Nepal Rastra Bank warns of security risks in digital payments

Nepal Rastra Bank (NRB) has issued a warning regarding increasing security risks within the nation’s digital payment sector. According to its Payment System Oversight Report 2024/25, the central bank identified significant failures in regulatory compliance and governance among payment service providers (PSPs) and payment system operators (PSOs).

On-site inspections of 16 licensed institutions revealed that many failed to properly implement Know Your Customer (KYC) protocols. These lapses increase the vulnerability of the sector to money laundering, financial fraud, and cybercrime. The NRB noted widespread deficiencies in internal controls and operational procedures, specifically regarding systemic, operational, settlement, and liquidity risks.

In addition to security concerns, the report highlighted a surge in cross-border QR transactions. During the review period, there were 993,582 transactions totaling Rs 2.86 billion, with the vast majority—981,654 transactions worth Rs 2.69 billion—occurring between Nepal and India.