As the unlimited possibilities of a digital economy increase throughout the world, it is exciting to witness Sri Lanka emerging as a nation participating actively in the digital commerce revolution.
All indicators point to Sri Lanka being ready to embrace the benefits of low-cost, efficient digital forms of payment securely, reliably and easily in a world beyond cash. Given the large cash displacement opportunities available regionally, it can be said that Sri Lanka is well placed to experience the transition from using more cash to one that uses cashless payments with ease - empowering the economy and citizen-centric services while driving financial inclusion and accelerating growth opportunities.
I was able to gain key insights into the enthusiasm among Sri Lankans towards a digital economy when I undertook a week-long tour across Sri Lanka recently as a part of a charity drive, during which I opted to only pay with the card and not use cash. It was an interesting journey, given the challenges but also one that highlighted the optimism of people towards digital payments and the opportunity to expand usage at a wide level of markets. In this connection, the recent YouGov consumer payment attitude study that measured consumer sentiment around digital payments, affirms a growing interest among Sri Lankan consumers (51 percent) in favor of adopting new forms of digital payments. This also indicates a heightened level of awareness, acceptance and adoption of digital payments among consumers.
With over 18 million debit cards and 1.4 million credit cards in circulation as per Central Bank statistics, it is worthwhile to note that 70 percent of the population have access to some form of digital payment. Given a high mobile penetration level, it can be said that Sri Lanka has the potential to become one of the first South Asian economies to truly transition into a digital economy.
Central Bank figures already seem to confirm a trend of thriving digital payments; an increase of 15 percent in credit cards and 11 percent in debit cards point to a figure of 19.5 percent of total cards in circulation as at mid-2017. It is also imperative to note that transactions done on cards in Sri Lanka last year without cash withdrawals, stood at Rs.290 billion, which includes POS (Point of Sale) and e-commerce engagements.
It can also be said that a growth in internet penetration together with an increased availability of low-cost smartphones could drive the potential for tremendous e-commerce possibilities. With just 4.2 percent of electronic personal consumption expenditure, there is considerable room for growth there. This is significant as digital payments enable individuals, businesses, and governments to engage in transactions efficiently while focusing on growth. For banks, payments providers, financial-technology start-ups, retailers, government and citizens, the potential is remarkable. In this connection, the recent study by Roubini Thoughtlab reinforces that opening up to digital payments may help Colombo obtain US$0.2 billion in net benefits annually, equivalent to three percent of the city’s average GDP. Estimated catalytic impact for Colombo over the next 15 years include 20.4 basis point increase in GDP growth rate and 2.1 percent increase in employment. Once again, this study helps us learn the actual benefits of going cashless for governments, businesses and consumers, stimulating long-term economic growth in the process.
We at Visa believe that the time is now to seize the opportunity – undoubtedly, digital payments have the ability to transform the economic prospects of millions of people while empowering small businesses through actual financial empowerment. This process can be strengthened through the consolidation of three building blocks: enhancing widespread mobile and digital infrastructure, creating a dynamic business environment for financial services, and paving the way for digital payment innovations that meet the needs of individuals and small businesses in ways that are bigger, convenient and secure.
Of course, making this vision a reality would mean expanding secure access points, while offering consumers more choices that empower their lifestyles. Sri Lanka today engages with global markets while the retail sector is planning for more growth opportunities. The expansion of the tourism industry with more hotels and restaurants coming up would mean enhanced digital payment options. All of which would mean the need to expand the usage of digital payments which will contribute towards bolstering the economic potential.
As Sri Lanka looks to a future of exploring unlimited opportunities, it is good to focus on enhancing digital connectivity, enable digital identification across markets, secure payment innovations, empower citizen centric services, focus on better digital security while creating a greater sense of digital awareness. However, it is important for all of us to keep in mind that digital transformation is not a technological fix or a one-off plan, or a one-size-fits-all strategy. It is rooted in empowering a shared vision, one in which we can securely embed payments and commerce into any device. In the end, it is all about bringing the global digital revolution closer to meet specific socio-economic priorities through partnerships, innovation, and engagement among all key stakeholders at an economic, social and a community level.
(The author is the Country Manager for Visa Sri Lanka)