Retail digital transactions in Sri Lanka doubles over last two years: Robocash

• From 2Q21 to 2Q23 retail digital transactions expanded by 94% to US$ 31 bn
• Says convergence of economic, political, and pandemic-induced crises created an environment conducive to the evolution of fintech

Sri Lanka has witnessed a doubling of retail digital transactions over the last two years, a report from Robocash, a leading legal and authorised online lender revealed.

From 2Q21 to 2Q23, retail digital transactions have expanded by a staggering 94 percent to US$ 31 billion.
According to the report, Sri Lanka’s payment infrastructure, inclusive of the Real Time Gross Settlement System (RTGS) and Retail Payment Systems (RPS), forms the backbone for digital transactions. 

Despite occasional downturns, notably during the height of the COVID-19 pandemic in 2Q2020, stability remains a hallmark, with retail digital payments resilient throughout other crises.

“The convergence of crises economic, political, and pandemic-induced—fostered an environment ripe for fintech evolution.

“Amidst adversity, Sri Lanka’s fintech sector has emerged as a beacon of resilience. The convergence of crises propelled the nation towards embracing digital solutions, transforming consumer behaviour, and accelerating fintech growth,” said Robocash Country Manager Konstantin Bereutsyn.

He added that the surge in retail digital payments is a testament to the nation’s adaptability and the burgeoning potential within the fintech ecosystem. 

While the pandemic-related responses spurred fintech development, the report by Robocash noted that the increase in retail digital transactions between 2Q21 and 2Q23 was primarily driven by the exponential growth of CEFTS and Internet payments. 

This was propelled by measures such as restricting electronic accounts per individual, establishing uniform standards for mobile payment apps, and reducing fees.

Examining Tracxndata (as of 09 November 2023), Sri Lanka has 473 active fintech companies in the country.
At present, 69.1 percent of the entire market is occupied by players from the e-Commerce sectors (167 — 35.3 percent) and Business management (160 — 33.8 percent). 

However, from the point of view of attracting investments for the development of the industry, Sri Lanka’s fintechs were able to attract only US$ 7.5 million, of which US$ 5.34 million was directed to the e-commerce sector. About 77 percent of the investments were realised before 2019, signaling further opportunities for development, Robocash said. “Considering Sri Lanka being clearly dominated by the service sector, making up 56.1 percent of its GDP in 2022, the country has a high economic potential to enter the list of developed countries in the coming decades, which requires additional domestic production,” the report said.

It added that the reliance on tourism income and its symbiotic relationship with the national payment infrastructure have amplified the country’s focus on digital payments.