ECONOMYNEXT – Sri Lanka has been trying to persuade PayPal, an online payment platform to enable inward remittances for over eight years with no success, the Indian Ocean island’s central bank said, though it has not given up yet.
“For the last 8 to 9 years we are working with them to get this receiving facility to Sri Lanka,” Dharmasiri Kumaratunge, Director of Payments and Settlements at Sri Lanka’s central bank told reporters.
“We wrote to the Singapore entity and our embassy to connect with the Pay Pal officials in Singapore. And we are directly working with an Indian agent that has been appointed for this purpose.
Sri Lankans who want to sell goods on online platforms like Ebay.com and independent software developers have been asking for PayPal, which foreign firms are comfortable in using to pay contract workers.
Some others however have also found workarounds.
“I want to mention, that there are some other entities that gives the same facility and some Sri Lankan companies also give these facilities,” Kumaratunge said.
“And there are some international companies apart from pay Pal that provide these facilities. However, that Sri Lanka is continuing to have discussions with Pay Pal.”
The central bank has already allowed credit card holders to make outward payments through Paypal which can be linked to personal credit cards.
Paypal accounts with inward remittances facilities in other countries can hold cash and also be connected to a domestic bank account to which money can be transferred.
There has been speculation that restrictions on opening foreign bank accounts by residents in Sri Lanka’s foreign exchange laws may have spooked Paypal’s legal team, but there has been no confirmation.
There had also been speculation that it may be due to low volumes.
Governor W D Lakshman said earlier in January that the central bank was looking at multiple ways to help cross-border trade and e-commerce.
“The Central Bank is actively seeking possibilities to develop and promote other forms payment mechanisms to attract capital flows and to enable ecommerce, thus facilitating cross-border trade,” Governor Lakshman said.
“The Central Bank has already commenced discussions with international payment service providers, such as PayPal, to enable payment receipt facilities for Sri Lankan residents, and we expect positive outcomes in the near future”.
He said efforts were being made to improve the payments and settlement system and security.
“Major focus areas included strengthening of the regulatory framework, ensuring the safety of customer funds and information, and enhancing the efficiency of payments and settlements systems” he said.
“Accordingly, a Fintech Regulatory Sandbox was established, providing a testing platform for innovative products”
Governor Lakshman said Block chain Proof of Concepts that were developed are now been tested in collaboration with licensed commercial banks.
Digital payments had become increasingly useful during the pandemic.
“The year 2020 was designated as the year of digital transactions,” he said. “Thus, many promotional activities were carried out throughout the year to popularize digital payment mechanisms among the public” he said.
“In fact, the adoption of digital payment platforms proved extremely useful during the pandemic.”
“As the future of the global financial architecture is essentially digital, the Central Bank will continue its deliberations with local and international stakeholders on its treatment of digital currencies, using thorough cost benefit analyses and a long-term perspective.” (Colombo/Jan20/2020)