Real time payment revolution begins! 

A flawless real time electronic payment system is a critical component that helps drive a modern economy. That is to lean less on cash and cheques and more towards electronic payment systems.

With the technology evolving at an uncontrollable pace, today’s consumer looks for nothing but convenience in their every activity and opting for a simple, safe and easy method of payment has now become a natural choice.

Striving to push the nation towards being an efficient, green, and paperless nation, LankaClear continues to play a key role in ensuring Sri Lanka is in the forefront in bringing in the latest electronic payment platforms.

Sri Lanka’s position in the electronic payment industry

The electronic payment systems in Sri Lanka has been continuously evolving since its debut in 1993. Originally introduced by the Central Bank of Sri Lanka (CBSL) as Sri Lanka Interbank Payment System (SLIPS), which was subsequently taken over by LankaClear in 2002, the infrastructure has continuously improved throughout the years and now accommodates a same day fund transfers.

Playing a strategic role in bringing the electronic payment infrastructure to meet the needs of a modern customer, LankaClear is the catalyst of change in the local payment industry.

“While a number of milestones were achieved in the evolution process of retail electronic payments, it is the introduction of the T+0 facility that put Sri Lanka under fresh spotlight as it became the first country in South Asia that enabled the same day retail electronic fund transfer facility,” shared LankaClear GM/CEO Sunimal Weerasooriya.

What does SLIPS offer?

SLIPS essentially connects every single licenced commercial bank in the nation along with a significant number of Licensed Specialised Banks and NBFIs, bringing the total member base to 40, a growing number. In a literal sense, all current and savings account are connected to the SLIPS network, covering each and every account in the country.

With SLIPS, the public is typically offered the facility of faster transfer of funds. What initially started off as a solution for bulk payments such as salaries, now is also a solution widely used for Person-to-Person (P to P) transactions, standing orders, insurance payments and credit card settlements.

How does it work?

LankaClear has stipulated window cut off times to participating banks in order to facilitate a smooth and productive flow of same day or next day electronic fund transfers.  Transactions are accepted in two sessions per day where the first session cut off time is 1 p.m., facilitating the credit of funds in the recipients’ account before 3 p.m. and the second session cut off time is 7 p.m., facilitating the credit of funds in the recipient account by 9 a.m. the following day.

In terms of pricing, LankaClear charges a transaction processing fee of Rs. 3.50 + tax from the participating banks and financial institutions for each interbank transaction processed through the LankaClear switch. The maximum transaction tariff chargeable by the banks and financial institutions from their customers is Rs. 50 with effect from 1 September as stipulated by Central Bank of Sri Lanka.

LankaPay – Real Time Payments (CEFTS): Next big development in electronic payments

Shaping the future of the electronic payment industry will be the Common Electronic Fund Transfer Switch (CEFTS), which went live only recently with five commercial banks and two NBFIs joining in the pilot stage. Bank of Ceylon, People’s Bank, Commercial Bank, Hatton National Bank, NDB, LOLC Finance PLC and Commercial Leasing & Finance PLC are now connected to the CEFTS. Union Bank and Cargills Bank are now ready to join the system shortly.

CEFTS is essentially a system that allows real time payments, which means the recipient would receive the funds instantaneously and the transactions could be initiated from electronic channels 24 × 7 × 365.

“The goal is to facilitate the migration of majority of payments in the country to efficient faster payment systems.  Since our job is to have the backbone infrastructure in place, LankaPay – Real Time Payments (CEFTS) was implemented under the Common Card And Payment Switch (CCAPS) project to facilitate real time retail fund transfers in Sri Lanka 24 × 7, which was not possible under the earlier SLIPS,” said Weerasooriya.

"Payment systems are critical components of a modern economy though it is not seen on the front. The efficiency of a payment system has a direct effect on the overall economy and an increase in retail payment volume indicates a velocity increase in the circulation of money – LankaClear CEO and GM Sunimal Weerasooriya"

He elaborated that the LankaPay- Real Time Payments (CEFTS) is a “complete game changer” in the electronic payments in Sri Lanka and can create enormous amounts of opportunities. “The sky is the limit,” he said confidently.

Although the commercial operations of LankaPay – Real Time Payments (CEFTS) commenced in August 2015, the system has been ready since April 2014. The delay in the launch was attributed to the period given to banks to upgrade their systems to facilitate real time fund transfers. This system will allow maximum of Rs. 5 million per transaction.

As per the CBSL Circular issued to banks, transfers initiated through electronic channels will be charged a maximum fee of Rs. 50 whereas those initiated at bank branch counters will be charged a maximum of Rs. 100. Nevertheless, financial institutions can offer the service for free or at reduced rates to their customers.

“Payment systems are critical components of a modern economy though it is not seen at the front. The efficiency of a payment system has a direct effect on the overall economy and an increase in retail payment volumes indicates a velocity increase in the circulation of money,” Weerasooriya professed.

Moving forward

To increase the uptake of LankaClear’s newest solution, it is essential that banks understand the change in consumer behaviour, predict their future needs and conceptualise innovative products accordingly.

In the journey of moving from a cash economy to electronic payments, it is imperative for banks to have increased focus on creating awareness of new offerings. To make these transitions successful, a clear policy direction is expected from the Regulator, including roadmaps with clear milestones.

“With the pace at which technological innovation is taking place today, what we say is current will not be so for long. A number of disruptive technologies are making an entry and are a threat to the traditional payment industry that involves financial institutions. Unless that level of efficiency, responsiveness and innovativeness is maintained, the payment industry may no longer be dominated by the financial institutions. With technology the innovation is endless. It is imperative that we keep up,” said Weerasooriya.