Nepal Clearing House Limited (NCHL) and Fonepay have both implemented 13% VAT on their clearing and settlement services from Shrawan 01, 2081. The decision comes in response to the government’s decision to charge and impose VAT on the same services from FY 2081/82.
However, their approach has been contrasting. While Fonepay, a private entity has decided to bear the cost on its own, the partially government-owned NCHL has transferred the payment burden to the customers’ end.
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NCHL and Fonepay payment after 13% VAT
There were concerns among the enterprises and users of both these companies that they might have to pay more for transactions on NCHL and Fonepay. But while Fonepay has spared its customers further financial burden, NCHL users may feel a sting in their pockets with the 13% VAT charge.
NCHL added an additional 13% from the VAT to the previous fee which means now it charges 13 percent more than the previous fee from its users. Until the last FY 2081/81, Fonepay charged 10 rupees when sending money from one bank and financial institution to another, while NCHL charged 8.40 paisa.
But on the other hand, Fonepay decided to bear the new VAT-induced costs on its own shoulders. After the 13% VAT implementation, Fonepay would have added Rs 1.30 to the previous fee of Rs 10 (13%), raising its charge to Rs 11.30. However, it has rather fixed it to Rs 8.70.
On the other hand, NCHL has added Rs 1.92 (13% VAT against the previous fee of Rs 8.40) which now raises its rate to Rs 9.49. But it must also be noted that NCHL’s service charge is 0.79 paisa more than Fonepay’s. These new fee structures came into implementation from Shrawan 01, 2081 (FY 2081/82).
| Fonepay money transfer rate | NCHL money transfer rate |
Fonepay’s Chief Operating Officer (COO) said that bearing the costs after 13% VAT on its own costs the company Rs 15 crore annually. But still, the company has decided to pay the government on its own without raising the tariff on the customers as the company aims to connect the citizens to digital payment.
Likewise, the company’s CEO Diwas Kumar says that the company has adjusted the Rs 1.3 of the 13% VAT in the Rs 10 charge. He added, “As the maximum fee is Rs 10, the Nepal Rastra Bank (NRB) should clarify whether the VAT money can be collected from the customer or not.”
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Anti-digital Nepal theme?
The government’s decision to impose 13% VAT on clearing and settlement on Fonepay and NCHL has been dismissed as an anti-digital Nepal theme. Till now, both entities relaxed the VAT provision to help promote affordable digital payment for the customers. It was helpful too.
As of Jestha, 2081 (FY 2080/81), there are 2.43 crore mobile banking users while 19 lakh use Internet banking and over 2.30 crore use digital wallets in Nepal. Likewise, over 19.45 lakh customers use Connect IPS. However, the growing costs of digital transaction charges will frustrate the users and will draw the question on their justification.
Both Fonepay and NCHL record around 5 lakh transactions per day with the transaction volume almost reaching Rs 8 billion on average.
What do you think of the government’s decision to enforce 13% VAT on clearing and settlement on Fonepay and NCHL and the company’s treatment of implementing the tax on the users’ ends? Are you fine with paying more? Drop your opinion in the comment section below.