Gearing towards ‘CASHLESS’ economy
How many times have you lost your 1000 rupee note? How many times have you forgotten to take sufficient money while stepping out of your house? How many times have you thought that you need a big wallet to keep all your cash inside? These questions would have occurred innumerable times, right? While most of the developing and developed countries are moving towards a cashless society, Sri Lanka has also taken continuous measures of reducing the dependency on carrying currency notes in society.
As the technological progression is escalating unimaginably, the world is marching towards becoming a cashless society where all the financial transactions would take place through the transfer of digital information instead of physical banknotes or coins.
One of the few ideas, why countries are trying to switch to a cashless society, is to eliminate the risk of theft of cash, counterfeit money, and robbery of cash whilst also reducing the costs of security, withdrawing cash from the bank, and calculating.
Another reason why the government has given the nod for a cashless society is that the compilation of economic data can be executed with almost 100% accuracy. This is because all cashless payments are recorded by financial transactions, which makes it easy to track the movement of money through these records in which cases, black money, and other illegal transactions could be easily identified.
The motive why businesses have started to adopt this measure globally is to eliminate cash payments as it is time-consuming for both parties involved during a transaction. That’s the reason why many businesses have decided to go cashless so that they can leverage faster transactions with increased efficiency.
There are countless reasons why cashless payments are better than managing cash in hand. In Sri Lanka, many entrepreneurs came up with the solution of providing a method of operating this technological advancement with appropriate gadgets to make the life of business people easier, efficient, and happier.
One of the current leading gateways in Sri Lanka is ‘PAYable’. To understand how the business operates, The Sunday Morning Business reached out to interview PAYable CEO and Co-Founder Yohan Wijesiriwardane.
The following are extracts of the interview.
When was payable released to the market?
PAYable was commercially released to the market in January 2015.
What inspired you to incept this brand?
What triggered me is that I used to live in Canada for about nine years and got used to not using cash at all by doing all transactions through my debit card. When I moved back to Sri Lanka, we used to carry cash most of the time which made me wonder why a country with a high bank population access to ATM cards does not use a merchant point to do the transaction.
Then we realised that merchant point penetration is about one payment point to about 1000 people. Where in a developed economy or a developing economy like Malaysia had about 7 payment points. Then we realised that Sri Lanka does not have enough payment points due to a cost barrier. Large terminals at that point in supermarkets pay at $ 500 hence small merchants were very limited as it cost around Rs. 50,000 a month on their card system. So, this inspired us to build a cost-effective and cost-solution and one of the key aspects is that we rolled it out to the population free of charge. We did not charge anything or put any commitments to any transactional module.
How many years did it take to develop this payment gateway?
It took about six months to get the banks and sign the agreements and also do the Citrix testing, the VDA compliance, and all of that. Hence, all together it took about one and a half years of development and certification time to bring the product into the market. We were a team with a fully local solution. The initial architecture was done in the prototyping and after the prototyping, it took about a year and a half, 18 months in total to bring it ready to the market. However, we did not have any revenue coming into the business during this period.
How many payments have been achieved in the past years?
Currently, we are processing about 950 million a month and until now we have processed about 15 billion rupees to the system. The payments go into the entire system, so basically, we get this turnover from our 30,000 merchants base who are on the PAYable’s platform.
How are the rates right now?
The rates are directly decided by most of the banks, and then the rate is directly connected to how much revenue you do through your merchant terminal. The bank decides that we just facilitate that with the bank, and we negotiate the best rate possible for each merchant.
What are the benefits?
The benefits are that in most of these shops people are used to cashing and then there’s another segment of consumers who are used to pay by card, and they don’t carry too much cash around. Hence, having this payment option opens up that merchant base for shops.
Firstly, let’s say I’m a consumer, and I’m used to always paying with my credit card or debit card, and I never have cash around. So, if I’m going to buy something, I will stop at a shop that normally accepts cards. So that way, you can increase your target consumer category comes into your show.
Secondly, another reason would be that if they have something for sale or something, and they have only got enough cash to buy whatever they needed to buy, they can just purchase that, or they can put that on the cart. Thirdly, there are various point schemes through discounts and promotions, so from a shop that doesn’t accept cards it opens up to a new market and a chance to upsell along with consumer convenience.
How is it different from visa and other bank transactional cards?
We process visas on our system. So, we are basically a payment processor, where we process Visa, Master, LankaQR, and China UnionPay.
What are the main features which attract the consumers?
The way we achieved these goals is that removed the barriers to entry as we did not charge anything for the reader at the beginning, there is no transactional limit. Today we have given few conditions, but we achieved that growth by giving a product with minimal entry barriers into the market.
Who are the important decision-makers in your firm?
Excluding me, it’s the entire management team. So, the way we have a kind of structure is the management team, each member handles each of the different aspects of our business. For instance, one person handles customer services, marketing under one person, and they are the key people who make the decisions that direct them to their different management area.
We have empowered the team to make their own choices and make sure the vision and the goal of the company are kept intact, but they are free to make decisions on how to achieve those goals. We also have a really good advisory board from the industry who have given a lot of valid information about how to do things in the financial sector and things like that.
How is it unique in comparison to the existing competitors?
The biggest advantage is that we use an Android phone, and the features on our terminals cannot be matched with any of the other terminals that are in the market because we have this business portal reporting, we have a business site, we create custom reports from a merchant and customers can get more payment information through the merchant than from any other traditional credit/debit machine.
This solution has the key feature because it has facilities in English, Tamil, and Sinhala which was the first in Sri Lanka as no other merchant application has this facility. It is also user-friendly because we have built-in a way where even the simplest person can understand and use it. The company’s core strength is our technology that we have built and also the service that is given to the merchant.
How do you think PAYable will make a difference in the industry?
So, in industry, basically, they say that SMEs are the backbone of the Sri Lankan economy, and the way I look at it we have processed 15 billion rupees of transactions from the SME sector. So, this sector didn’t have the opportunity or the means to accept any of these transactions before PAYable came into existence. Hence, as a company, we take great pride that we were able to enrich the SME base, their businesses in this value.
So when I think about it now, if you’re a shop that couldn’t access payments, and then all of a sudden you’re accepting Rs. 100,000 worth of payments which has most probably increased business at least, to some margin. It improves their business and their quality of life because more money means more money in general life.
What are the challenges?
The tourism sector is a very strong merchant base in our company, from small hotels, to tour guides, to agents to everyone they accept a lot of payments through cards. We are dependent on their revenue merchants to make our own revenue. As of today, have lost a good chunk of revenue. As the market shrunk during the period of Covid-19, were a part of that shrinking. The other biggest challenge is cash because as a society we still are used to using cash. Currently, the Central Bank in Sri Lanka is trying to push to get into a digital economy. If I am a competitor, I would pick cash as our competitor, because 96% of the economy runs on cash.
Where do you see yourself in five years?
We are currently in Bangladesh. We are in negotiations in Nepal and other emerging markets to take the solution into those markets. So, we are trying to move as a Sri Lankan entity into the emerging markets in our region and try to make our presence well in the region. That’s our goal in the next three years.
To conclude Wijesiriwardane said that PAYables’ motto is to help and empower SMEs to get them into the financial system so inclusivity. We want to make sure every merchant in Sri Lanka has the ability or the technology needed to accept electronic payments to be a part of the financial system.