Challenges and Opportunities of Digital Payment Adoption in Rural Nepal and Its Impact on Financial Inclusion

Challenges and Opportunities of Digital Payment Adoption in Rural Nepal and Its Impact on Financial Inclusion

This study explores the factors influencing digital payment adoption in rural Nepal, specifically along the Annapurna Circuit Trail. Employing a mixed-methods approach-including surveys, interviews, focus groups, field observations, and secondary data analysis-it offers a comprehensive perspective on adoption trends. The findings identify digital literacy, internet quality, and education as key drivers, with regression analysis indicating that digital literacy has the greatest influence, followed by education and internet quality, while age and distance to banking facilities negatively affect adoption. To provide a comprehensive understanding of this phenomenon, the study draws upon the Technology Acceptance Model (TAM) and the Diffusion of Innovations theory. Younger individuals, those with secondary education, and users with higher digital literacy are more likely to embrace digital payments. Major barriers include unreliable internet, inconsistent electricity supply, limited smartphone access, complex registration processes, and low merchant acceptance. Despite these challenges, opportunities for growth exist through infrastructure improvements, capacity-building initiatives, and policy reforms. With the current adoption rate at 35%, the study suggests that a 50% adoption rate is achievable within two years through strategic interventions. The research offers practical recommendations for stakeholders, emphasizing the need for collaborative efforts to enhance digital infrastructure, improve user education, and address systemic barriers.