LankaPay real-time payment system

By Harsha Wanigatunga

Currently the most widely used electronic fund transfer system for payments is SLIPS (Sri Lanka Interbank Payment System) operated by LankaClear. This is a popular payment system for salary payments, third party fund transfers and utility bill payments etc. Though this is a highly advanced and mature system that caters to over Rs. 4 billion worth of interbank payments per day, it’s limited to batch mode fund transfer. Hence, the fastest that this system will credit the recipients account will be within half a day during a bank working day. 

However, as the Government and the private sector moves towards a digital economy, creating greater efficiency in doing business and providing greater convenience for the general public, an online real-time payment system, is imperative. Such a real-time payment system should enable the general public to transfer funds and make payments at any time of the day and any day of the week, and the recipient should receive the funds in a fraction of a second. 

Further, the Central Bank of Sri Lanka (CBSL) envisioned a highly efficient and secure real-time payment system to cater for all types of retail payments such as government payments, third party fund transfers, utility bill payments, etc. in order for greater customer convenience, financial inclusion and to facilitate efficient business in order to enable rapid economic growth.

Countries such as India, UK, Singapore and Malaysia are some of the early adopters of real-time payments and enjoying the benefits of the same. Many of the banks, financial institutions and payment networks have innovated around these payment systems creating a huge value for themselves and for their customers.

LankaPay

The long-standing need for a national online real-time payment system in Sri Lanka has been realised by LankaPay – CEFTS (Common Electronic Fund Transfer Switch), which has been designed and implemented by LankaClear with the approval and guidance of CBSL. LankaPay is the brand name for the Common Card And Payment Switch (CCAPS), which is the National Payment Switch. LankaPay is one of the few early adopters of real-time payments globally and Sri Lanka can be proud of this achievement

Government payments

As per the budget proposals for 2016, the Government has planned to implement a National Payment Platform (NPP). LankaPay – CEFTS will be of immense value for the NPP in order to facilitate online real-time interbank payments on a 24 x 365 basis, where the government entities will receive the payments instantaneously. Further, the customers can use any payment channel (e.g. ATM, Mobile, Internet Banking, Over The Counter (OTC), etc.) to make these payments, as per the facilities provided by their banks and financial institutions.

Value towards the digital economy

An online real-time payment system will facilitate greater efficiency in payments, reduce the use of currency (which is a enormous cost for the government) with innovative products that are developed in this ecosystem, reduce the cash floats in the market, reduce the overall cost of making a payment and thereby creating huge savings for the government and private sector alike.

LankaPay – CEFTS

LankaPay National Switch is developed on cutting edge technology, where the systems caters to high availability, real-time disaster recovery capability and the highest level of security on par with the best of international payment networks. This payment system is managed by a highly skilled and dedicated team of professionals. The process maturity that ensures the smooth operations of LankaPay is remarkable.

LankaPay – CEFTS facilitates online real-time interbank fund transfers with the highest levels of security. These transactions can be initiated via any payment channel such as ATM, OTC, Internet Banking or any Mobile Payment Device. LankaPay defines the messaging standards, operations procedure and does the clearing of the transactions. Further, the payments are settled between LankaPay participating institutions via the Real-Time Gross Settlement (RTGS) System of CBSL thus mitigating the settlement risk. These fund transfers can be between account to account of bank customers or account to card or card to account and hence facilitates C2C, C2B, C2G, B2G and vice versa.

Innovation via LankaPay – CEFTS

LankaPay – CEFTS has paved the way for a common infrastructure that enables multiple payment channel sand facilitates interoperability between payment channels. Hence LankaPay – CEFTS will not be a mere facilitator of interbank fund transfers but it will inspire banks, financial institutions and payment facilitators to usher a truly innovative, cost effective and highly convenient payment ecosystem that will greatly facilitate the development of the digital economy in Sri Lanka.

Digitising Sri Lanka

LankaPay – CEFTS will embolden Sri Lanka on its path to becoming a digitised country. With the right innovations, LankaPay – CEFTS can be used for merchant payments thus creating greater profitability for retail merchants as they are assured that the money is received in real-time and at a much lesser cost of operations. 

Further, CEFTS will be a great impetus for digital banking and thereby reduce customer visits to the branch and they could use the digital media platforms provided by banks in order to meet all their payment needs (e.g. pay utility bills, pay for the delivery guy, pay school fees etc.).

Currently BOC, Peoples Bank, Commercial Bank, HNB, NDB, Cargills Bank, LOFC and CLC are members of LankaPay – CEFTS. By early Q1 of 2016 all the top banks in Sri Lanka will be participants of this national payment system, as they are currently working towards the same. We expect all the other commercial banks to go live with CEFTS in another six to nine months, which will create a huge benefit for all stakeholders (customers, banks and country).

(Harsha Wanigatunga is the Deputy General Manager – IT & Operations of LankaClear and also the Project Director – CCAPS. He could be reached at [email protected].)