Digital payment transactions and adoption of digital wallets in Nepal
Date
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Department of Economic
Abstract
Digital Economy Foundations identified by the World Bank start from connectivity and
then payments. Nepal has made tremendous achievements in terms of connectivity,
while there have been positive trends in digital payments, Cash is still the dominant
method of doing transactions. The research explored the legal and regulatory
environment governing payment systems in Nepal, focusing on the Nepal Rastra
Bank's role and relevant laws. Using Nepal Rastra Bank's data, trends in monthly
transactions across various digital payment instruments (mobile banking, digital
wallets, cards) were examined, and identifying of the user base, average transaction
size, and volume changes, was also done. Mobile banking emerged as the preferred
option in 2022, while digital wallets exhibited smaller average transaction sizes
compared to mobile banking and cards. Debit card usage for cash withdrawals
paralleled general card usage. A survey of 380 respondents investigated factors
influencing digital wallet adoption, applying Technology Acceptance Model. Based on
the conceptual framework, perceived usefulness, ease of use, credibility, and
convenience were hypothesized to explain adoption. 64.5% of respondents were male,
indicating potential gender skews in digital wallet usage. All four hypothesized factors
(perceived usefulness, ease of use, credibility, and convenience) showed positive
correlations with digital wallet adoption, as expected. Median values for each factor
(between 3 and 4) suggest agreement by most respondents that these factors play a role
in adoption. Correlation and regression analyses confirmed the predicted influence of
these factors on digital wallet adoption, with the final model explaining 77.4% of the
data variance. This research sheds light on the growing adoption of digital payments in
Nepal, highlighting the regulatory framework, user trends, and key factors influencing
digital wallet adoption.