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There is a profound impact of Financial Technology (Fin Tech) companies on the complete finance industry in Nepal. Fin Tech is changing how people save, spend, and invest, even in the hustle and bustle in small towns. The change is not simply for the sake of convenience, but is aimed for inclusion, growth, making Nepal a digital powerhouse in South Asia.
Rapid growth: The stats say it all
There was an incredible increase in banking transactions using cell phones and by July 2024, users had reached to 24.65 million while e-wallet users in 2023 was only 23.46 million. This shift is indicative of moving to a cashless society.
As per Statista, the overall transaction value is predicted to reach €3.94 billion (or almost USD 4.3 billion) by 2025 with 12.17% expansion every year after 2028. With key drivers like QR code payment acceleration, mobile banking, smartphone adoption, government policies, growth of fintech services and digital wallets, this figure is expected to increase at a compound annual growth rate (CAGR) of 30%, ultimately hitting US$11.14 billion by 2029.
Source: NRB annual report and data published in several newspapers
The COVID-19 pandemic single-handedly fueled this change as FinTech users increased from 6.48 million in 2020 to over 20 million in 2023—an increase of 200%. This signifies that a larger proportion of Nepalli citizens are beginning to accept digital financial services.
Key contributors and progressions
Nepal’s Fintech industry has a total of 132 companies, with prime contributors being eSewa, Fonepay, Khalti, and PrabhuPAY . All these payment systems form an integral part of day-to-day transactions like paying bills and shopping.
One of the new changes is the integration of India’s UPI service with Nepal’s National Payments Interface (NPI). Nepali users have utilized UPI QR codes for over 100,000 transactions, amounting to more than ₹250 million. This is a huge milestone, as many travelers and businesspersons will benefit greatly from streamlined cross-border payment solutions.
Regulatory support and innovation
In accordance with the opportunities provided by FinTech, NRB started a Digital Finance Innovation Hub in March 2025 for FinTech companies to test their innovative solutions in a confined and controlled setting to verify safety and ensure reliability before final launch of the solution into the market. Such a regulatory environment is definitely conducive to innovation within the fold of financial stability.
| Fintech Company | Innovation | Regulatory Link |
| eSewa | First digital wallet | Licensed PSP by NRB |
| Fonepay | QR interoperability | Licensed PSO |
| NCHL | National Payment Switch, connectIPS | Operates under NRB |
| Khalti | Payment for government services | Licensed PSP |
| IME Pay | Digital remittance | Licensed by NRB & remittance company |
Where,
PSP means Payment Service Provider
PSO means Payment Service Operator
Supporting regulations in the Nepali fintech ecosystem:
1. NRB Initiatives
a. Licensing for PSPs and PSO:
i. A number of digital wallets have been licensed by the NRB, including eSewa, Khalti, IME Pay, PrabhuPay, etc.
ii. It has issued licenses separately to wallet operators and switch/settlement platforms (such as Fonepay and NCHL).
b. Guidelines and Regulations:
The NRB has formulated different directives and guidelines such as:
i. Payment and Settlement Bylaw 2072 (2016)
ii. Fintech Regulatory Sandbox Framework, 2079 (2022)
iii. Cybersecurity Frameworks for BFIs and PSPs
c. KYC and Digital Onboarding:
The e-KYC (electronic know your customer) guidelines provide for digital onboarding into financial services.
d. National Payment Switch (NPS):
A system introduced to provide interoperability among various wallets, banks, and cards by Nepal Clearing House Limited (NCHL).
e. QR Code Interoperability:
Existence of initiatives to promote unified QR code usage via Fonepay QR, Smart QR, and integration through NCHL.
2. Innovation in Nepali fintech ecosystem
a. Digital Wallets & M-Payments:
i. Widespread use of wallets including eSewa, Khalti, IME Pay, PrabhuPay.
ii. Facilities it provides: making payments for utilities, insurance premiums, topping up mobiles, transferring funds, making online shopping payments.
b. API Banking and Open Banking Initiatives:
i. Commercial banks now grant API access to third-party Fintechs for integration of their services.
ii. NRB promotes partnership between BFIs and Fintechs.
c. Lending & Credit Scoring Innovations:
i. Digital lenders are harnessing alternative data such as mobile usage and transaction records.
ii. Automated credit scoring models coming into prominence.
d. Blockchain & Cryptocurrency Exploration
NRB has not legalized cryptocurrency trading, but innovations based on blockchain are under study (e.g., digital identity and document verification).
e. InsurTech & AgriTech:
i. Insurance aggregators and mobile microinsurance platforms are on the rise.
ii. Fintech in agriculture for loans, crop insurance, and market linkage.
f. Remittance Integration:
i. Direct remittance transfers into user wallets through digital wallets.
ii. Partnerships between local Fintechs and International Money Transfer firms (e.g., WorldRemit + eSewa).
Challenges and opportunities
In spite of the progress, the challenges remain. Studies indicate that financial literacy and government support are necessary but it do not influence FinTech adoption unless the effect is mediated by the user’s innovativeness . Other factors such as digital literacy, trust in technology, and social influence, serve to promote adoption mainly among millennials, in places such as Karnali Province.
Confronting these challenges calls for education and awareness campaigns to build mutual trust with, and familiarity of, digital financial tools seems inevitable.
The road ahead
The future of Nepal’s banking landscape is digital. With projections indicating that the digital banking market will reach a net interest income of US$170.8 million by 2025 and grow to US$240.6 million by 2029, the momentum is undeniable.
For this growth to be inclusive and sustainable, stakeholders must focus on enhancing digital literacy, ensuring robust cybersecurity measures, and fostering an environment conducive to innovation. By doing so, Nepal can not only transform its banking sector but also set a precedent for digital financial inclusion in the region.
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