Nepal has banned popular Chinese digital payment apps WeChat Pay and AliPay saying payments from the unregistered systems were illegal and resulting in a loss of income to the Himalayan nation, a spokesman for the central bank said on Wednesday.

Laxmi Prapanna Niroula, a spokesman for the Nepal Rastra Bank, said the two digital payment platforms were not registered with the regulator in Nepal but were widely used by Chinese tourists for settling their payments with businesses.

“Any digital transaction made with unregistered foreign payment system like WeChat Pay and AliPay is illegal,” Niroula told Reuters.

“Anyone using such platforms can be punished,” he said.

Under Nepali laws, anyone found guilty of embezzling foreign exchange can be sentenced to up to three years in jail.

WeChat Pay, operating on Tencent's messaging service, and e-commerce giant Alibaba's Alipay, are the two dominant platforms in mainland China. They are widely used by Chinese tourists for making payments to Chinese-run hotels, restaurants and other businesses in Nepal as the payment giants seek to expand overseas.

Tencent said WeChat Pay's overseas division “strictly complies” with all regulations in the countries it operated in.

“As for illegal payment collection overseas, we are constantly using technical means to crackdown and prevent this behaviour,” it said. “Overseas vendors should work with WeChat Pay's partners to enable WeChat Pay's collection services.”

Alibaba's affiliate Ant Financial said Alipay's cross-border payment operations in Nepal were operating normally.

“Alipay strictly complies with local rules and regulations in all markets where we operate, including overseas,” Ant Financial said.

“We request that all users abide by the Alipay Collection QR Code Agreement when using our QR code payment services. We have strengthened our measures to effectively prevent future cases where some users had wrongfully collected payments outside of China using domestic QR codes,” it said.

Nepal, home to Mount Everest and birthplace of Lord Buddha, received 1.1 million tourists in 2018 — of them 153,000 were Chinese visitors, the second largest number after Indian tourists who totalled 200,000. China and India jostle to influence Nepal, a natural buffer between them.

Niroula, the central bank spokesman, said these apps were using Nepal's internet connectivity but transactions were made in China and not reflected in the Himalayan nation's national accounts.

“The government cannot tax such transactions nor check any crimes related to such unregistered payment systems,” Niroula said.

The ban came into force from Monday, he said.