eSewa is Nepal's pioneering company in the field of micro-payment services and it is a member of holding company F1Soft. Jagdish Khadka, who is a Chartered Accountant, has been leading eSewa for around a year as its CEO. In a conversation with New Business Age, Khadka delved into topics including the advancement of payment gateways in Nepal, the trajectory of eSewa, and its future policies and strategies. Excerpts:

What is the status of eSewa today?

eSewa has 7.8 million registered users at present. However, the nation's digital economy stands at 10.71%. We have to work to increase digitisation. We have succeeded in making financial access possible.

Currently, the term "financial access" mostly implies banking, credit, and deposits, but there's much room for expansion. Components like insurance and investments are not included in financial access. We are working to expand access, making such services available on mobile phones.

With accessibility through every individual's mobile, eSewa has connected users to every organ of the state. We don't just stop at the service itself; we're also contributing to raise awareness. The impact of this is yet to fully unfold. For instance, from our platform alone, around 25,000 to 30,000 people daily pay their Nepal Electricity Authority bills. This figure, combined with the time required and costs involved in going there, and additional expenses like fuel, gives a significant picture of how our service is aiding the state.

But it is not limited to payment alone. It is about increasing the efficiency of every business. Transparency has improved. Previously, we didn't know which airline charged how much for a ticket, but now we can see and choose. Even regulatory bodies can now observe. This ensures transparency now many businesses and people live in our service. 

In a country like ours, where there's a prevalence of cash transactions, our company has a big role to play. The government's slogan of taking Singha Durbar to every household is possible digitally. People are yet to be made aware of insurance, investment, and empowerment. Even today, people don't fully comprehend why they need insurance. This is a challenge that we're addressing.

How easy is it to hire employees? Many companies say that they lack competent and skilled manpower? What is the scenario at eSewa?

At eSewa, we operate with a forward-looking perspective: what we did yesterday was for yesterday, and what we do today is for tomorrow.

Our team is composed of self-motivated individuals. While it is not particularly difficult to find candidates, the real challenge lies in hiring talented individuals. We choose the best candidates from the available talent pool. As an employee-centric organisation, we invest significant effort and resources into developing the skills and capabilities of our staff. When people join us, they undergo several changes that drive personal growth. We offer comprehensive training across various scenarios. But the individual's willingness to learn is paramount; we can only facilitate their growth if they are receptive to it. While retaining good manpower is a challenging task, we have not encountered major obstacles in this regard so far.

What's the contribution of the digital wallet to the economy? 

The central bank incurs a cost of Rs 2 to mint a coin with a face value of Re 1. Such coins, once in circulation, rarely find their way back to the banking channels. In comparison to the past, the rate of coin minting has significantly declined. Digital wallets have also helped reduce the cost associated with printing paper notes and the destruction of banknotes. Also, the people of remote areas do not need to travel to city to make payments.

In addition to extending the lifespan of currency, digital wallets have facilitated the availability of services 24 hours a day. Consider the process of purchasing plane tickets a decade ago versus now. The digital wallet has made a substantial contribution to enhancing service accessibility.

We employ approximately 600 individuals, contributing significantly to job creation. Moreover, we have established a network of 230,000 agents, indirectly generating employment opportunities through our services. Besides these direct and indirect economic benefits, there are numerous other advantages to consider.

We are committed to realising the government's goal of a digital Nepal.

Is the regulatory body providing enough support to you? Is it possible to go digital while the regulators enjoy working on papers? 

While the government's efforts are commendable, they are not yet complete. We are receiving required support and promotion. The government regulations are really effective. In the dynamic landscape of technology and regulations, technology typically leads the way. Regulators may not always anticipate the full impact of technology beforehand. But we will find them updated in the next meetings. The change is happening gradually. Today, we can make digital payments for traffic fines, passport fees, and even certain municipal transactions through eSewa. While progress may seem gradual, it is happening. We should view this positively.

In recent times, incidents of system hacks and data security breaches have become regular. What is your take on this? 

We do encounter issues related to hacking. While our system is robust, there are many other factors that can affect our system. These factors include activities like phishing, and the sharing of OTPs, among others. These things are happening by tempting users, showing false identification or taking credentials. It is not that a bank's system is compromised; it is the user that has been compromised. 

We are working to raise awareness among users about hacking and phishing risks by collaborating with agencies like the Central Investigation Bureau (CIB). Within our systems, we have implemented measures to address false identifications. Such implemented measures are live photo verification, Citizenship number validation in KYC approval and system also flags any suspicious transaction. We follow up with phone calls in cases of doubt. We periodically share reports with regulatory bodies. Likewise, we are also adapting to evolving technology.

What are the future strategies of eSewa? 

Ensuring excellent customer service remains our top priority. By understanding our customers' needs, we are committed to introducing new products tailored to their requirements.

We also plan to educate our customers about investments. The Nepal Insurance Authority is working to establish provisions for selling digital insurance. Once these provisions are in place, we will offer this service as well. There is considerable ongoing work in this direction. We have also introduced innovative methods for payment confirmation, such as Voice enabled QR. We are committed to utilising technology for the benefit of our users, and we continuously develop new features to enhance their experience.

Much of our learning stems from external sources. India's rapid progress in FinTech serves as a valuable example. However, it is important to note that we do not blindly copy India. 

Furthermore, the government has signed some agreements with India to support our learning endeavours. As a payment provider, we collaborate with operators who are actively participating in these initiatives. Very soon, Nepalis travelling to India for education, medical purposes, and more, can use their own wallets. The introduction of facilities for scanning India's QR codes in Nepal and vice versa will eliminate the need for cash transactions and currency exchange.

How is the market for wallets in Nepal? How do you see the future? 

Customers are assets of digital wallets. As long as the wallets have customers, there will always be some sort of business. Therefore, its future seems promising. In QR payments and the adoption of other products, we are ahead of Europeans and Americans. In South Asia, we are ahead of Bangladesh and Sri Lanka in using wallets. In these South Asian countries, people use cash, unlike QR codes in Nepal. Banks are also emphasising digital transactions. When they say it's the future, it means exactly that, and we're already moving in that direction.

Wallets provide services that banks too offer. Then, why should customers use wallets? 

We are companions to the banks. Our strength lies in our convenience and a wide array of services. We can provide numerous services, but competition increases over time. Banks handle large-scale transactions, while wallets handle microtransactions. I believe wallets will continue to exist for micro payments. Abroad, there are two types of accounts: one is the control account, and the other is the main account. With a control account, you only spend, while the main account is for other transactions. This establishes a clear distinction for spending. Banks do not pose a threat to us. Wallets thrive on innovation. Banks have their own structures, and collaboration with them certainly benefits us.

According to data from the Nepal Rastra Bank, there are 27 registered wallets. Do you think the number is too high?

Having 27 wallets doesn't make a significant difference. The key is how they progress and establish themselves in the natural hierarchy of numbers. Initially, the number of development banks and financial institutions was significantly large. They must have helped increase financial access to remote parts of the country. But now, the number has reduced to a manageable size. The increasing number of digital wallets helps materialise the goal of a digital economy and digital Nepal. However, what matters is how they survive and adapt in the competitive market.

Many companies are still struggling to enter the market. It took us 15 years to reach the current stage. Some might have entered the business in the last 2 to 4 years. Market research is required to understand the issues, but there's a considerable scope for improvement.

Like banks, wallet companies might have to consider mergers. Some may have better technology, some may have a better business model. Although mergers might bring profits, in my opinion, it is not just about mergers. There must be a reason for merging. If it is solely based on the number of wallets, I don't believe it is sufficient. Many wallets are yet to establish themselves in the market. Only 10.71% of the market has become digital, and there's still a large gap as cash transactions remain pervasive. Having many wallets will help the current economy by enhancing awareness and broadening the reach of digital transactions.

There are talks of eSewa becoming a public company. When will the company launch its public issue?

Yes, we plan to become a public company. We are still a private company. Currently, we are in the preliminary stage, and after transitioning to a public company, it will take another three years to issue the IPO to the general public. I can't tell you now when exactly we will go public.

Users are made to incur charges in government payments. Do you think the government does not trust the wallet in government bill payments?

The situation has improved significantly. They are the ones who benefit the most from the transaction. For instance, eSewa has helped the Nepal Electricity Authority (NEA) collect in one month what it used to take a year to collect 5-6 years ago. In various sectors, eSewa's services have helped save time and cost. Since government bodies do not provide a commission for utility payments, we have to charge users, which is not excessively high.

For example, when paying an electricity bill, a user has to pay Rs 5 as a fee, and there's also a 13% VAT. Wallet payments primarily benefit merchants, and while our services are not just for users, even merchants can benefit. However, they don't bear the charge. These issues involve regulatory considerations.

Previously, an airline company had over 3,000 agents. They would be pleased if they collected the money in three months. It wasn't guaranteed that staff would deposit all the ticket money at the company office. 

We have facilitated the transition of many government services online, even in remote areas. The impact of this is also visible. We have put a lot of effort into integrating systems.

Can the government's dream of Digital Nepal be successful in this way?

If the government supports us in various sectors, the dream of a digital Nepal could become a reality. We have been supporting the government, and will continue to do so. We are making continuous efforts to make this slogan a success.