KATHMANDU -- The Himalayan nation of Nepal has emerged as an unlikely obstacle to the global conquest of Chinese mobile payment services WeChat Pay and Alipay.
The Nepal Rastra Bank, the central bank, on Tuesday announced a ban on the two Chinese services, operated by Tencent Holdings and Alibaba Group Holding's Ant Financial Services Group affiliate, respectively, citing their failure to secure licenses to operate in the country.
"Digital payment services must have permission from the NRB but till now WeChat Pay and Alipay have not received any license to operate in Nepal or offer their services here," Director Laxmi Prapanna Niroula of the bank told Nikkei Asian Review.
The ban comes as a surprise as the Communist government elected in 2017 year has steered the country toward China, away from its traditional dependence on India.
Nepal's transport minister earlier this year told Nikkei the country would align its new rail lines with those of China rather than India. Chinese state-owned companies including ZTE have recently won contracts to expand 4G telecommunications networks in Nepal. The two government earlier this month firmed up an agreement for Nepal to ship out exports through Chinese ports. Most recently, Nepal's national news wire said it would investigate three journalists for translating and publishing a health update about the Dalai Lama, the exiled Tibetan spiritual leader, while Nepal's president was visiting China.
Nepal's move is the first national ban imposed against Alipay and WeChat Pay, according to a person involved in the Chinese payment sector. Alipay claims more than 1 billion global users, with arrangements for stores in more than 40 overseas markets to accept payment through its network. WeChat Pay, leveraging on the 1.1 billion worldwide users of the WeChat messaging app, said recently it had entered 49 foreign markets.
Chinese visitors overtook Indians to become the top source of tourists to Nepal during the first four months of 2019. Companies in Nepal however have complained that the influx of Chinese tourists, who are not charged for visas, has been of limited benefit as much of the value has been captured by Chinese-owned businesses.
"Chinese tourists want to eat at Chinese restaurants, travel with Chinese guides and stay at Chinese hotels so not even a penny enters Nepal," said convenience store owner Sudeep Pradhan. "Most Chinese tourists come to Nepal without even carrying any cash."
Despite the Nepal Rastra Bank's announcement, an Alipay spokesperson told the Nikkei Asian Review that "Alipay's cross-border payment operations in Nepal are operating as normal."
"Alipay strictly complies with local rules and regulations in all markets where we operate, including overseas," she said. She added, however, that the company had determined that some Alipay users "had wrongfully collected payments outside of China" using domestic Chinese account codes.
"We have strengthened our measures to effectively prevent future cases," she said. "We reserve the right to take further actions against those who violate the terms of our service agreement."
Subsequent to publication, a spokesperson for WeChat Pay told Nikkei that it "is currently not in operation in Nepal."
"WeChat Pay's cross-border business strictly abides by relevant local laws and regulations and has been making efforts to crackdown on and prevent unauthorized collection of payments abroad," he said.
It is not clear how much impact the payment ban will have on either tourists or the businesses that serve them in Nepal. Dar Munna, owner of Kathmandu souvenir store Paradise Handicrafts, said, "The ban won't affect us since Chinese tourists can pay in yuan or with UnionPay or Visa cards."
China's UnionPay card payment network in December linked up with Nepali peer SCT to launch an e-wallet service called Qpay. At the time, UnionPay said its cards were already accepted by 70% of Nepali merchants and at 60% of the country's ATMs.
Lung Chao, a visitor in Kathmandu from Chengdu, is among those unworried by the restrictions on Alipay and WeChat Pay. "The ban won't bother me because I only pay with yuan," he said.
Additional reporting by Nikkei Asian Review deputy editor Zach Coleman.