Tomorrow’s transactions: Driving the growth of digital payments in Sri Lanka

From Left: Jonathan Alles, Dharmasiri Kumaratunga, Anthony Watson, Priyantha Talwatte and Roshantha Jayatunga

With the emergence of a next generation of consumers, key factors will shape the way tomorrow’s transactions are made. These key factors include the impact of technology, shifting customer expectations, changing global demographics, the rise of e-commerce, and the growing regulatory supervision. Regulators in emerging markets are realising the huge costs, risks and inefficiencies associated with cash transactions and recognising the importance of electronic payment methods in promoting access to formal credit and savings instruments. 

Drastic measures like introducing differentiated banking licenses, tax benefits on electronic payments, awareness campaigns are being taken to build a sustainable electronic payments ecosystem. 

Sri Lanka’s payments landscape is also rapidly changing because of these new and disruptive market players who will be looking at easier, more secure and alternative business models. 

Engaging a host of bankers and financiers, the Payment Card Industry Association of Sri Lanka (PCIASL) together with VISA Worldwide Ltd. hosted a panel discussion recently to discuss and debate the opportunities, perceptions, and challenges in the growth of digital payments in Sri Lanka.

Introducing the distinguished panel of speakers, moderator PCIASL Past Chairman Roshantha Jayatunge stressed on the importance of the future growth in card payments and how the industry, the regulator and the consumer will have to adapt to these changes.

With the Central Bank of Sri Lanka (CBSL) promoting digital payments in Sri Lanka, Jayatunge called on CBSL Payments and Settlements Department Director Dharmasiri Kumaratunge to explain the roadmap for this industry and its benefits. 

According to Kumaratunga, the CBSL has proposed a five-year national payment roadmap that will include greater security measures like EMV technology, 3D authentication, dual authentication and island wide awareness campaigns to educate the public on the advantages of digital payments. 

“With this, we need a common ATM/POS switch that will offer more convenience, reduce the bank charges and get the two main mobile service providers to involved in this national initiative,” he added.

The growth of Internet penetration coupled with the availability of cost effective smartphones and tablets in Sri Lanka will be what drives the next wave of convenient and secure commerce transactions amongst consumers. 

VISA Country Manager – Sri Lanka and Maldives Anthony Watson said that Sri Lankan consumers have already started to adopt this technology considering three trends that are growing exponentially: online purchasing, online payments and invisible transactions through third party applications. He added that with the recent announcement of VISA PayWave launching in the market this creates infrastructure capable of supporting contactless transactions through various form factors such as cards and mobile. 

Watson said, “Sri Lanka is in a good overall position to leapfrog from other developing markets and replace costly, inefficient forms of payment (e.g., cash and checks) with secure, convenient and reliable ways to pay. Key to that objective is offering consumers choices that suit their lifestyles and behaviours.” One of the key questions in a customers mind is dependable safety and security measures, especially when making purchases or transactions online. Nations Trust Bank DGM – Consumer Banking Priyantha Talwatte said, “The adaptation of digital tech is happening now with the introduction of Sri Lanka’s high-speed bandwidth.  There is a rapid development of new payment concepts based on mobile infrastructure initiated by the online retailers. Therefore it is vital that we take this opportunity to develop air-tight protection for our users via new innovations in chip technology.”

Hatton National Bank MD/CEO Jonathan Alles stressed that it is critical for the CBSL to help with the security systems by migrating all cash to machines. “Let us digitise the bazaars at Pettah, Kurunegala and Dambulla etc. This will encourage vendors to go digital and save the Government huge cost incurrence involving national payments.”

However, Alles cautioned his counterparts against bringing in more of these machines. “ATM’s are just another way of dealing with cash,” he averred.  “It is time to concentrate on digital payments.”

To date, there are 43,000 POS terminals across the country with most of them located in the Western Province. Financial institutions carry out aggressive marketing campaigns to educate and create awareness to use card base products. There is need to have more card acceptance locations and develop our card acceptance infrastructure so that move towards ‘less cash society’ will be achieved within relatively shorter time period. Payment Card Industry Association of Sri Lanka (PCIASL) is the industry body that represents all card issuing and acquiring banks, financial institutions and processors operating with in Sri Lanka. It is working in closely with all stakeholders of the payments eco system over last 25 years.