Seek Indian assistance to bring Lanka’s digital payment ecosystem in line

Former Central Bank Director Dr. Roshan Perera called on the country to actively seek Indian assistance to bring Sri Lanka’s digital payment ecosystem in line with the great success story of the Indian payments system.

“Even though we launched LankaQR over 3 years ago with 350,000 merchants, the total number of daily transactions that are conducted through these QR Codes is about half the number of merchants. This is baffling. Why is there such low usage?”

Perera was speaking at the recent Advocata event ‘Closing the divide through women’s access to finance’ held on March 20.

“Hopefully since India has connected with LankaQR there will be more initiative to promote digital retail payments and encourage Sri Lankans to use digital payments,” she added. India has been able to digitize its payment space by creating a unified payment interface where multiple financial service companies compete to create a vibrant digital marketplace for payment providers. The Reserve Bank of India has been at the forefront of digitizing payments allowing swift rollout of bank openings for the vast rural population in conjunction with the Aadhar identification system. “The poster child in all of this is India,” she added.

Sri Lanka’s failure in digital payments can be attributed to the high establishment and operational costs of the dominant bank-backed payment gateways in the country. These entities collude to maintain high merchant rates and prevent a marketplace for digital payment providers by preventing larger merchants concerned with compliance from passing on the costs associated with the mode of payment to the customer. This in conjunction with a highly calculated reward scheme associated with card usage prevents the uptake of other forms of digital payment in the country.

It is within the ambit of the Central Bank to step in and issue directions allowing the passing on of transacting costs to the consumer. As cash management has associated costs in terms of storage and lost interest the LankaQR system is much cheaper for businesses to operate contingent on much higher take up in the economy. PickMe should be called on to facilitate JustPay payments within its application.

With the ageing population and the recent wave of migration, there is going to be huge pressure for increased productivity. She said that though the female population is over 51% their economic participation is less than 36%.

Perera highlighted digital payments as a means to revolutionize female participation in the economy. She said, “The UPI has transformed the number of transactions that have gone through.”She added, “Women lack physical assets to access credit. Using data on transacting history they can build up a credit history which can then be used in informed decisions on how to lend to these women.” TP

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