ECONOMYNEXT – Sri Lanka launched Unique Payment Interface (UPI), a digital payment method used by India to facilitate payments by growing Indian tourists into Sri Lanka and increase formal banking, officials said.
The new payment system was launched in the presence of Indian Prime Minister Narendra Modi, Sri Lankan President Ranil Wickremesinghe, and Mauritius Prime Minister Pravind Jugnauth with Indians making payments in Colombo and Port Louis.
The launch will allow Indians to make payments in Sri Lanka through UPI to any vendor who uses Lanka QR using a smartphone without any cash or card.
Officials said Sri Lanka has identified 65,000 hotspots where Indian tourists frequently visit and 10,000 of such locations will be enabled to use UPI in the next three weeks, while the rest will be enabled by March 31 this year.
Topping the list, Indian tourists of over 300,000 accounted for a fifth of the total 1,487,303 foreign visitors who arrived into the island nation in 2023.
The maximum amount is limited to 200,000 Sri Lankan rupees per transaction, Kenneth de Zilwa, Chairman of LankaPay, a body which has been in the forefront in digitalizing the country’s banking and financial services sector by keeping the elements ‘innovation’ and advanced ‘technology’ at its core.
“QR request system is still to take off in Sri Lanka unlike what we have seen in India. It was done through the Indian government pushing. In Sri Lanka it is not the case,” Zilwa told reporters at a media briefing in Colombo.
We are optimistic about the QR payments. We have already signed up with International partners who can bring traffic. The UPI is one such partner. With more international partners we expect the usage and popularity to increase because the merchants themselves will see the benefits.”
The UPI will allow Indians to use only their smartphones to scan the Lanka QR code and make any payments in Sri Lanka. The measure also will help the Sri Lankan authorities to motivate merchants to switch into digital payment and thus shift from the current informal income measures to formal income.
ONLY FOR INDIANS FOR NOW
However, Sri Lankans who go to India are not allowed to use the same facility in India.
“This is stage one and in stage two it will be done,” Channa de Silva. The CEO of LankaPay said when asked if Sri Lankans also could use the same platform in India.
An official who is involved with the new digital payment method said Sri Lankan authorities are concerned over allowing locals to use the same facility because there will be more outflows.
President Wickremesinghe at the launch emphasized the centuries-old economic relations between Sri Lanka and India and added that he hopes to maintain the momentum of connectivity and deepening of the relationship between the two countries.
Indian Prime Minister Modi said India’s UPI comes in a new role of Uniting Partners with India.
“Use of technology is promoting transparency, reducing corruption and increasing inclusivity in society”, Modi said.
Modi expressed the confidence that connection with UPI will benefit Sri Lanka and Mauritius and digital transformation will get a boost, local economies will witness positive change and tourism will be promoted.
“I am confident that Indian tourists will give priority to destinations with UPI. People of Indian origin living in Sri Lanka and Mauritius and students studying there will also get special benefits from it”, the Prime Minister added.
India witnessed 100 billion transactions took place via UPI last year worth 8 trillion Sri Lankan rupees.
Sri Lanka last year saw 1.1 million transactions last year with 380,000 Lanka QR registered, from 599,000 in 2022. The country also witnessed 3.3 billion rupees worth money transferred using the Lanka QR code in 2023 compared to 1.9 billion rupees in the previous year.
With guidance from the Reserve Bank of India and the Central Bank of Sri Lanka, NPCI International Payments Limited of India and LankaPay of Sri Lanka have collaborated for enabling the acceptance of UPI services through LankaQR.
This is expected to allow merchants in Sri Lanka to accept seamless digital payments from Indian tourists. (Colombo/Feb 12/2024)