CBSL to mandate ‘LankaQR’ for all banks
By Ishara Gamage
The Central Bank of Sri Lanka (CBSL) has decided to mandate the LankaQR system, which enables Quick Response (QR) code-based payments, for all Licensed Commercial Banks, CBSL Payments and Settlements Department Director, D. Kumarathunga told Ceylon FT.
The CBSL first introduced LankaQR as a National QR Code Standard for local currency payments in 2018, with the aim of establishing a standard for payments carried out through mobile phones. All Licensed Banks, Licensed Finance Companies and Licensed operators of mobile phone-based e-money systems that offer QR code-based payment solutions were required to conform to the new specification.
He said that the recent directive was aimed at encouraging small businesses to transact digitally and maintain the momentum that digital banking gained among citizens during the lockdown period.
QR code-based payments do not require any particular machine, and the payments can be made by card or directly from a bank account via a printed QR code.
“This brings down the cost substantially. Therefore, we invite all small businesses to implement QR code-based payment methods. You can get more information from your bank,” he said.
The QR Code Payment System enables the unbanked population of the country to be included in the financial system, thus increasing financial inclusion, he said.
According to CBSL, there has been an exponential growth in digital transactions during the nation’s lockdown period (April-May), but a 10 per cent reduction in usage of the Common ATM Switch (or CAS in short), which is an inter-bank ATM network that allows participating banks to use each other›s ATMs for free or at a minimal charge.
Meanwhile, Common Electronic Fund Transfer Switch (CEFTS) has become a pillar of the initiative to digitalise retail payments in Sri Lanka. It has already provided the switching infrastructure for inter-bank real-time fund transfers such as JustPay, which is the base infrastructure for mobile payment apps, and the LankaPay Online Payment Platform (LPOPP), which is the platform facilitating real-time payments to Government and other institutions.
“Payments initiated from CEFTS have shown an annual growth of over 100 per cent in both volume and values between 2018 and 2019. The total value of transactions for 2019 on CEFTS was Rs 1.3 trillion. The maximum limit of a CEFTS transfer is Rs 5 million. Therefore, we can see the increased popularity of CEFTS amongst Sri Lankans for retail payments in 2019 itself, even before the COVID-19 emergency started,” he said.
During the lockdown period, CEFTS transactions saw an increase of 85 per cent.
The enhancement of digital ecosystems has been identified as a key factor for a country’s economic development, he added. “The conversion to digital or less-cash helps authenticate and formalise the transactions that are done. This helps to curb corruption and the flow of black money in the economy,” he said.
“Encouraging digital transactions will be more beneficial to banks and to the public, so we can extend the benefits of moving digital transactions to the entire economy.”
The Central Bank has played a prominent role over the past few years and took initiatives to improve understanding and standards in payment and settlement systems in Sri Lanka.
“We are fully supportive of digitalisation and the use of new technologies that promote a less-cash society in Sri Lanka through the use of new digital payment mechanisms,” he said.
According to CBSL, digital awareness is a must to promote a less-cash society in Sri Lanka.
He also said, “In March, we all witnessed the unexpected closure and travel restriction due to the COVID-19 outbreak. The CBSL took swift action to ensure that customers had access to their bank accounts, digital payment mechanisms and even cash to meet their daily needs. One of the quick steps we took was to enable digital on-boarding of customers using digital KYC to be subsequently verified by banks. This made sure that customers who didn’t have digital payments could quickly join such systems.”
“The other was to increase digital wallet limits to Rs 25,000, and the enabling of delivering cash and remittances to households directly. These steps were swiftly taken by us.”
The CBSL also worked to ensure uninterrupted operations of the payment and settlement systems of the country in collaboration with Commercial Banks and other financial institutions by activating the Business Continuity Plan.
In addition, it took several steps to facilitate customers to register for online transactions during the period with travel restrictions within the country due to the COVID-19 outbreak.
“There are immense benefits of digital payments to improve the quality of our lives. We are taking steps together with all stakeholders to promote digital payments,” he concluded.