Nepal makes national ID the trust layer for digital payments

The national identity card (NID) in Nepal is now a mandatory requirement for anyone conducting a transaction using the country’s national digital payment system.

This follows a recent Nepal Central Bank amendment to the 15th Integrated Payment System Directive, as reported by MyRepublika. The measure is part of efforts by the government to strengthen digital Know Your Customer (eKYC) for all financial operations.

According to the regulatory changes, users must link their national ID to their bank wallet service for digital payments by October 17 at the latest, after which they could face challenges.

All licensed digital finance service providers in the country have been told to verify the identity applicants against the national identity database before allowing them to open or update their wallet.

The Central Bank has said those who do not yet have ID cards must receive monthly reminders from service providers about the need to comply once they are in possession of their card.

For citizens living abroad, they can activate their wallet accounts digitally but must comply with the ID linkage requirement within a period of six months. A waiver has been granted to persons living with disabilities who are allowed to access their wallets using alternative documents if the NID is unavailable.

Officials say the move is not only intended to reduce fraud in digital payment transactions, but also to strengthen oversight of its national digital payment system to align with global Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) standards set by bodies like the Financial Action Task Force (FATF).

Nepal is seeing the rapid growth of non-bank digital payment platforms which have created a potential loophole where unverified or loosely verified mobile wallets could be exploited for illicit financial flows, tax evasion, or fraud.

The move is consistent with efforts seen in other places where authorities are integrating digital identity with other public systems such as payments infrastructure or digital government platforms to financial inclusion or streamline access to public services.

India’s Aadhaar digital ID is linked to the UPI and bank accounts to enable seamless payments.

In Nigeria, the Central Bank (CBN) has long made it mandatory for all bank accounts and digital mobile wallets to be linked to verified National Identification Numbers (NIN) and the Bank Verification Numbers (BVN).

Nepal has been working to expand use cases for its national ID. An ongoing engagement with India seeks permission for cross-border acceptability of the ID card.

Article Topics

digital payments  |  digital wallets  |  identity verification  |  KYC  |  national ID  |  Nepal  |  regulation