ILLUSTRATION: KATMANDU JOURNAL
WALK INTO a tea stall in Kathmandu today and you will likely see a laminated QR code taped to the counter. A few years ago, the same counter would have carried three or four: one for eSewa, one for Khalti, one for whichever wallet the vendor’s nephew had signed them up for. The central bank’s interoperable standard, NepalQR, modelled on the same technical specification underpinning India’s UPI, ended that clutter: one code, scannable by any compliant app, with the payment routing automatically to the merchant’s account regardless of which wallet the customer happens to use. It was meant to make life easier for shopkeepers. It has also, almost as a side effect, made it much tougher to explain why Nepal still has so many separate wallet companies.
The growth that drew them all in is real. Nepal Rastra Bank’s own oversight data show QR-code transactions grew 117% by volume and 104% by value in the 2023-24 fiscal year alone, making QR the most widely used payment method in the country. Against numbers like that, starting a digital wallet looked, for several years, like an obviously good idea. eSewa, IME Pay, Khalti, Prabhu Pay, Q Pay, Moru and a clutch of smaller entrants all built apps, signed up merchants and chased the same exploding pie.
The trouble is that the pie has an extremely uneven owner already. eSewa, run by F1Soft International and licensed as Nepal’s first payment service provider, controls somewhere between 70-80% of the market by most industry estimates. Everyone else has been fighting over what is left.
That fight has just gotten harsher to win as a small, standalone player, for a reason that has little to do with marketing budgets. NepalQR’s whole point is interoperability: a customer no longer has to use the same wallet as the shop they are paying. That is good news for consumers and terrible news for any wallet trying to build a moat out of brand loyalty, because the thing that used to lock a customer into one app—the fact that it was the only one their favourite shops accepted—has been engineered away by the regulator itself.
Once the front-end experience is commoditised, the competition shifts to things smaller players struggle to match: capital reserves to absorb years of slim transaction margins, the scale to negotiate favourable terms with banks and international partners, and the compliance infrastructure to survive an increasingly attentive regulator.
Nepal got its first real test of this logic in 2025, when Khalti and IME Pay merged into a single entity, eventually rebranded Khalti by IME after the NRB granted final approval in June. The merger used a legal pathway the central bank had created years earlier, in its 2020-21 Transaction and Settlement Bylaw, specifically to allow digital wallet consolidations—a rule that sat essentially unused for half a decade until two of the market’s mid-sized players finally needed it.
The combined company moved fast to put its new scale to work: in April this year it announced an integration with Stripe, letting Nepali freelancers receive international payments into their wallets, something neither Khalti nor IME Pay had managed to deliver alone. Scale, it turned out, bought access that fragmentation could not.
A second pressure is now building from the regulatory side. In March the government began moving to redefine payment service providers under Nepal Rastra Bank law in ways that would broaden the regulatory net around them, prompting Chandra Prasad Dhakal, then president of the Federation of Nepalese Chambers of Commerce and Industry, to argue publicly that wallets should stay separately regulated rather than being folded into the same legal category as banks.
The fear among smaller operators, reported by Kantipur the same month, is this: if digital wallets get classified as full financial institutions, their shares could end up subject to the same promoter-and-public ownership split, and the same restrictive trading rules, that already apply to banks. For a slimly capitalised standalone wallet, that is not a minor compliance update. It is the kind of governance burden that only a well-funded, merger-strengthened competitor can absorb handily.
Put those two pressures together—a regulator that has deliberately stripped wallets of their consumer-facing moat, and a possible reclassification that would raise the cost of staying small and independent—and the conclusion for Nepal’s remaining mid-tier payment apps is straightforward. The smart move is to find a partner while the merger rules are still generous, rather than after they tighten further. ■
