Digital wallets hold Rs 14.18 billion, users earn no interest

Digital wallets in Nepal collectively hold Rs 14.18 billion across 28.1 million accounts, with an average balance of Rs 500 per account. Despite this substantial sum, most users do not earn interest on the money stored in their wallets, according to data from Nepal Rastra Bank, the central bank.The number of digital wallet accounts has surged, reaching 28.1 million by mid-September, an increase of 3.5 million from the 24.6 million accounts recorded a year prior. However, approximately 50% of these accounts are inactive, as stated by Guru Prasad Poudel, spokesperson for Nepal Rastra Bank.Poudel explained that the central bank does not actively encourage interest payments on wallet balances, viewing them as akin to cash kept in a physical wallet for daily expenses rather than a banking deposit. “If interest is provided on this money, it could resemble another banking system,” Poudel said.While Nepal Rastra Bank does not have a clear rule mandating or prohibiting interest on digital wallet balances, it requires prior approval for any service provider wishing to offer such a facility. “Some service providers have already received approval, while others have not come forward,” Poudel noted.Sadicchya Silwal, a digital rights advocate, argues that since wallet service providers deposit user funds in banks and earn interest, some of that benefit should be passed on to consumers. She also highlighted the lack of clear regulations from Nepal Rastra Bank on this matter.Silwal cautioned against allowing wallets to become deposit-gathering platforms, as bank deposits are insured and interest rates are regulated, unlike wallet balances. “If deposits start accumulating in wallets for interest like in financial institutions, both regulation and security risks increase,” she said.Globally, practices vary. Many European countries offer interest based on the deposit period, while India prohibits interest on wallet balances. Other countries do allow it, according to Silwal.Typically, individual wallet accounts in Nepal have a daily transaction limit of Rs 50,000 and a maximum of 10 transactions per day. During festivals like Dashain, Tihar, and Chhath, Nepal Rastra Bank temporarily increases the transaction limit to 50 per day to promote digital dakshina (gifting).Poudel emphasized that wallets are merely digital versions of traditional purses and wallets. “We have set some limits to ensure it retains its original characteristics,” he said, adding that Nepal Rastra Bank permits wallet operations only with security and necessary limit conditions.In September alone, digital wallets facilitated transactions worth Rs 49 billion, a decrease from Rs 58 billion in June. Mobile banking also shows significant growth, with 30 million accounts registered by mid-September, up from 28.2 million a year ago. QR code transactions reached 75.5 million in a single month, processing Rs 167 billion.