December 03, 2024

Digital Transactions via LankaPay Outpace GDP of Sri Lanka

Contrary to the popular belief that the country is way behind in its digital transformation, Sri Lanka's economic heartbeat now pulses digitally with LankaPay as its lifeblood. Transcending its original role as a mere payment system, LankaPay has emerged as the country’s digital backbone, laying the foundation for rapid economic growth.

In 2023, LankaPay’s digital transactions exceeded the nation’s GDP, emphasizing the transformative impact of digital payments on the economy. Nearly half of Sri Lanka’s economic output was transacted via real-time payment transactions through LankaPay’s interbank fund transfers. By operating 24X7X365 and prioritizing security, speed and accessibility, LankaPay empowers both businesses and individuals: businesses benefit from efficiency, faster operations and market reach, while individuals gain quicker access to funds stimulating economic activity nationwide.

This achievement demonstrates the profound effect of digital financial transactions on Sri Lanka’s economy, with LankaPay driving this pivotal shift.

Saving Billions for the Economy

By routing most domestic financial transactions through its local network, LankaPay reduces the dependence on international networks, keeping financial flows within Sri Lanka and saving billions in fees and commissions that would otherwise go overseas.

LankaPay also facilitates significant savings as the economy shifts away from cash, reducing the costs associated with printing, issuing, distributing, transporting and providing security to currency - an estimated expense of 1.5% of GDP to the economy. The cost of cash rivals the 2% of GDP spent on the entire education sector in Sri Lanka. If shifted to digital transactions, it could save the country billions of rupees that could be repurposed to provide social benefits. Through digital payment options such as CEFTS, JustPay, LankaQR and SLIPS, LankaPay enables millions of cashless transactions at a value of more than 100 billion rupees each day, easing the financial strain of a cash-based economy.

Creating Inclusive Financial Access

LankaPay’s mission has always been rooted in financial inclusivity, ensuring that citizens, regardless of location, can access secure and efficient financial services. Sri Lanka Interbank Payment System (SLIPS), one of the pioneering services launched by LankaPay, enables same-day electronic fund transfers across the country. SLIPS now facilitates nearly 70% of all salary payments in the country, contributing to nationwide economic stability by ensuring timely fund access for millions of employees.

Additionally, the JustPay platform has made it easier for citizens to conduct mobile payment transactions, with approximately 2.5 million transactions occurring monthly, valued at over Rs. 12 billion. This service bridges a critical gap for people in rural areas, providing them with safe and accessible means of financial engagement without relying only on physical cash. Using LankaPay systems, small and medium-sized enterprises (SMEs) can deposit funds directly into their systems, and receive and manage payments thereby enhancing their creditworthiness. With nearly 400,000 merchants accepting LankaQR based payments, SMEs gain access to digital financial services, fostering growth and extending their reach within the economy.

Transforming Government Digital Payments

LankaPay’s digital platform has also significantly supported the government’s revenue collection efforts. Through the Government Payment Platform, established in 2018, LankaPay facilitates real-time digital payments to government institutions. This streamlines revenue collection for the government while contributing to transparency and reducing the reliance on cash-based transactions, which are expensive and prone to inefficiencies. In the financial year 2023/24, LankaPay processed government payments worth approximately Rs. 1 trillion, demonstrating the scale and impact of its contribution to the public sector.

With innovative solutions tailored to government priorities, such as the LankaRemit service for secure inward remittances, LankaPay aligns its offerings with the national agenda, supporting economic resilience and making government services more accessible to citizens. This is ample proof that LankaPay’s initiatives lay a strong foundation for sustainable digital governance.

Forging International Partnerships

In an increasingly interconnected world, Sri Lanka’s alignment with global payment systems is crucial for attracting international trade and investments into the country. LankaPay has forged key partnerships, including collaborations with UnionPay and the National Payments Corporation of India (NPCI). These alliances allow Chinese and Indian tourists, for example, to pay local vendors directly from their home bank accounts using the LankaQR network.

With these partnerships, LankaPay positions Sri Lanka competitively on the global stage, improving convenience for citizens, businesses and tourists alike using familiar digital payment options. The benefits are clear: a seamless, cost-effective payment landscape that supports tourism and trade, encouraging international visitors and businesses to transact within Sri Lanka’s borders seamlessly.

Pioneering Digital Payment Systems in the Region

Despite being one of the region’s smaller economies, Sri Lanka has led South Asia in digital payment innovations, largely due to LankaPay’s fearlessness in pushing the boundaries of innovation and pioneering approach. LankaPay has set numerous milestones that surpass even some of the larger economies.

One of LankaPay’s landmark achievements was the Nationwide T+1 Cheque Clearing system introduced in 2006 as the second of its kind in the world, enabled next-day cheque clearing across Sri Lanka, drastically reducing transaction times and transforming cheque-based transactions into an efficient tool for businesses, banks and individuals alike.

Not stopping at facilitating cheques, LankaPay launched the Same Day Electronic Bulk Payments (SLIPS) in 2010, a first in South Asia that enabled same-day electronic fund transfers between banks to facilitate large volume payments such as salaries.

LankaPay also created a regionally unique proactive security mechanism by forming the Financial Sector Computer Security Incident Response Team (FinCSIRT), the pioneering cybersecurity unit in South Asia focused on protecting the financial sector. FinCSIRT’s proactive and coordinated approach to cybersecurity strengthened the integrity of digital financial transactions and helped build public trust in digital payments.

In 2017, LankaPay launched JustPay, one of South Asia’s foremost national mobile payment networks, allowing users to make low-cost and low value mobile payments directly from their bank accounts without needing a credit card. This platform connected banks, fintech apps, and merchants in a unified system, bringing digital transaction access to millions.

As the first entity in Sri Lanka to be certified with PCI-DSS, LankaPay also set a new benchmark in payment security. In 2018, they launched South Asia’s first Government Payment Platform, enabling real-time payments to government institutions, further strengthening digital infrastructure and supporting national economic agenda and efficiency.

Through these ground-breaking efforts, LankaPay continues to strengthen Sri Lanka’s financial sector stability, proving that size is no barrier to regional leadership in digital payments.

The Unseen Factor of Economic Growth

In a world where financial transactions are becoming increasingly digital, LankaPay works tirelessly behind the scenes to keep Sri Lanka’s economy running smoothly. With innovative solutions and a strong commitment to inclusivity, LankaPay has fortified the nation’s financial infrastructure, empowering citizens, businesses and government alike. As LankaPay forges ahead with new innovations, it will continue to play a crucial role in shaping a resilient and inclusive digital economy for Sri Lanka’s future.