- Exponential growth in digital transactions
- ‘Cashless society’ dream revitalised
By Uwin Lugoda
Sri Lanka is estimated to spend 1.5% of its GDP on costs related to maintaining money as cash in the system. This has made physical currency a heavy burden on the country’s economy and led the Central Bank to launch several initiatives over the years to try to reduce cash and move towards a more cashless system.
Ironically, Covid-19, one of the worst things to happen to both global and local economies, may actually be fast tracking this very goal.
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CEO and General Manager of LankaClear (Pvt.) Ltd Channa De Silva[/caption]
According to Channa De Silva, the CEO and General Manager of LankaClear (Pvt.) Ltd., which is a public-private partnership (PPP) set up under the Central Bank of Sri Lanka (CBSL) in 2002, constant access to cash and its prevalence in Sri Lanka have been one of the main deterrents when it comes to the country becoming cashless. However, he explained that since the coronavirus outbreak and curfew restrictions which made it difficult for people to travel about, including to banks and ATMs, people have been forced to adopt a cashless system.
“One of the good things about the outbreak is that people are now using a cashless system. Because of Covid-19, they could not leave their homes to get cash the way they used to through banks and ATMs,” he said in a webinar on the “Importance of e-signatures to support digital payments and paperless trade” conducted by the Ceylon Chamber of Commerce on 13 May.
Exponential growth
CEO and General Manager of LankaClear (Pvt.) Ltd Channa De Silva[/caption]
According to Channa De Silva, the CEO and General Manager of LankaClear (Pvt.) Ltd., which is a public-private partnership (PPP) set up under the Central Bank of Sri Lanka (CBSL) in 2002, constant access to cash and its prevalence in Sri Lanka have been one of the main deterrents when it comes to the country becoming cashless. However, he explained that since the coronavirus outbreak and curfew restrictions which made it difficult for people to travel about, including to banks and ATMs, people have been forced to adopt a cashless system.
“One of the good things about the outbreak is that people are now using a cashless system. Because of Covid-19, they could not leave their homes to get cash the way they used to through banks and ATMs,” he said in a webinar on the “Importance of e-signatures to support digital payments and paperless trade” conducted by the Ceylon Chamber of Commerce on 13 May.
During the webinar, De Silva said that JustPay, a payment product of LankaPay that allows customers to make retail payments using smart mobile devices by transferring funds from their current or savings account to the merchant’s account directly, has seen a significant increase in the last few months. Furthermore, the platform, which was introduced in 2019, has seen its monthly registration volumes go up by more than 200% and monthly transaction volumes grow by almost 100% between January and April this year.
He stated that last month alone, there were almost Rs. 1 billion worth of transactions on the platform, which added to a total of more than Rs. 2.8 billion worth of transactions since the start of 2020. He went on to state that this was an impressive achievement as the limit on transactions is Rs. 25, 000 as of 2 April, an increase from the earlier limit of Rs. 10,000, and the average transaction value being below Rs. 2,500.
Similar to this, also speaking at the webinar, Sanasa Development Bank (SDB) CEO Thilak Piyadigama mentioned experiencing a major boost in the bank’s digital transactions between the months of March and April. According to him, there was a growth between 100% and 200% in the last two months due to the islandwide curfew.
Speaking from a non-banking financial institution’s side, LOLC Finance Director and CEO Conrad Dias stated that they experienced a similar growth in their digital payments of around 200% in the month of April through the company’s digital platform iPay.
As a payment platform that facilitates online, real-time cash handling and omnichannel payments, Dias explained that due to its end-to-end transaction ability, LOLC is giving a solution to both the vendors and customers during this time.
“Customers already have many banking applications, with almost all banks having a mobile banking application so that they could pay bills and transfer money to another person. But seamlessly doing it with an unknown party is very important. So that is that gap we have closed with the app which we introduced,” he said.
Dias explained that the platform is also used by SMEs (small and medium-sized enterprises) and large corporations, and suggested that these organisations use the current environment to focus on efficiency and to adopt technology. The company now has also enabled smaller companies to make their sales through the platform.
Challenges
According to Hatton National Bank (HNB) Chief Technology and Digital Officer Rohan Buultjens, they have seen a couple of challenges when trying to implement cashless transactions.This included a disconnect when it comes to how a customer orders an item, how the delivery takes place, and finally when in terms of the payment of the item. He stated that this disconnect also occurs when a customer orders an item but does not know how the payment works or when to make the payment.
Due to this, Buultjens stated that they are looking at the problem from both a customer’s and merchant’s points of view, and have made it their main objective to bridge this disconnect and bring convenience to their lives by bringing the payment platform to a level that is future-proof.
“We are looking at how we can bring the ordering, delivery, and payment together and how that ecosystem can coexist, as well as how we can acquire these customers and merchants in a seamless way. If we can enable the micro-merchants who play a big role in our economy, and if they can be cashless merchants, then there could be a big impact on our GDP and an increase in the efficiency of the supply chains and how customers will achieve their end objectives,” he explained.
Opportunity in crisis
As a payment platform that facilitates online, real-time cash handling and omnichannel payments, Dias explained that due to its end-to-end transaction ability, LOLC is giving a solution to both the vendors and customers during this time.
“Customers already have many banking applications, with almost all banks having a mobile banking application so that they could pay bills and transfer money to another person. But seamlessly doing it with an unknown party is very important. So that is that gap we have closed with the app which we introduced,” he said.
Dias explained that the platform is also used by SMEs (small and medium-sized enterprises) and large corporations, and suggested that these organisations use the current environment to focus on efficiency and to adopt technology. The company now has also enabled smaller companies to make their sales through the platform.
Challenges
According to Hatton National Bank (HNB) Chief Technology and Digital Officer Rohan Buultjens, they have seen a couple of challenges when trying to implement cashless transactions.This included a disconnect when it comes to how a customer orders an item, how the delivery takes place, and finally when in terms of the payment of the item. He stated that this disconnect also occurs when a customer orders an item but does not know how the payment works or when to make the payment.
Due to this, Buultjens stated that they are looking at the problem from both a customer’s and merchant’s points of view, and have made it their main objective to bridge this disconnect and bring convenience to their lives by bringing the payment platform to a level that is future-proof.
“We are looking at how we can bring the ordering, delivery, and payment together and how that ecosystem can coexist, as well as how we can acquire these customers and merchants in a seamless way. If we can enable the micro-merchants who play a big role in our economy, and if they can be cashless merchants, then there could be a big impact on our GDP and an increase in the efficiency of the supply chains and how customers will achieve their end objectives,” he explained.
He stated that due to the pandemic, an opportunity has arisen to fast track a lot of the solutions for these challenges, including those to do with adoption, trust, and security. He explained that the current situation has basically enabled them to reinvent themselves and given them a chance to “leap frog” in certain technologies and functions that could really help these organisations, merchants, and customers.
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Information and Communication Technology Agency of Sri Lanka (ICTA) Director and Legal Advisor Jayantha Fernando[/caption]
Adding to this, Information and Communication Technology Agency of Sri Lanka (ICTA) Director and Legal Advisor Jayantha Fernando said there is no better opportunity than the current environment to fully operationalise and implement the Electronic Transaction Act first passed in 2006.
The Act was set to create necessary legislation, enable the country to make use of digital technology, and facilitate the acceptance of electronic signatures and electronic payments. “The ability to do your financial transactions digitally becomes critical for businesses to function effectively at a time like this.”
De Silva of LankaClear stated that one of the biggest challenges they faced is getting people started in a cashless system. He is confident they would keep using it after seeing its convenience. He stated that Covid-19 has helped fast track this by forcing people to adapt to it.“In a sense, Covid has got people, including the older generations, to start using a cashless system, and because of that, it will give us a boost when it comes to the adoption of this system.”
Information and Communication Technology Agency of Sri Lanka (ICTA) Director and Legal Advisor Jayantha Fernando[/caption]
Adding to this, Information and Communication Technology Agency of Sri Lanka (ICTA) Director and Legal Advisor Jayantha Fernando said there is no better opportunity than the current environment to fully operationalise and implement the Electronic Transaction Act first passed in 2006.
The Act was set to create necessary legislation, enable the country to make use of digital technology, and facilitate the acceptance of electronic signatures and electronic payments. “The ability to do your financial transactions digitally becomes critical for businesses to function effectively at a time like this.”
De Silva of LankaClear stated that one of the biggest challenges they faced is getting people started in a cashless system. He is confident they would keep using it after seeing its convenience. He stated that Covid-19 has helped fast track this by forcing people to adapt to it.“In a sense, Covid has got people, including the older generations, to start using a cashless system, and because of that, it will give us a boost when it comes to the adoption of this system.”