Sri Lanka banks to launch request to pay services shortly
ECONOMYNEXT- At least two Sri Lanka banks will launch request to pay services shortly, a new technology that makes it much easier for customers to settle bills online, speeding up transactions and cutting costs, an official said.
A Request to Pay (RtP) is an online generated message which not only notifies the user of his bills but also creates a real time payment portal where the payment could be made without having to enter details which are usually required.
Channa de Silva, chief executive of Lanka Clear (Pvt) Ltd, which runs several payment clearing platforms in the country including paper cheques, said getting message notifying them of the outstanding or a reminder as is done now has limited value.
“However, imagine where you click on that message and it opens the app and enables you to pay instantly without having to enter any unnecessary details. What if you could click to pay? ” de Silva asked.
“In the future, all your payments could be settled from smart messages using the Request to Pay facility.”
He was speaking at a business forum on legal aspects of digital banking and data protection, by the Junior Bar Committee of the Bar Association of Sri Lanka in collaboration with Lanka Clear (Pvt) Limited.
Under an RtP system, a user can typically choose to settle a bill in part of full or delay response.
De Silva said that two banks in Sri Lanka will launch the Request to Pay facility, most probably in the next two weeks.
This system can also be used to settle personal payments using real time and Payment Exchange Name (PEN) system which identifies a person’s nickname and phone number for quick payments.
The PEN system enables a user to make quick payments without the hassle of retrieving the receivers’ bank and personal details by identifying the mobile number and an assigned nickname.
Almost 40 percent of the online users are identified as Generation Z or the demographic (born after 1995) that came after so-called Millennials.
GenZ’ers are said to have an attention span of nine seconds, De Silva said.
They mostly use YouTube, Instagram and Snapchat, with barely 11 percent who use Facebook.
In order to reach most of these digital users, companies should first identify how they behave and interact with internet.
Using RtP can change the existing payment and cash platforms. Moving away from cash can make savings to an economy, in addition to speeding up transaction settlements.
“More than 75 percent of cash withdrawals from ATMs are below 10,000 rupees therefore it’s a retail market,” de Silva said.
De Silva said there is a cost of about 1.5 percent of gross domestic product for cash payments, which could be better spent elsewhere.
Sri Lanka central bank however earns billions of rupees each year by giving people un-backed paper bank notes on which zero interest is paid after discounting cost of maintaining circulating medium.
Even when the paper is backed by US dollars, the central bank can earn interest on its foreign reserves. The net profits are called seigniorage profits. However with electronic money, the central bank could potentially make even bigger profits.
De Silva said in the future, people and firms will be able to pay their taxes, EPF and ETF, and all utility bills through the mobile phones.
Online clearing for Customs and transactions with the Board of Investments would also be digitized in the near future, he said. (Colombo/Feb23/2020)