The NPCI on Friday announced that Unified Payment Interface (UPI) is now live in neighbouring Nepal.
UPI users can scan QR codes to make payments to Nepalese merchants, an official statement said.
This follows a tie-up between the National Payments Corporation of India International Payments (NIPL) and Nepal's largest payment network Fonepay Payment Service in September last year.
In its first phase, the partnership will enable Indian consumers to make instant, secure, and convenient UPI payments across various business stores in Nepal by using UPI-enabled apps, the statement said.
Merchants acquired by the participating members of Fonepay Network can accept UPI payments from Indian customers, it specified.
It called the integration a "revolutionary shift" in cross-border transactions between citizens of both countries.
"This initiative not only signifies our commitment to innovating the digital payments space but also reflects our dedication to creating new avenues for trade, strengthening the bond between the two nations," NIPL's chief executive Ritesh Shukla said.
"I am confident that this cross-border payment solution will significantly improve economic ties, commerce, and tourism between the two nations, eventually promoting economic prosperity and progress," Fonepay's chief executive Diwas Kumar said.