I still remember the ease of not having to carry my wallet to visit the 7eleven store for my midnight munchies, as I could simply tap my phone to pay for everything. Back then it was a matter of convenience however, now, this simplistic gesture of paying with a phone is becoming “the new” necessity.
With the lockdown slowly coming to an ease, businesses all over the country are regaining some momentum which inevitably is generating cash flow. However, fear of contamination due to the pandemic has caused many (payer and payee) to opt for precautious measures and extreme change of mindsets regarding their daily habits and thus, slowly shifting their payment preferences from peer-to-peer cash transactions to much safer contactless alternatives.
In a market where businesses and financial institutes have not yet utilized the card payment system to its maximum potential, introduction of a more technologically advanced alternatives has always been a challenge. Yet, services like E-Sewa, FonePay and Connect IPS are operational and thus are proving a safer alternative for transactions in these dire times of social distancing and hand sanitizing. This accelerated new normal of transaction technology might just be the base of the new economic ecosystem and here’s our bit on understanding alternative payments.
The future that lies ahead
As cliché as it may sound, “mobile payment may just be the future”. The sophisticated network of consumer, merchants, financial institutes and payment processes has never been connected with such an ease. Gone are those days of waiting in lines to pay and those resource consuming three step transaction process (customer-merchant-bank-merchant). Transactions are becoming effortless with a simple scan of QR code or tap of a button. Due to this, the rate of cash transaction is slowly decreasing around the world. It was just the matter of time that mobile transactions would have been adopted as the preferred payment option for any transactions. Plus, after the advice from WHO to the consumers to wash their hands after handling cash, a psychological perception has been created that has made people reluctant to get into any peer-to-peer monetary transactions, thus, accelerating the contactless payment scenario.

From the survey by the Economist Intelligence Unit (EUI) in January/February 2020, we can get a good brief on the global mix of consumer payment methods just as the pandemic was gathering momentum outside China and understand that the world is heading towards a cashless society[1].

Mobile applications
Nepal is in the earliest stages of digitizing its transactions. With the introduction of E-Sewa in mid-2009, many mobile payment and mobile wallet apps such as FonePay, Connect IPS, Khalti and many others are currently emerging out and stabilizing in the market. Banks have partnered up with various developers and are providing mobile app which enables every customer to perform day to day banking transactions (including transfer, payment and checking) digitally, making banking processes much easier and quicker than the traditional days.
From its inception in 2009, mobile banking sector has had 8.34 million register users i.e. 25.6% of the total registered bank accounts (32.6 million) across the nation[2]. According to the report, compared to the data from 3 years ago, mobile banking users has increased by 5 times which only inclines to the fact that with the increase communication infrastructure, mobile banking users will also increase.
What are the challenges?
With every new innovation and technology there are always few challenges. Alternative payment services also have many challenges that needs to be dealt with. First and foremost is the security risks involved in these payment methods. Since these applications and services store personal information and bank details, many people are afraid of getting hacked. However, various security measures have been implemented, such as pin lock, facial recognition (IOS) and fingerprint code lock to provide a secure and seamless option for the end users.
Keeping the security risks aside, mobile payment services also require a certain level of infrastructure for it to run smoothly. First, every-citizen should own a smart phone that at least fulfills the minimum specific requirement of the app. Second, there should be a decent working internet connection and third, all the users should have an adequate knowledge on how to use the application. Yes, these alternative payments provide seamless option for transaction. Yet, these services are only good if you know how to use them and if there is a proper infrastructure where it functions.
Nepal is, like mentioned earlier, in its early stages of digitization. There are many requirements that needs to be met, information to be passed and strategies to be applied for Nepal to be declared a cashless nation. However, even though if the mobile payments grabs the market, the need of physical cash will never disappear. COVID-19 has accelerated the path way to a future in which cash payment are the exception rather than the norm. The future of mobile payments seem to dominate the transaction market with the trend already seen in people leaning into the easier and safer mobile wallets applications. Whilst there is still far more development required in this sector, the path way towards a cashless nation seems clear.
References:
[1] 8.34 million Nepalis have access to mobile banking services. Retrieved June 2020, from The Kathmandu Post: https://kathmandupost.com/money/2019/10/16/8-34-million-nepalis-have-access-to-mobile-banking-services
[2] Digimentality. Retrieved June 2020, from The Economist: https://digitalcurrency.economist.com/
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