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Sri Lanka starts new payments services as online banking soars in Covid-19 lockdowns

ECONOMYNEXT – Sri Lanka’s interbank clearing house, Lanka Clear, is starting an easy-to-use mobile cash transfer and an automatic bill payment facility as internet banking use in the country soared during a Coronavirus crisis when curfews confined people to their homes, an official said.

Sri Lanka had seen a 600 percent growth in internet banking and a 200 percent growth in payments, during Covid-19 curfews, Channa de Silva, Chief Executive Officer of LankaClear (Pvt) Ltd, Sri Lanka’s interbank clearing house said.

Sri Lanka imposed strict curfews from later March, which were relaxed in May as part of successful efforts to curb the spread of Coronavirus.

Sri Lanka has confirmed 2,047 Coronavirus cases up to July 02, of which 947 were linked to a Navy camp. Another 787 were foreign returnees or foreigners and there were 313 cases from the community.

No new domestic cases outside of the Navy cluster had been found since April 30.

“What we realized in the last eventful three months is that the way forward is digital,” De Silva said.

“And the issue most banks face was to get the customers on board to adopt the technology.”

Lanka Clear (Pvt) Ltd had started a mobile phone cash transfer service with a nickname or payment exchange name (PEN) which is available with Sampath Bank and National Savings Bank as well as an automatic bill payment facility, or Direct Debit Authorization.

These initiatives were supposed to be launched in mid-March but due to the COVID lockdowns, it was postponed.

“Now we have a consumer base which is stretched, which is more towards digital,” De Silva said. “So now is the time we need to go and capture them because they have seen the benefits so they will stick to it.”

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Nick Names linked to mobile phone number

Payment Exchange Name (PEN) is a real-time peer to peer (P2P) facility for to transfer cash from a mobile phone with an easy to remember nickname which is linked to their mobile phone number and an underlying bank account.

Banks will assign each account with a unique nickname that will be linked to the mobile number that is registered with them, but it could also be linked to the national identity card or driver’s license.

“In future, you will not need to know branch code, account number, all that,” Channa de Silva, Chief Executive Officer of LankaClear said.

“The receiver does not need to divulge any bank credentials. This also eliminates fund transfers to incorrect accounts”.

National Savings Bank and Sampath Bank are the first banks to offer the facility which allows payments of up to 500,000 rupees.

Under PEN only the sender will need to have a smartphone and not the receiver as money will go directly to a bank account, which will make it easier for people in the rural areas to receive payment.

De Silva said the PEN is a system similar to the Unified Payment Interface (UPI) in India. UPI in India has carried out 1.23 billion transactions with a value of 2.2 trillion Indian Rupees by May 2020.

He said less tech-savvy people could also use the system as it is based on nicknames.

Periodic payments with an upper limit

Lanka Pay also launched Direct Debit Authorization (DDA), which allows utility bills or installments to be paid automatically when they fall due like a standing order.

However, the customers could set a limit where only cash for bills below or up to the limit could be deducted by the service provider.

With DDA, customers would have the convenience of giving a mandate to the bank of a third party to pull up to a certain amount of funds from their bank account on a given date, without the customer having to initiate the payment, Lanka Clear said.

Electricity bills, water bills, telephone bills, or other payments like insurance premiums could be made using DDA.

These initiatives were supposed to be launched in mid-March but due to the COVID lockdowns, it was postponed.

Once all the banks come on board, banks, insurance companies, leasing companies, and utility companies would find it a useful feature to get their dues on time, De Silva said.

“For most people payment is not a problem but time is,” he said.

Peoples Bank, National Savings Bank, Standard Chartered Bank, Deutsche Bank, Public Bank, Seylan Bank, LOLC Finance, Commercial Leasing and Finance, and Citizens Development Finance PLC are providing DDA to their customers. (Colombo/July02/2020-sb)

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