From left: Ottawa University Law Professor, author on Internet law and expert attached to Geneva’s International Trade Centre Michael Geist, Industry and Commerce Minister Rishad Bathiudeen and Consumer Affairs Authority Chairman Hasitha Thilakaratne at the launch event
The control of payment gateways by a handful of large banks and financial institutions is trapping the e-commerce revolution from taking off in Sri Lanka, a Canadian e-commerce expert was quoted as saying in a communiqué issued by the Industry and Commerce Ministry.
“It is clear that the payment systems here to be a major issue for e-commerce. These gateways are concentrated mostly on a few large banks and financial institutions but not for other payment institutions and this is an obstacle for the Lankan e-commerce progress,” University of Ottawa Canada Research Chair in Internet and E-Commerce Law Michael Geist said yesterday.
Speaking at the workshop ‘National Public-Private Dialogue for a Fairer Digital Marketplace’ held in Colombo, organised by the Consumer Affairs Authority and supported by the Geneva-based International Trade Centre, to which he is affiliated, Geist said that the time is ripe to broaden the base of payment institutions.
Industry and Commerce Minister Rishad Bathiudeen showed support for the cause.
“Despite the high rate of smartphone and social media use and the high potential for e-commerce in Sri Lanka, the use of our e-commerce is still at low levels and at low penetration,” he said.
He noted that just US $ 19 million or one percent of the annual domestic sales happen through e-commerce.
He said that more start-ups need to enter and expand Sri Lanka’s digital market place but these businesses need low-cost payment gateways.
In addition to limiting the choices of the Sri Lankan consumer, the grip large banks and financial institutions have on digital payments with high usage fees, has restricted Sri Lanka’s exports as well, since the local small and medium enterprises with a potential to thrive in the global markets have no low-cost method to collect the payments.
Global giant Paypal had expressed interest in setting up operations in Sri Lanka several years ago.
The state’s ICT Agency had at the time said that the Central Bank had not cooperated and Paypal had found the then existing draconian Foreign Exchange Law to be off-putting.
However, the Central Bank last December said that it had in fact been a case of Paypal not observing the required e-commerce volumes in Sri Lanka to justify entering the market, since the Central Bank had offered to provide the required regulatory space.
There is now a more relaxed foreign exchange law in place and Paypal was reported to have sent a delegation to Sri Lanka in January but the government officials have been tight-lipped about the development.
The two-day workshop, which began yesterday, will also focus on facilitating online fund transfer to and from Sri Lanka using global platforms like Paypal.
Bathiudeen said that safety of the online shoppers, with data protection also needs to be toughened in order to drive the e-commerce growth.
The workshop is expected to come up with recommendations on legislative and regulatory priorities for a modernized e-commerce framework, the communiqué said.