LankaPay real-time payment system

12 January 2016 06:30 pm - 0 - {{hitsCtrl.values.hits}}

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Currently the most widely used electronic fund transfer system for payments is Sri Lanka Interbank Payment System (SLIPS) 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 move towards a digital economy, creating greater efficiency in doing business and providing greater convenience for the public, an online real-time payment system is imperative. Such a real-time payment system should enable the 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, the 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 realized by LankaPay – Common Electronic Fund Transfer Switch (CEFTS), which has been designed and implemented by LankaClear with the approval and guidance of the 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 digital economy
An online real-time payment system will facilitate greater efficiency in payments, reduce the use of currency (which is an 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 cater 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 the 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 channels and 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.

Digitizing Sri Lanka
LankaPay - CEFTS will embolden Sri Lanka on its path to becoming a digitized 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, Bank of Ceylon (BOC), People’s Bank, Commercial Bank, Hatton National Bank (HNB), National Development Bank (NDB), Cargills Bank, Lanka ORIX Finance PLC (LOFC) and Commercial Leasing & Finance PLC (CLC) are members of LankaPay - CEFTS. By early 1Q 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 and Operations of LankaClear and also the Project Director CCAPS. He could be reached
at harsha@lankaclear.com)

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