NRB releases study report on USSD-based payment system

KATHMANDU: Nepal Rastra Bank (NRB) has released a study report titled 'USSD-Based Payment System and its Regulations: Suggestions for Nepal,' aligned with its Fourth Strategic Plan (2022-2026). The report covers the rationale and necessary regulatory arrangements for implementing a payment system based on Unstructured Supplementary Service Data (USSD).

The report includes an introduction to the USSD-based payment system, technical structure and transaction process, advantages and challenges, and an analysis of policy arrangements in different countries. It also explores the possibilities, opportunities, and challenges of the system in Nepal and provides regulatory and policy suggestions.

According to NRB, the report utilises secondary data from the internet and information from payment-related organisations licensed by the central bank. The USSD-based payment system, which can operate without internet or smartphones, is used as an offline payment system in various countries to enhance financial inclusion and electronic payments. The main technical infrastructure for this system is owned by USSD Gateway telecommunication service providers, requiring coordination between NRB and the Nepal Telecommunications Authority for regulation and supervision.

The report highlights that in countries where the system is effectively used, it was implemented before app-based electronic payment devices. In Nepal, the USSD-based payment system began in 2021, while app-based payments started in 2010. The study offers suggestions for coordination and policy arrangements between relevant agencies based on the experiences of other countries and the current state of electronic payments in Nepal.