HNB becomes first bank to eliminate merchant discount rates for LANKAQR transactions

 PIX BY KITHSIRI DE MEL

By Nishel Fernando

In a significant move to accelerate the adoption of cashless transactions, Hatton National Bank (HNB) has become the first bank in Sri Lanka to eliminate the merchant discount rates (MDR) for LANKAQR transactions. 

This initiative applies to HNB-appointed merchants enabled to accept LANKAQR payments, aiming to make digital transactions more accessible and cost-effective for businesses across the country.

At a press briefing in Colombo this week, HNB Managing Director/CEO Damith Pallewatte highlighted that this initiative would also enhance credit access for numerous micro, small and medium enterprises.

“We believe this is a powerful tool to support the growth engine of our country, the SMEs and microfinance businesses. By integrating them into the digital ecosystem, we can facilitate their access to crucial financing,” he explained. 

“Currently, their transactions often go unnoticed, hindering their ability to secure credit. As a partner in progress, we are committed to finding ways to support their growth.”

This initiative will directly benefit over 30,000 HNB-appointed LANKAQR merchants, empowering them to accept QR-based payments through 30 bank and fintech payment apps and wallets, including HNB’s own SOLO.

LankaPay CEO Channa De Silva emphasised the potential of this move to bring a significant portion of cash from the retail sector into the formal banking system.

“Excluding high-net-worth individuals, the majority of cash in circulation outside the banking sector resides within retail trade. By driving digital adoption in this segment, we can significantly boost financial inclusion,” he said.

LANKAQR, an interoperable quick response code compliant with EMVCo international standards, allows customers to make payments at LANKAQR merchants using any LANKAQR-enabled mobile app. Currently, there are 22 LANKAQR merchant acquirers and 30 LANKAQR-enabled mobile apps operating in Sri Lanka. As of 3Q 2024, there were over 410,000 LANKAQR merchants nationwide.

Furthermore, LankaPay’s integration with India’s Unified Payments Interface (UPI), China’s UnionPay and Alipay facilitates seamless cross-border transactions, benefiting both local businesses and international visitors. This integration allows UPI, UnionPay and Alipay users, particularly Indian and Chinese tourists, to make payments at Sri Lankan merchant points, especially in tourist hotspots. This encourages local merchants to embrace digital payment methods, attracting digitally-savvy customers accustomed to high digital payment adoption in their home countries.