The Nepal Rastra Bank granted Sajilo Pay Payment Services Pvt Ltd permission to operate as a payment service provider at the end of March (PSP).
Sajilo Pay immediately began its transaction with a capital of Rs 10 million. This brings the total number of companies with such permission in Nepal to 28.
Four other companies had received the same permission from the central bank just days before Sajilo Pay. It also issued licenses to around a dozen other businesses in the current fiscal year, despite the fact that the previously licensed wallets have struggled to make a profit.
In Nepal, the majority of e-wallets are struggling to stay afloat. eSewa, Khalti, and PrabhuPay, e-wallet companies with more users, have also seen a drop in sales. It has compelled e-wallets to sell their licenses or combine with others in order to continue operating.
Old is Gold
Many industries have been thrown into chaos as a result of the Covid-19 pandemic and the resulting lockdowns. However, the pandemic, according to Lama, has had the opposite impact on the e-wallet industry.
At the start of the current fiscal year, there were just 14 wallets. However, at the end of the first three quarters, the figure had exactly doubled.
According to the NRB, though the number of wallets has increased by 100% in the first eight months of the current fiscal year, the total number of customers has only increased by 22%.
In July of last year, there were 6 million and 274,129 wallet users. This number had risen to 7,667,312 by mid-February 2021.
As a result, the number of customers has remained constant.
According to Amit Agrawal, CEO of Sparrow Pay Pvt Ltd, not all licensed companies are involved in the market. And several, he claims, are successful companies solely dependent on mobile recharge.
According to Agarwal, “getting a license does not guarantee that the company will be successful; it will take time.”
Is mergers a solution?
Experts say that in a small market like Nepal, having 28 wallet companies is too much. The NRB spokesperson Dhakal also says the offices have realised so and hence they have now closed the application for new licences.
The NRB, however, has not made any plan regarding the merger public. Spokesperson Dhakal says that there is an existing rule that states the licence will be revoked if the criteria are not met. This is why, everyone wants to do good business and they can choose to go for a merger, voluntarily, if necessary, he says.
PrabhuPay operator Lama says it is good that the new companies bring new features and services. But, there is a risk of wasting investment, she says. “The NRB has sought the same security as the bank and has given the licence only to those with a capital of up to Rs one billion. But, it will be difficult for investors and businesses to get the same level of security as from the banks,” says Lama.
She agrees the number of licenced e-wallets operating today is too much now. Of the 30 million Nepalis, only 60 per cent can use an e-wallet, and more than 4 million of the population are abroad, she says. And for these reasons, she thinks it is better to have a merger so that more people can invest in the same company while maintaining the demand.