Bill to regulate online business still pending

Kathmandu, September 7 — The global trend of online shopping continues to grow with the advancement of technology. Major online shopping platforms like Amazon, Alibaba, Walmart, eBay, and AliExpress have established strong presences in international markets. The convenience of online shopping, coupled with stringent regulations and robust legal frameworks in developed countries, has contributed to the success of these platforms.

In Nepal, online shopping is still emerging. However, recent trends show an increase in the number of people ordering items such as shoes, clothes, electronics, books, daily essentials, and food from the comfort of their homes or offices. The rising popularity of online shopping is attributed to the ease of purchasing, access to detailed product information, and various other conveniences. Companies like Daraz are gaining recognition for their reliability and expanding presence in the market.

 Online business in Nepal began in 2000 with platforms like Muncha.com and Thamel.com, but these early entrants are now overshadowed by more competitive players. Despite their initial success, these platforms have struggled to maintain their market position.

The entry of Daraz.com into the Nepalese market has significantly accelerated the growth of online shopping. With its large-scale investment, wide range of products, and regional reach across South Asia, Daraz has helped establish online shopping as a viable option in Nepal. The COVID-19 pandemic and lockdowns further boosted online shopping as people sought alternatives to traditional shopping during the restrictions.

However, the rapid growth of online business has also introduced challenges in regulation and monitoring. The absence of specific laws for online shopping has hindered its expected growth. Issues such as receiving incorrect products, handling complaints, and dealing with non-delivery after payment have eroded consumer confidence. The lack of regulations has led to increased instances of fraud, including scams on social media platforms like Facebook, Instagram, and TikTok. According to police data, approximately 10 million rupees were defrauded in online business scams in the last fiscal year alone.

Baburam Adhikari, spokesperson for the Ministry of Industry, Commerce, and Supply, acknowledges the issues with online business regulation. He highlights that the current legal framework is insufficient for effective oversight. Adhikari suggests that legislative changes could benefit the government, consumers, and businesses alike.

Bill Pending for 14 Months

The government has proposed a bill to regulate online business, which was introduced to the National Assembly on June 12, 2080. Despite some discussions, the bill has yet to be enacted into law.

This bill aims to regulate commercial transactions of goods and services conducted via information technology. It mandates that online shopping sites must be registered and listed on a government-managed electronic business portal. Once the bill becomes law, it will require details such as the type of business, available items, and service names to be provided.

According to Nepal Rastra Bank, as of the end of last fiscal year, there are 246.48 million mobile banking users and 1.91 million internet banking users. Mobile banking transactions totaled 3.73 trillion rupees in the past year alone.

The bill includes provisions for obtaining separate permissions to open branch offices, designating individuals to handle complaints, and collecting VAT or PAN. It also stipulates that the final sale price, including taxes, shipping times, and any additional shipping charges, must be disclosed. If goods are not received as ordered, customers should be able to request a replacement or a full refund without incurring service fees.

Additionally, the bill proposes fines for various violations. Due to the absence of such laws, the police currently address online shopping irregularities as fraud. The bill outlines penalties, including up to three years in prison and fines up to 500,000 rupees, for selling substandard products, failing to deliver goods, not disclosing service and trade details, or operating unregistered businesses.

Growing Online Payments

The convenience of online payment systems has bolstered consumer confidence in online shopping, although the fees can be high. While transactions between accounts at the same bank are free, a fee of 10 rupees applies for payments to different banks, with VAT added in the current financial year. Additionally, users in areas without internet incur extra charges for data from telecommunication providers.

In June 2022, there were 183,700 mobile banking users and 1,684,000 internet banking users. Over the past few years, digital payments have expanded rapidly. As of June 2024, mobile banking users had increased to 246.48 million, and internet banking users to 1.91 million, with 3.73 trillion rupees transacted through mobile banking in the past year.

Dr. Bhagwat Acharya from Nepal Rastra Bank said that digital payments have significantly facilitated online business. He emphasizes that promoting and expanding digital payments benefits both customers and the state.