QR code payments: For financial inclusion

With innovation in the payment systems in Nepal, people are shifting gears from cash to digital payments. Cash remains the king, as 97 per cent of the transactions are done through it; however, digital transactions are on the rise. Digital payments are faster and hassle-free. Digital payments are not just limited to card payments through Point of Sales (PoS) machines these days even in Nepal. People have started scanning QR through their smartphones, businesses have integrated the innovative payment system, and this is on the rise.

Quick Response (QR) code payments are an alternative to cash or debit/credit card payments. It is a contactless payment that is done by scanning the QR code using any mobile banking application, or digital wallet, which is part of the network. This avoids the use of expensive point of sale machines and cards. The customer can simply enter the required amount, remarks, and PIN. In a few taps, the payment is done.

“I’ve been transacting through my mobile banking application and digital wallet in restaurants, department stores, and even petrol pumps. In less than 30 seconds my payment is done, and I don’t feel the need to carry loads of cash since these services have been introduced,” shares a customer. Moreover, with QR codes, there is no need to swipe a card as well. People have started saving money with its use as most QR merchants provide discounts and offer with every transaction.

Under the Fonepay network, there are 60,000 plus merchants throughout the nation, and 20,000 transactions take place every day. Around 300,000- 400,000 users are paying through the network daily. Restaurants in the city, such as Trishara, Dalle and Bota, provide attractive offers to customers who use QR systems to make payments. In businesses, such as Tranquility Spa, QR payments have surpassed the traditional card payments. QR payments offer up to 50 per cent discount.

“One in every four transactions is done through QR, and the customer flow has significantly increased after introducing QR payment offers,” says Rajesh Phaiju, administrator at Tranquility Spa.

QR code payments have reached across Nepal, covering the remote areas in the Himalayas, hills, and Tarai. QR code payments have been acquired by small and medium-scale businesses in the nooks and crannies of the country. Okhaldhunga’s Gyan Katuwal, owner of Ganga Bijaya Wholesale Kirana Pasal, installed QR code payments a few months back. He shares that people are gradually shifting towards digital payments in the region. According to him, “QR code payments are quite easy to maintain and use. I do not have to install, maintain and operate a PoS machine.”

Similarly, Krishna Sharan Lama, the owner of White House View Point Restaurant, Dakshinkali has installed a QR payment system. “My restaurant is quite packed during the weekends, and many customers have inquired about QR payments,” he said. “So, I felt the urgency to integrate it into my business.” Since he started using these services, his customer’s needs for contactless payments have been met.QR payments have also been accepted in social functions, such as weddings, and also at temples. When I recently visited Tal Barahi Temple in Pokhara, I observed that even it has started accepting 

QR payments, even Gods have started going digital in a way. I installed my QR code during my wedding reception, which made it possible for the guests to scan my QR and directly send cash to my account. This saved me from taking all the cash out of the envelope, counting them, and depositing it into my account. Moreover, it is also a secure option as there is always a risk of losing cash during the rush of a traditional Nepali wedding. 

However, the acquisition of QR code payment systems doesn’t mean that people will use it right away. People have to be educated about how and why using QR payments are necessary. Having QR doesn’t just make payments simple, secure and affordable but also aids the government in generating more taxes. Now, this has a multiplier effect and contributes to economic prosperity. A Permanent Account Number (PAN) and bank account are required to acquire QR code payments for a business. This promotes financial inclusion, access and transparency. Our neighboring country, China, has adopted QR code payments religiously, even mom and pop stores, vegetable vendors, transport rental services use this technology to accept payments. 

Moreover, even artists performing in the streets do not accept cash, instead, they have their QR payment codes to accept payments. When someone makes payments using cash, they get odd stares in the streets of China. Some 92 per cent of people in China’s top cities used We Chat Pay or Alipay as their primary payment method as per Penguin Intelligence in 2017.

We can learn a lesson from the factory of the world, China, and promote digital payments through QR code payments in Nepal. Since we now have 8.4 million mobile banking subscribers, and it is increasing rapidly, this facilitates QR code payments. Moreover, digital wallets also facilitate these payments. The government must play a proactive role in enabling digital payments to enable transparency, financial inclusion, financial access, and economic prosperity in the long run.

This article was published in The Himalayan Times on December 20, 2019.