Diwas Sapkota: Promoting global financial inclusion through multinational partnerships

The collaboration between Fonepay and India’s NPCI International Payments Limited (NIPL) heralds an exciting era in cross-border digital payments, promising to empower millions of citizens in both Nepal and India with secure and convenient payment solutions. Through a certified mobile application developed by Fonepay and backed by the National Payments Corporation of India (NPCI), consumers and businesses will be able to effortlessly make instant payments using QR codes at various retail outlets. Evana Manandhar of ApEx spoke with Chief Executive Officer (CEO) of Fonepay, Diwas Sapkota, about this partnership. Excerpts. 

Could you give a brief description of the latest cross-border payment partnership between Fonepay and NPCI? Why did Fonepay decide to seek this collaboration?

The collaboration between NPCI and Fonepay for cross-border payments between India and Nepal, leveraging mobile banking and QR code technology, has the potential to revolutionize the way people transact when traveling between these two countries. This partnership promises a host of advantages for both customers and merchants, making cross-border payments more accessible, convenient, and secure.

Fonepay’s decision to seek collaboration with NPCI stemmed from a combination of strategic, market-driven, and customer-centric considerations. By entering into this partnership, Fonepay is strategically looking to expand its footprint and diversify its service offerings. This expansion into cross-border payments enables Fonepay to tap into the substantial flow of transactions between the two neighboring countries, driven by factors like tourism, trade, and remittances.

Moreover, in a competitive fintech landscape, staying relevant and ahead of the curve is crucial. Collaborating with NPCI, a renowned financial infrastructure provider, can give Fonepay a competitive edge by offering unique and innovative cross-border payment solutions. This move could position Fonepay as a frontrunner in the mobile banking and payment sector by meeting the evolving demands and expectations of its customer base.

What are the main benefits of cross-border payment facility for customers in Nepal and India?

The introduction of a cross-border payment facility between India and Nepal holds paramount significance in alignment with the national priorities of both countries. For nations prioritizing economic growth and stronger bilateral ties, this initiative represents a strategic move. By facilitating easier, faster, and cost-effective cross-border transactions, it paves the way for increased trade, investments, and business collaborations, ultimately bolstering economic development on both sides of the border. 

Additionally, the shift towards digital payments not only enhances financial security, but also simplifies transactions compared to traditional methods involving physical cash or international debit/credit cards. Customers can sidestep the risks associated with cash handling and the high foreign transaction fees often levied by banks for card usage abroad. This transition to digital payments not only streamlines the transaction process but also contributes to a more secure and convenient financial landscape for individuals and businesses in India and Nepal, further emphasizing the transformative potential of this cross-border payment innovation.

Can you provide any specific information regarding the Memorandum of Understanding (MoU)’s goals that apply to this cross-border payment project?

The successful launch of QR payments represents a significant milestone in the collaborative cross-border payment project between Fonepay and NPCI, benefiting customers traveling between India and Nepal. This achievement reflects a commitment to modernizing and simplifying cross-border transactions by providing a user-friendly QR code payment system

Building upon this success, the forthcoming goals of implementing P2P (Peer-to-Peer) payments and incorporating Rupee card payments demonstrate a holistic approach to enhancing the cross-border payment ecosystem. P2P payments will empower individuals to transfer funds easily across borders, addressing personal financial needs such as remittances. The inclusion of Rupee card payments, leveraging India's domestic card payment network, will offer an additional payment avenue, expanding the choices available to users.

When can customers anticipate this cross-border payment service to be fully operational and accessible? Could you give an estimate or target time frame?

The launch of a cross-border payment service is a multi-step process that demands careful coordination and collaboration with banking partners. Initially, the service provider, in this case, Fonepay, must establish partnerships with various banks, both within its home country and the target country (India, in this instance). These banks are essential for facilitating the cross-border flow of funds. While this process unfolds, the service can be rolled out with a limited number of partner banks, enabling customers to engage in one-way transactions, such as sending money from one country to another, within a relatively short span of 15-20 days. During this phase, rigorous testing and optimization efforts are common to ensure smooth functionality, regulatory compliance, and an optimal user experience.

However, the official launch of the service often takes more time, typically within a range of 6-12 months. This is because achieving full connectivity with a broader network of banks is a crucial step. It involves expanding partnerships to enable two-way transactions, allowing customers in both countries to send and receive funds seamlessly. Additionally, compliance with various regulatory requirements, both in the home and target countries, is a meticulous process that can contribute significantly to the extended timeline. Obtaining the necessary regulatory approvals and ensuring full compliance is essential for a smooth and legally sound cross-border payment service. Once all technical, regulatory, and partnership aspects are in place, the official launch can commence, encompassing marketing campaigns, customer education, and broad availability of the service to the public.

Can you describe the equipment or setup that will make it possible for these cross-border exchanges between Nepal and India? What sets it apart from card payment options?How can issues about compliance with KYC/CFT (Combating Financing of Terrorism) and AML (Anti Money Laundering) regulations and concerns be addressed to ensure that cross-border transactions with India are secure and adhere to global regulatory standards?

This setup encompasses critical components, such as a robust payment gateway infrastructure, collaboration with partner banks on both sides of the border, user-friendly mobile apps or websites for customer transactions, a currency conversion mechanism, and a compliance framework adhering to local and global regulations, including KYC/CFT and AML requirements.

What sets this approach apart from conventional card payment options is its emphasis on direct bank transfers, handling local currencies (Nepalese Rupee and Indian Rupee) without conversion fees, and deep integration with the local banking infrastructure for regional cross-border transactions.

To ensure compliance with KYC/CFT and AML regulations and address security concerns, strict measures are in place. These measures include thorough customer verification processes involving valid identification documents, transaction monitoring systems to detect suspicious activities, integration of AML and CFT measures, compliance with regulatory authorities, customer and employee education on compliance and security, and a commitment to regular audits and updates to stay in line with evolving threats and regulatory changes. In summary, the setup for cross-border exchanges through services like Fonepay is designed to provide a secure, efficient, and legally compliant ecosystem for cross-border transactions, bolstered by stringent compliance measures and advanced technology.

What steps are being taken to address cyber security and digital fraud concerns, so that customers feel secure performing cross-border transactions?

Ensuring the security of cross-border transactions is of paramount importance, and steps to address cybersecurity and digital fraud concerns closely align with those taken for domestic transactions. The core principles of cybersecurity, such as user awareness, multi-factor authentication, encryption, and compliance with recognized security standards, user education and awareness campaigns are pivotal, emphasizing the importance of not sharing sensitive information, being cautious of phishing scams, and adopting secure practices. Implementing multi-factor authentication adds an extra layer of protection. Robust encryption protocols are vital to safeguarding data during international transmission.

Moreover, obtaining relevant certifications signals a commitment to security, offering customers reassurance. Real-time transaction monitoring, powered by advanced fraud detection algorithms and artificial intelligence, can identify anomalies promptly. Collaboration with both domestic and international law enforcement agencies helps combat cybercrime effectively.

Customer support is indispensable, providing customers with a resource to report concerns and incidents. Regular security audits and vulnerability assessments maintain a proactive stance against potential threats. Lastly, international collaboration and information sharing within the global financial community play a crucial role in staying ahead of evolving cyber threats. Together, these measures create a comprehensive security framework that instill confidence in customers conducting cross-border transactions.

How does Fonepay hope to support Nepal’s digital economy and global financial inclusion in the context of such multinational partnerships? 

Fonepay aims to play a pivotal role in advancing Nepal’s digital economy and promoting global financial inclusion through strategic multinational partnerships. By leveraging its expertise in digital payments and financial technology, Fonepay can help bridge the financial inclusion gap in Nepal. This includes extending access to financial services to previously underserved populations, enabling efficient cross-border remittances, and facilitating the adoption of digital payments among businesses and consumers. 

Fonepay’s commitment to financial literacy initiatives, interoperability with various financial institutions, and outreach to rural communities further strengthens its potential to drive financial inclusion. Collaborations with global financial institutions can unlock a broader range of financial products and services for Nepali users, contributing to economic growth and empowering individuals and businesses to participate more fully in the digital economy. Ultimately, Fonepay’s role in promoting financial inclusion aligns with Nepal’s broader economic development goals and fosters greater connectivity with the global financial ecosystem.