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Resurgence of National Payment Platform via Total Pay?


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01Arising out of the media exposures on the subject of a National Payment Platform, several interested parties have started to express opinions about the matter. As the subject matter is related and connected to various Acts and Legislation now in operation in the country, it has become necessary to invite the focus of the authorities on the issue as there appears to be a resurfacing of a resurgence by interested parties who wish to circumvent the laws in their business interest.

Hence this article is presented as a codification of the views received by the writer from persons who wished to express their concerns on the matter.

Further, all banking operations in the country are governed by the following Acts and Legislation.

  • Banking Act No. 30 of 1988
  • Bills of Exchange Act No. 34 of 1964
  • Monetary Board Act No. 58 of 1949
  • Operational Guidelines and Directives issued to Financial Institutions {Banking and Non-Banking} by the CBSL

In the last few weeks extensive coverage was given in the electronic media to a major violation of banking sector regulations, committed by an entity called Total Pay Ltd. functioning on the basis of approval granted by ICTA. This news expose affect the credibility and reputation of the Yahapalana Government.

According to the prospectus circulated boldly by Total Pay Ltd., it has been awarded the “right-to-operate” as a Digital Instruction Provider (DIP) for the National Payment Platform (NPP) by the Information Communication Technology Agency (ICTA). As a part of the “right-to-operate”, Total Pay has a web portal and iOS and Android applications, where users can register, add their payment source (bank account and credit card) and execute account based payments to merchants/business, one another, and government institution. Therefore, users are asked to share confidential banking information. 

According to its website, Total Pay can carry out “user executed transactions” by transmitting instructions to the bank via the NPP to transfer funds from Account 1 at Bank A to Account 2 at Bank B. As a modular solution, Total Pay is able to go beyond the bank-to-bank transactions and initiate cash-to-bank transactions in real time bring in the unbanked population into the fray. 

Questions have been raised:

  • How did Total Pay get the ‘Right to Operate’ from ICTA? When all banking and payment sector operations are tightly regulated by the Central Bank to ensure financial sector stability in Sri Lanka? (b) Did CBSL grant any authorisation or approval to ICTA to allow ICTA to have the right to grant a third party the ‘right to operate’ a National Payment Platform through Total Pay Ltd.? 
  • CBSL has not given any authority to ICTA to enable it to grant Total Pay the right to operate a Digital Instruction Provider status for NPP! It is blatantly clear that ICTA leaders have abused their authority and violated the law by usurping/misusing the authority vested in CBSL by giving this Total Pay “right to operate a DIP for the National Payment Platform”. This action of ICTA dented the credibility of the Government. 
  • ICTA has very limited powers under the Information and Communication Technology Act, No. 27 of 2003 to implement projects and give inputs to policy formulation. ICTA is functioning under the Ministry of Telecommunication and Digital Infrastructure. The main thrust of ICTA is to facilitate ICT development activities with other partners in Government and NOT to take over the regulatory functions of CBSL. 
  • According to the Payments and Settlements Act No: 28 of 2005; Part II, Chapter I, Clause (4): 

(1) The Central Bank shall be the authority responsible for the preparation of a plan for a national payment system. The Central Bank shall also be charged with the responsibility of providing guidance and leadership for the establishment and development of payment, clearing and settlement systems in Sri Lanka. 

(2) …

(3) In the exercise of its powers under this Act, the Central Bank may, notwithstanding anything to the contrary in any other law— 

(a)regulate and supervise the services and facilities provided by any Bank, any other financial institution or person, with regard to the sending, processing and receiving of payment orders and instructions for the transfer of securities on its own account and for its customers in domestic or foreign currencies, and assist any bank or other financial institution in the establishment, operation and organisation of such services and facilities; 

(b) establish, operate, organise, promote, participate or assist in the establishment, operation, organisation and promotion of, and regulate and supervise any system for the clearing and settlement of payments and other arrangements for the making or exchange of payments in domestic or foreign currencies; 

  • The authority given by ICTA to Total Pay Ltd. with “Right to Operate” a National Payment Platform and collect confidential information of citizens and send payments instructions to banks is a blatant abuse and violation of the Payment Systems Act by the ICTA CEO, who has been appointed under the Yahapalana Government. As a result of this abuse of power and violation of the law by the CEO of ICTA, the reputation and credibility of the Yahapalana Government has been gravely tarnished. 
  • According to Part Iv, Miscellaneous Provisions clauses: 

39. (1) Every person who contravenes or fails to comply with any provision of this Act or any regulations made thereunder, or directive, direction, instruction or rule issued by the Central Bank in connection with any matter under those   provisions, or a lawful request for information, records or documents, directed under this Act, shall be guilty of an offence, and— 

(i) in the case of a natural person… 

(ii) in the case of any other entity…. 

(2) Where a corporation or any other legal entity other than an individual, or an unincorporated body or organisation contravenes any provisions of this Act or any regulation made thereunder or any directives, directions, instructions or rules issued by the Central Bank, then, every director and member shall be liable for the contravention in the same manner and to the same extent as the corporation, legal entity or the unincorporated body or organisation as the case may be. 

  • Therefore by giving the Right to Operate for Total Pay to carryout functions, ICTA has not only violated the law but may have committed an offence under the Payment Systems Act. Even Total Pay is committing an offence under this Systems Act by operating without any approval from CBSL. 
  • Total Pay Ltd. (Company Registration No: PV 112170) has been incorporated on 01/03/2016 and its Registration Address: No 488, Kotte Road, Pitakotte, website: http://www.totalpay.lk/). 
  • According to the Incorporation Certificate the Directors of the company are as follows:

 

  • Durka Chellaram
  • Steve Ephraums
  • Rajapathirage Don Ishan Niroshan Lewis Perera
  • Radhakrishnan Senduran 
  • Eassuwaren Subramaniam

 (The writer is a former Chairman, Bank of Ceylon.)


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