Sri Lanka central bank in low cost QR code drive to boost digital transactions
Sri Lanka is promoting low cost quick response (QR) code based technology with slashed fees to draw a wider base of small businesses and rural customers into digital transactions with credit cards costs keeping away the less affluent, Central Bank officials said.
Sri Lanka’s banks have also issued has 23 million debit cards but they are not being widely used in making payments, Deputy Governor H A Karunaratne said.
The average use of debit cards was about 5 percent and females were 3 percent.
Debit cards were mostly used to withdraw cash from teller machines and not to pay at point of sale machines (POS) at shops, which are also not found at only larger establishments.
“POS machines cost around 65,000 rupees partly due to taxes, and there were fees 2,500 rupees upwards a month, which made it prohibitive for small business in rural areas,” D Kumaratunga, Director of the Payments and Settlements Department of the Central Bank said.
“Banks charge this additional monthly fee from vendors based on the volume of transactions.”
Low Cost Extension
QR code used payment systems would be cheaper for the small businessmen who cannot afford a POS terminal.
Banks typically charge about 3 percent for credit card payments (a credit card purchase is made through a loan to the customer, with the cost being borne by the merchant and not his/her own money)
The central bank has proposed that in 2020, which has been declared the year for digital transactions, the QR code fee be brought down to 0.5 percent.
Central bank has also proposed that no charges will be taken for utility bill payments and payments to government institutions within the year for digital transactions.
“The idea is to bring in more merchants and customers,” R A Jayalath, Assistant Governor of central bank said.
“They may have losses in the beginning but after they onboard enough customers and increase volume they will earn revenue and cover the costs.”