The coronavirus pandemic has affected not only individuals but every business. People’s regular livelihood has been thrown off balance and the economy is on the verge of collapsing. While all of the non-essential businesses remain shut, essentials ones are forced to find alternative ways of operating.
Under current circumstances, the digital payment solutions have become an unique platform that provides an easy solution for mobile-top ups, utility payments, money transfer and many more.
Digital payment solutions are among the rising alternatives to the traditional cash-based transactions. Most of the e-commerce businesses in the country have even integrated cashless payments. Plus, it is actually thriving amid a global pandemic. So, all of the businesses operating right now, prefer and actively promote digital payment solutions.
As a consequence, there’s a huge surge in the use of digital payments. This presents an opportunity for digital wallets to garner organic users.
With concerns about the spread of coronavirus via banknotes, Nepalis are resorting to digital payment as a safer alternative. More specifically, the e-commerce merchants, who deliver the daily essentials, prefer digital payments over cash.
Along with this, Nepalis now need to depend on digital wallets for money/remittance transfer. In turn, it has led consumers to adapt to digital wallets resulting in a surge in digital wallet transactions.
“Huge number of people were unable to transfer money as they used to. This impact was seen in our call center as phones were busting up. We were able to help them with digital money transfer which has helped a lot of people during this crisis.”, says Mohit Agarwal, Assistant Manager of IME Pay.
The banks are only operated for limited hours. Plus, there is just little to no place from cash-based transactions right now. Rather than taking a risk of sorts, people find it easier to turn to digital wallets for their daily essentials.
Quite frankly, it’s much more simple and can be done from the comfort of home. To make things easier, digital payment companies and banks have waived transaction fees as well.
“People who have never tried digital wallets are now trying it out just to experience it. Moreover, Nepali’s are just now realizing the ease of digital payment and the flexibility it provides from the comfort of your home”, says Manish Modi, MD of Khalti.
This situation has presented an opportunity for all of the digital payment companies to grow and the onus lies upon the digital payment community to help people with everything they can amid this crisis, adds Mr. Modi.
During this pandemic, most of the merchants are operating with the support of several digital payment platforms. Bhoj, Sastodeal, Kirana, Nimbus Nepal, and various other outlets prefer digital payment. Moreover, these outlets are actively promoting the “Scan to Pay” feature on delivery in order to avoid the use of cash.
It’s a great relief for denizens of Kathmandu valley as they don’t need to leave their houses in search of basic necessities. Furthermore, some of the merchants are even providing discounts if you use scan to pay. Kudos to all the merchants helping people fulfill their basic necessities!
As the lockdown period extends, more merchants are coming into operations. Most of the digital wallet platforms mentioned that the number of partner merchants is increasing daily. However, it will take some time to fully roll out all of the services as they need to sort out special permissions from the government.
Despite the surge in other digital transactions, digital payment companies still face a tricky situation with airline tickets. Airline tickets amount to one-third of their all online transactions, which are now completely shut. According to Mohit Agarwal, Assistant Manager at IME Pay, this particular situation affects their total transaction by 30-35%. The story is the same for the other companies as well.
Thus, it is a large hit to transaction volume, which might not end even after the lockdown period. There is a strong change that restrictions on travel could still persist. Plus, it will take some time for the aviation industry to resume its normal operations.
Similarly, the closure of merchants that use QR Code Payment has also hampered transaction volume. However, Ujjen Shrestha, Chief Marketing Officer of FonePay says that QR transactions have not fallen more than 1/3 of normal transactions.
“This is not the time to complain about how the situation has hampered the business. Current circumstances have definitely affected the transaction volumes. But, leading e-commerce businesses and other online services use our network and payment system. So, this is keeping the Fonepay transaction in balance”, adds Mr. Shrestha.
“This is not the time to complain about how the situation has hampered the business. Current circumstances have definitely affected the transaction volumes. But, leading e-commerce businesses and other online services use our network and payment system. So, this is keeping the Fonepay transaction in balance”, adds Mr. Shrestha.
In a bid to control the spread of coronavirus, the government has urged people to use digital payments. NRB (Nepal Rastra Bank) has also increased the transaction limit on digital payments.
Previously, fund transfer from wallet to the bank and vice versa was limited to Rs 5000 per transaction. Whereas, the daily and monthly transactions were restricted to Rs 10,000 and Rs 50,000 respectively. As a result, these limits had a downfall impact on the volume of digital transactions.
But, NRB has relaxed the limits to allow for flexible digital wallet transactions. Considering the current crisis per transaction limit has been increased to Rs. 25,000 along with daily and monthly limit of Rs. 1,00,000 and Rs. 5,00,000 respectively.
Support from the government has helped digital payment platforms to grow during this crisis. Even though the economy is going through tough times, this situation presents with a perfect opportunity for digital wallet companies to grow their appeal and create a lasting impression on new users.
“Like everyone else we also feel, this is the time when the ecosystem will understand the need for digitization and accept it. Therefore, our effort has been to make our service accessible and user friendly”, says Ujjen Shrestha, Chief Marketing Officer of Fonepay.
As per the report of NTA, 59.9% of people in Nepal use the internet as of 2019. Among them, only 61% percent have financial access. Likewise, among that, 40% are formally banked and 21% use other sources, according to Khalti Blog.
In other words, about 39% of people with internet access do not have proper financial access. And, even though mobile banking has increased by 64% and internet banking users by 10% in the fiscal year 2075/76, people from some parts of Nepal still do not have access to digital payment.
Lack of infrastructures and facilities play a major role but it boils down to socioeconomic status as well. As the lockdown continues, we are seeing the unavailability of recharge cards. In such cases, digital wallets are the go-to solutions. Some of us might enjoy the ease of digital payment.
But, people in the rural parts of our country won’t have the same comfort. While this subject might not fit in here, coronavirus has unwittingly exposed the ever-widening social and economic divisions in Nepal.
Talking on this issue, CEO of Prabhu PAY, says, “Prabhu PAY is on the verge of rolling out a pilot project where people can pay for various services via USSD feature. This will allow people to load money via Prabhu TV’s recharge cards. Moreover, they can access various services through something as trivial as a bar phone even without internet access!” While this could prove to be a part of the solution, it is also dependent on the availability of recharge vouchers.
Digital payment companies are dependent on the development of internet infrastructure and banking facilities. These underlying issues need to be solved if Nepal is to fully embrace digital payments. However, the development of infrastructure might not suffice. Lots of people from urban areas are still not aware of digital payment and its proper usage. Thus, educating people about e-commerce and digital payment is also necessary.
The whole world is facing an uphill battle against COVID-19. It has affected everyone socially and economically. Simply take it as a good news, among the never-ending sea of bad news. The overall situation has highlighted and boosted the need for digital payment in Nepal.
Whilst we want this pandemic to over as soon as possible, this period is also helping people to realize the importance and flexibility of digital payments.
Similarly, E-payments also soared after a surprise ban of Rs. 500 & Rs. 1000 cash notes in India, which led to a cash crunch in 2016. As a result, it forced people to move to electronic payments and India saw a nation-wide jump of 150% in e-payment.
Coronavirus is a similar shock that has/will surge digital payments in Nepal. Though it might be temporary, it has forced people to use digital payment. Who knows, it could leave permanent positive effects on such digital platforms in Nepal.