Dinesh Pathak

Kathmandu / Although we are new to digital payments, it’s evident how Gen-Z’s and Millennials across Nepal are already on board. A quick rundown on the history of digital payments in Nepal shows, systems like eSewa and MeroPay were introduced in the early 2000s. Other digital wallets such as Khalti and IME Pay gained popularity during the 2010s. Gradually, the government's push for financial inclusion played a pivotal role in soaring QR code payments. The COVID-19 pandemic in the 2020s accelerated digital payment adoption as people shifted to online platforms. Fast forward to today, the growth of digital payments in Nepal has bolstered. The seamless alignment between technological advancements and supportive government initiatives are the catalyst to their growth.

This soaring industry is witnessing a potential shake-up as two of its leading digital wallets, IME Pay and Khalti are exploring the possibility of a merger. These days, we see how this has become the headlines in any economic media platforms.  If this materializes, it will mark Nepal’s first major digital wallet consolidation which can set a precedent in the Fintech sector. As these two companies are exploring a merger, we can expect it to be something big.

IME Pay, backed by the IME Group, is a dominant player in remittances and money transfers. While, Khalti is run by entrepreneurs like Amit Agrawal, Manish Modi, and Binay Khadka, it is gaining popularity for its seamless user experience and robust partnerships. If these two giants join hands together, they could pose a serious challenge to eSewa, Nepal’s current market leader.

A merger like this invites both opportunities and challenges to these entities. On the bright side, IME Pay's remittance network and the image of IME group play a vital role in boosting financial inclusion. Users of these digital wallets can benefit from having better security, more service, and smoother transactions. Nevertheless, the challenge of getting regulatory approval from Nepal Rastra Bank awaits, as this merger is a first in the digital wallets landscape. In addition, this merged company might dominate the market, leading to higher fees. Technical integration could be difficult too.

If we see through similar global instances, PayPal’s acquisition of Braintree in 2013 was a game-changer. It was highly beneficial as PayPal was eventually able to expand through mobile payments, mainly through Venmo. If IME Pay and Khalti merge successfully, they could control a significant share of Nepal’s digital payment sector.

This would give eSewa real competition. But the real question is, if the merger will encourage innovation or just form another powerful digital giant. The answer depends on how well they handle integration, regulation, and competition. For now, everyone is eagerly anticipating to see what comes next in Nepal’s booming Fintech space.