Electronic payment systems:

Change in lifestyle increases demand

by Lalin Fernandopulle

The future of payment systems would be electronic due to the growing customer demand for convenience, accessibility and availability, General Manager and CEO, LankaClear (Pvt) Ltd., Sunimal Weerasooriya told a seminar on ‘Electronic Payments to Power up the Digital Era of Business’ organised by the National Chamber of Commerce recently.

With the change of lifestyle towards higher work demands and pressure for time, consumers’ demand for more convenient modes and options to do their work.

Therefore, business houses are forced to be more efficient with enormous pressure to reduce costs. They can no longer survive with traditional paper-based payment systems, Weerasooriya said.

Reports reveal there is a sharp rise in the number of mega cities mostly in developing countries which will need efficient modes of transaction that would cut time and ease the hassle of conventional paper-based payments.

Payment system experts said with the challenges of working capital, cost of funding and accessibility to funding, many businesses are exploring the possibility of improving their finance supply chain. Real time payments are the ideal solutions since payments could be collected much faster.

Weerasooriya said the internet and the use of mobile devices have increased tremendously during the past couple of years.

The Government initiative to create wi-fi zones and provide wide accessibility to the internet will boost the use of internet in the near future.

Mobile penetration is high in the country and people are comfortable using the device despite the level of language or IT literacy.“We believe that the mobile would be the ideal channel for banks and payment system providers to reach the unbanked and underbanked population.

LankaClear has already implemented the Common Mobile Payment Switch which could facilitate an inter-bank mobile payment transaction and process transactions initiated by Telco Lead Mobile Payment Systems licensed by the Central Bank,” he said.

“The challenge is to get the right model which should be simple and convenient for the customer and use the mobile as a low-cost payment mode without compromising security. We are working with banks to finalise the model and deploy a mobile payment system that meets the needs of the country,” Weerasooriya said.

He said the Common Card and Payment Switch (CCAPS) approved by the Central Bank comprise components such as a Common ATM Switch (CAS), Common Electronic Fund Transfer Switch (CEFTS), Common Mobile Payment Switch (CmobS) and Common POS Switch (CPS) to address various electronic payments and transactions.

These switches are being implemented at LankaClear and will be used by banks and financial institutions. The LankaPay Common ATM Switch went into commercial operation in July 2013 and today there are 12 banks connected to the switch with over 2,600 ATMs in the network facilitating customers of member banks to avail of services at any of the 2,600 ATMs.

The LankaPay Common EFT Switch went into commercial operation in August 2015 and there are five banks and two non-banking financial institutions connected to the system. Two more banks will join within the next two weeks and the rest of the banks are in various stages of development to join the system.

“We expect all the major banks with a large number of accounts to join the system before the end of the year so that the full functionality of the system with access to all bank customers would be a reality,” Weerasooriya said.

Weerasooriya said that to ensure the highest level of security and to prevent unauthorized access to the system, LankaClear has taken measures such as changing the Zone Master Key annually, aligning all processes to PCI – DSS (Payment Card Industry Data Security Standards) and ensuring the Key used to encrypt the PIN is not static and changes frequently.“By deploying various payment system platforms, we have covered the diverse needs of different levels of customers. The selection of what mode to use would depend on the value of the transaction, the cost, the accessibility to technology and the location,” he said. “The cost issues on the current card based payments would be addressed through the proposed National Card Scheme and we believe that the cost of card-based transactions and the variety (pre-loaded cards, top-up cards and social security cards) would increase and acceptance of cards by merchants would also increase,” Weerasooriya said.