Biswas Dhakal is a Nepali entrepreneur and one of the early pioneers of digital financial services in the landlocked country, which is bordered by India and China. The fintech solutions developed by Dhakal and his team at F1Soft’s 12 units, including Fonepay and eSewa, are used by over 90% of the country’s banks, while the payment gateway pioneered by the company serves over 5 million people across Nepal.

What are the biggest opportunities for fintech players in Nepal?

Nepal is a small market, but the central bank has provided licenses to 10 payment service operators and 27 payment service providers. We started our business in 2004, when there was no internet penetration and no smartphone penetration. Today we cater to almost half of the population through fintech services. Our neighboring countries have been ramping up digitalization across industries, and I see that wave of digitization entering Nepal as well. But I don’t see a competition among fintech players here, because cash is still the king. About 95% of the transactions are done in cash, which shows the great potential for the fintech players in this market.

How do you scale in a market the size of Nepal? 

To scale in a market like Nepal, we try to tap the unbanked population. With eSewa, the first mobile wallet in the region, we not only prioritize the already banked population, but have also built a strong agent network to cater to the unbanked population across the country.

What markets are you watching for a possible expansion of Fonepay? 

Fonepay is an interoperable network that enables more than 62 partners, including China UnionPay, Alipay, Visa, and the National Payments Corporation of India. This is one of Nepal’s first and leading networks, enabling more than 18 million Nepali users and 600,000 merchants [to conduct online transactions]. Now international users can make payments in Nepal. Our next step is to allow Nepali users to make payments abroad via Fonepay. We are working with our Indian counterparts as well as Visa, and we hope we will launch an international service very soon. 

What’s the most common misconception about doing business in Nepal? 

Nepal is heavily reliant on remittances for people’s buying capacity, and remittances are the largest source of foreign exchange reserves in the country. Sourcing capital is difficult in Nepal, but because of the inflow of funds in the form of FDI, private equity, and venture capital, there are ample avenues for SMEs [small-medium enterprises] and MSMEs [micro, small, and medium enterprises] to secure capital to scale up. A preference for profitability compared to growth, the risk appetite of local investors, collateral-based financing, the high cost of borrowing, regulatory issues, and repatriation of investor funds are all major hurdles that continue to have an adverse impact on doing business in Nepal.

Which one fintech solution has had the biggest impact in your market and why?

Fonepay’s QR payment system has had, and still has, a revolutionary impact in our market. The evolution of digital payment platforms and increasing consumers’ preference towards e-payment secures a bright future for QR code payment. Across the country, you can find Fonepay QR in micro and medium enterprises as well as big business conglomerates. We believe QR code has simplified people’s lifestyle and also helps the government in generating more taxes, contributing to economic prosperity. With the help of Fonepay QR, we have been able to secure around 2 billion Nepal rupees ($16.7 million) in transactions per day. QR code payment gained momentum especially during the pandemic as people began to avoid contact-based payments.

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