Registering a PSO/PSP Company in Nepal is a structured legal process governed by Nepal Rastra Bank (NRB) under the Payment and Settlement Act, 2075 (2019). A Payment Service Operator (PSO) and a Payment Service Provider (PSP) are two distinct categories of licensed entities in Nepal’s digital payment ecosystem. Any company intending to operate digital payment services, mobile wallets, or payment infrastructure in Nepal must obtain a valid license from NRB before commencing operations.
This guide covers the full registration process, legal requirements, capital thresholds, and compliance obligations for registering a PSO/PSP company in Nepal.
What is a PSO and PSP in Nepal?
Payment Service Operator (PSO)
A Payment Service Operator (PSO) in Nepal is a company that operates and manages the infrastructure or platform that facilitates payment and settlement between parties. PSOs do not directly provide payment services to retail customers but instead operate the technical backbone. Nepal Clearing House Limited (NCHL), which operates ConnectIPS, is a classic example of a PSO in Nepal.
Payment Service Provider (PSP)
A Payment Service Provider (PSP) in Nepal directly offers payment services to end users, including individuals and businesses. PSPs operate mobile banking apps, digital wallets, and payment gateways. Companies like eSewa, Khalti, and IME Pay function as licensed PSPs under NRB regulation.
The key difference is that PSOs build and operate the system, while PSPs use that system or their own infrastructure to serve customers directly.
Legal Framework Governing PSO/PSP Registration in Nepal
The registration and operation of PSO and PSP companies in Nepal fall under the following legal instruments:
- Payment and Settlement Act, 2075 (2019) – The primary legislation regulating payment systems in Nepal.
- Payment and Settlement Bylaw, 2072 (2015) – Operational rules for licensing and operations.
- Payment and Settlement (Third Amendment) Bylaw, 2079 (2022) – Updated capital requirements and licensing categories.
- Nepal Rastra Bank Act, 2058 (2002) – Grants NRB authority to regulate payment systems.
- Company Act, 2063 (2006) – Governs the incorporation of the company before applying for the PSO/PSP license.
You can access official NRB guidelines directly at Nepal Rastra Bank’s official website.
Categories of PSO and PSP Licenses in Nepal
NRB classifies PSO and PSP licenses into categories based on the scale of operations and paid-up capital requirements. Understanding these categories is essential before initiating registration.
| License Type | Category | Scope of Operation | Minimum Paid-Up Capital (NPR) |
|---|---|---|---|
| PSO | Category A | National Level | 2,000,000,000 (2 Billion) |
| PSO | Category B | Regional Level | 500,000,000 (500 Million) |
| PSP | Category A | Large Scale | 500,000,000 (500 Million) |
| PSP | Category B | Medium Scale | 200,000,000 (200 Million) |
| PSP | Category C | Small Scale | 50,000,000 (50 Million) |
The categorization determines the scope of services a licensed entity may offer. A Category C PSP, for example, may operate a limited digital wallet service, while a Category A PSP can offer a wider range of financial services including international remittance integration.
Step-by-Step Process for Registering a PSO/PSP Company in Nepal
Registering a PSO/PSP company in Nepal involves two parallel tracks: company incorporation and NRB license application. Both must be completed before operations begin.
Step 1: Incorporate the Company in Nepal
Before applying for an NRB license, the applicant must first register a private limited or public limited company under the Company Act, 2063 with the Office of the Company Registrar (OCR).
Documents required for company registration:
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Citizenship certificates of all promoters
- Proof of registered office address
- Tax clearance of promoters (if applicable)
- PAN/VAT registration
Visit Office of the Company Registrar Nepal for online registration procedures.
Step 2: Prepare and Submit the License Application to NRB
After incorporation, the company must apply to the Payment Systems Department of Nepal Rastra Bank for the PSO or PSP license.
Documents required for PSO/PSP license application:
- Completed application form as prescribed by NRB
- Certificate of Incorporation from OCR
- MOA and AOA of the company
- Board resolution to apply for PSO/PSP license
- Details of promoters and shareholders
- Audited financial statements (if applicable)
- Details of the proposed payment system or service
- Business plan for a minimum of five years
- Technology and IT infrastructure plan
- Security audit plan and data protection policy
- Evidence of minimum paid-up capital deposit
- Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance framework
- Details of key management personnel and their qualifications
Step 3: NRB Review and In-Principle Approval
NRB reviews the submitted application. If the application meets initial standards, NRB issues an in-principle approval. This approval is conditional and allows the applicant to proceed with setting up infrastructure.
Step 4: System Testing and Infrastructure Setup
After in-principle approval, the applicant must:
- Set up the IT infrastructure
- Complete third-party security audits
- Connect with the NRB-approved payment infrastructure (such as NCHL, Swift, or other authorized systems)
- Conduct system testing and submit test results to NRB
Step 5: Final License Issuance
Once NRB is satisfied with the infrastructure, compliance framework, and testing results, it issues the final operating license. The company can then legally commence PSO or PSP operations in Nepal.
Capital Requirements for PSO/PSP Registration in Nepal
Capital adequacy is one of the most critical requirements for PSO/PSP registration in Nepal. Under the Payment and Settlement (Third Amendment) Bylaw, 2079, the minimum paid-up capital requirements are strictly enforced.
| Entity Type | Category | Paid-Up Capital (NPR) |
|---|---|---|
| PSO | National (A) | 2 Billion |
| PSO | Regional (B) | 500 Million |
| PSP | Large (A) | 500 Million |
| PSP | Medium (B) | 200 Million |
| PSP | Small (C) | 50 Million |
The capital must be deposited in a commercial bank approved by NRB prior to license application. NRB requires proof of capital in the form of a bank certificate confirming the deposited amount.
Ownership and Foreign Investment Rules for PSO/PSP in Nepal
Under the Foreign Investment and Technology Transfer Act, 2075 (2019) and NRB regulations, foreign direct investment (FDI) in PSO/PSP companies in Nepal requires prior approval from the Department of Industry and NRB. The following conditions apply:
- Foreign ownership in a PSP or PSO is subject to the permitted sectoral cap as defined by the Investment Board Nepal and NRB circulars.
- Currently, NRB has specific restrictions on majority foreign ownership in payment service entities to ensure national financial system security.
- Technology transfer agreements with foreign entities must be disclosed and approved.
- All foreign shareholders must submit due diligence documents including identity proof, source of funds, and background verification.
For FDI-related procedures, refer to the Investment Board Nepal official website.
Compliance and Ongoing Obligations After PSO/PSP Registration
Obtaining the license is not the end. Licensed PSO/PSP companies in Nepal must fulfill the following ongoing compliance obligations:
- Annual license renewal with NRB Payment Systems Department
- Quarterly and annual financial reporting to NRB
- Annual IT security audit by a NRB-approved auditor
- AML/CFT compliance under the Asset (Money) Laundering Prevention Act, 2064 (2008)
- KYC obligations for all customers onboarded
- Consumer complaint resolution mechanism as mandated by NRB directives
- Maintenance of float accounts in NRB-approved commercial banks
- Submission of transaction data and reports as per NRB’s data reporting guidelines
- Compliance with Nepal Rastra Bank’s Payment Systems Oversight Framework
Failure to comply with these requirements may result in suspension or revocation of the PSO/PSP license under Section 19 of the Payment and Settlement Act, 2075.
Key Challenges in PSO/PSP Company Registration in Nepal
Several practical challenges arise during the PSO/PSP registration process in Nepal:
- Meeting high capital requirements, especially for Category A licenses
- Developing a robust IT infrastructure compliant with NRB technical standards
- Passing third-party security audits with international-standard protocols
- Preparing a comprehensive AML/KYC framework acceptable to NRB
- Obtaining technology partnerships or system integrations with NCHL or other payment operators
- Timeline uncertainty as NRB review processes can take six months to over a year
FAQs
1. What is the difference between a PSO and PSP in Nepal?
A PSO (Payment Service Operator) operates payment system infrastructure, while a PSP (Payment Service Provider) directly offers payment services to end users. Both require NRB licensing under the Payment and Settlement Act, 2075.
2. What is the minimum capital required to register a PSP in Nepal?
The minimum paid-up capital for a Category C PSP in Nepal is NPR 50 million. Category B requires NPR 200 million and Category A requires NPR 500 million as per NRB bylaws.
3. Which government authority regulates PSO/PSP companies in Nepal?
Nepal Rastra Bank (NRB) through its Payment Systems Department regulates and licenses all PSO and PSP companies in Nepal under the Payment and Settlement Act, 2075.
4. Can a foreign company register a PSP in Nepal?
Yes, foreign companies can invest in PSP/PSO companies in Nepal but must obtain prior approval from the Department of Industry and NRB. Foreign ownership is subject to sectoral caps and NRB compliance requirements.
5. How long does it take to get a PSO/PSP license in Nepal?
The PSO/PSP licensing process in Nepal typically takes six months to over one year, depending on the completeness of the application, infrastructure readiness, and NRB’s review timeline.
6. Is it mandatory to complete company registration before applying for a PSO/PSP license?
Yes. The applicant company must first be incorporated under the Company Act, 2063 at the Office of the Company Registrar before submitting the PSO/PSP license application to NRB.
Conclusion
Registering a PSO/PSP Company in Nepal is a legally intensive and capital-heavy process overseen by Nepal Rastra Bank under the Payment and Settlement Act, 2075. Companies must meet strict capital requirements, build compliant IT infrastructure, and satisfy NRB’s technical and legal standards before receiving an operating license. The digital payment sector in Nepal continues to grow rapidly, and obtaining a valid PSO/PSP license positions a company within Nepal’s regulated and expanding fintech ecosystem. Proper legal guidance and early engagement with NRB’s Payment Systems Department are highly advisable for prospective applicants
