HNB champions financial inclusivity via eliminated merchant commission on LankaQR

CBSL Payments and Settlements Director Vasantha Alwis

HNB Managing Director/ CEO Damith Pallewatte

LankaPay CEO Channa de Silva

HNB Chief Operating Officer (COO) Sanjay Wijemanne

Digital Banking Senior Vice President Chammika Weerasinghe

• HNB announces elimination of Merchant Commission/Merchant Discount Rates for LANKAQR 
• The initiative will be effective from 1 April 1 to 30 June; move expected to benefit 25,000 HNB appointed LANKAQR merchants

By Janani Kandaramage

In a strategic move aimed at accelerating the adoption of digital payments, the Hatton National Bank (HNB) has announced the elimination of Merchant Commission/Merchant Discount Rates (MDR) for LANKAQR transactions among HNB-appointed merchants who are enabled to accept LANKAQR payments. 

The decision by HNB to waive MDR for LANKAQR transactions among its appointed merchants coincides with the commencement of the Avurudu season and will be effective from 1 April to 30 June. 

This three-month incentive period strives to leverage digital transactions during a period of heightened economic activity, offering both merchants and customers a seamless and convenient payment experience while eliminating the risks associated with cash handling. HNB Chief Operating Officer (COO) Sanjay Wijemanne commended the financial inclusivity of the initiative, stating that, “It underscores HNB’s commitment to enhancing accessibility and affordability in digital transactions for businesses across Sri Lanka by easing digital transactions.” 

Being a HNB Merchant, backed by LankaPay integrated LANKAQR ecosystem facilitates interoperable QR-based transactions. The initiative is anticipated to benefit more than 25,000 HNB appointed LANKAQR merchants who are positioned to accept QR based payments facilitated through 30 banks and Fintec payment apps and Wallets including SOLO by HNB. By removing MDR fees, HNB seeks to encourage greater adoption of digital payments among all merchants especially for small ticket payments eliminating cash.

Discussing the importance of QR code transactions, Wijemanne told a media briefing that, “QR allows customers to make instant, secure payments by simply scanning a merchant’s QR code with their smartphone, eliminating the need for cash or physical cards.”

He also added that LANKAQR transactions offer the flexibility of being accessed from various existing accounts, including bank accounts and mobile wallets, provided they are linked to LANKAQR-enabled payment applications. This interoperability allows customers to make payments directly from their preferred financial accounts using any LANKAQR-certified app, giving rise to financial inclusion by accommodating diverse customer preferences and financial situations.

Speaking about this historic step towards cashless transactions, HNB Managing Director/CEO Damith Pallewatte described strengthened credit accessibility, benefitting small and medium-sized enterprises (SMEs) and microfinance initiatives by, “reducing operational expenses for these businesses in particular, enhancing their profitability and cash flow and therefore creditworthiness.”

He also spoke of the improved creditworthiness of these enterprises, enabling them to build verifiable financial histories on LankaQR facilities, fostering their long-term growth and integration into the formal economy.

Reiterating the HNB CEO’s sentiments, LankaPay CEO Channa de Silva said encouraging more merchants to participate in this initiative by HNB will benefit by providing them an additional source of income through interest earnings.  He noted that approximately Rs. 1.3 trillion in cash is currently in circulation in Sri Lanka and advocated for an eventual transition to a QR-based system, similar to China’s approach. He pointed out that maintaining cash accounts for 1.5% of the total GDP, which is a significant expense. 

He believes that efforts such as this by HNB will help pioneer the government’s digital economy initiative, potentially freeing up funds to be invested in essential sectors like education-which receives only 2% of GDP in the present.

He pointed out that Rs. 1 trillion of the cash currently in circulation is held outside the banking system- emphasising the need for increased digitisation of financial transactions through QR codes, which can encourage more individuals to deposit their money in banks. 

“This shift not only enhances security for depositors but also provides businesses with better access to liquidity options,” he remarked.

CBSL Payments and Settlements Director Vasantha Alwis reaffirmed de Silva’s concerns, citing that adoption is not often at the rate of expectations. He believes all financial institutions must strive to collaborate with one another to integrate a digital payment system.

Pix by Sameera Wijesinghe