By Yakuta Dawood
Recently, State Minister of Money and Capital Markets, and State Enterprise Reforms Ajith Nivard Cabraal tweeted that he was happy to learn from the Central Bank of Sri Lanka's Payment and Settlement Department that PayHere, DirectPay, WEBXPAY, Xoom, Skrill, Payoneer, Earthport, and Genie are suitable alternatives to PayPal. Well, the tweet did not stop there – he added: “Sri Lankan entrepreneurs please take note.”
The tweet was soon flooded with comments emphasising the need for PayPal, even though there are plenty of other digital payment platforms, including but not limited to the aforementioned ones. The Sunday Morning Business is thus taking an extensive look at what PayPal is, and why Sri Lankans need it regardless of the emergence of new local payment platforms.
[caption id="attachment_115617" align="alignright" width="355"]
"Any client will prefer to transfer money at PayPal without a doubt, because it is a globally preferred bank, whereas the alternatives available in Sri Lanka are not known by the international entrepreneurs; hence transferring money through this is questioned, as it is not yet globally trusted and recognised" DirectPay Director/Founder Kanishka Weeramunda[/caption]
What is PayPal?
PayPal Holdings, Inc. is an American company operating a worldwide online payment system that supports online money transfers and serves as an electronic alternative to traditional paper methods. Located in San Jose, California, PayPal was founded in 1998.
PayPal has quickly become a global leader in online payment solutions, with more than 325 million accounts worldwide. Available in 202 countries and 25 currencies around the world, PayPal enables global ecommerce by making payments possible across different locations, currencies, and languages. Sri Lankans have been using PayPal for outward remittances, but receiving inward remittances has long been a struggle for ecommerce businesses, graphic designers, web developers, and ICT (information communications technology) professionals.
However, as Cabraal noted, a number of digital payment platforms are available in Sri Lanka.
PayHere
PayHere is the first non-bank Internet Payment Gateway (IPG) service in Sri Lanka launched in 2016 by founder Dhanika Perera. This platform was launched to address the issue facing entrepreneurs in receiving payment transfers from abroad.
In 2017, PayHere partnered with Sampath Bank to make services more efficient, by resolving issues such as getting approval of clearance from the regulators. After a few additional months to ensure PayHere was 100% compliant with regulations, the Central Bank of Sri Lanka submitted its approval for PayHere to resume operations in 2018.
PayHere has three flexible service plans to fulfill different business needs, whether a start-up or a large enterprise, which are PayHere Lite, PayHere PLUS, and PayHere Premium.
WEBXPAY
WEBXPAY was launched to provide a variety of essential solutions, such as website building tools, embedded shopping carts, and an array of payment gateways. WEBXPAY today is connected to multiple international payment brands such as Visa, Mastercard, China Union Pay, American Express, Discover, and Diner's Club, and also connected to local payment brands such as Nations Trust Bank's virtual wallet FriMi, Upay, Genie, Ezcash, Mcash, and Sampath Vishwa.
Subsequently, the other payment app providers such as UPay, IPay, OrelPay, mCash, and eZ Cash, also started taking quite a lot of initiatives in terms of facilitating such transactions, and to promote ecommerce within Sri Lanka.
Accordingly, with technology as the backbone, innovation in products, processes, payments, and customer service have helped fintechs in Sri Lanka to grow more than expected. This platform also plays a major role as of today, after receiving the approval of the Central Bank.
The vision statement of WEBXPAY is “to enable micro, small, and medium businesses all over Sri Lanka to go digital and be part of the digital revolution, whilst committing to empowering SMEs (small and medium enterprises) across multiple socio-economic dimensions”.
Mastercard
This is another platform established to support the local entrepreneurs by enabling fintechs to ride on Mastercard innovation, and to further innovate and support cross-border payments. The purpose of Mastercard is to "connect and power an inclusive digital economy that benefits everyone, everywhere, by making transactions safe, simple, smart, and accessible".
The advantage of using Mastercard is that it supports peer-to-peer (P2P) fund transfers across countries, where freelancers don’t need to really worry about how they get paid. In addition to that, Simplify Commerce by Mastercard is another such platform that is aimed at making it easier for businesses to accept electronic payments, regardless of a payment brand, in Sri Lanka.
“Using secure data and networks, partnerships, and passion, our innovations and solutions help individuals, financial institutions, governments, and businesses realise their greatest potential”, is the vision statement of Mastercard.
Accordingly, this service is available through banks such as HSBC, Commercial Bank, Bank of Ceylon, and many more.
How PayPal stands out
Due to the different geographical locations of the customer and the client, the market would be an online/distant payment facility; hence the transaction will require a credit in a different geographical location, or it could be a cross-border transaction. When considering the alternatives available in Sri Lanka, the most preferred one would be a transaction through a card payment, which requires an IPG to transfer money.
In terms of financial transactions, the international client usually prefers a well-known IPG and a trusted platform such as PayPal to make the transaction process complete. Speaking to The Sunday Morning, DirectPay Director/Founder Kanishka Weeramunda said that international clients prefer to only use PayPal as a transaction platform due to perception of the brand and the trust the platform has created over the past years.
“Any client will prefer to transfer money at PayPal without a doubt, because it is a globally preferred bank, whereas the alternatives available in Sri Lanka are not known by the international entrepreneurs; hence transferring money through this is questioned, as it is not yet globally trusted and recognised,” Weeramunda explained.
Furthermore, another vital reason is that local freelancers and entrepreneurs receive their payment after two to three working days due to the long five-stage process involved while transferring money from another country to Sri Lanka, known as the T+2 transactional process.
Accordingly, five main parties are included in the transactional process, which comprises the customer depositing money into the bank, the IGP provider, the merchant of the acquiring bank who will provide the IPG service or a payment aggregator, and finally the issuing bank (cardholder’s bank).
The transaction process is as follows:
Firstly, the acquiring bank will check with the issuing bank if funds required for the transaction are available. If yes, authorisation from the bank is required for the second stage of the transaction. If this authorisation is given, the merchant of the acquiring bank will send a notification to the depositor saying that the “payment is accepted”.
Secondly, both banks conduct an interbank settlement, which will take another day. For instance, the issuing bank will transfer to the Visa or Mastercard platform, which will then transfer to the acquiring bank.
During the third stage, the acquiring bank will execute the reconciliation process (to understand which merchant they will have to credit the money to), as these funds are sent in bulk. “Due to this process, it will definitely take at least two days for the client to receive the money from the depositor. However, the process is also the same with PayPal,” Weeramunda added.
Sri Lanka's progress thus far
The struggle for establishing PayPal in Sri Lanka to receive inward remittances has remained the same, regardless of over six years of discussions with officials. To date, no progress has yet been achieved with PayPal to install infrastructure facilities in Sri Lanka due to a number of known and unknown reasons.
Sri Lanka began negotiations with US-based PayPal to become a domestic partner bank for inward remittances in 2014, when current State Minister of Money and Capital Market and State Enterprise Reforms Cabraal was the Governor of the Central Bank of Sri Lanka.
Speaking further, Weeramunda said that as a country we have not reached the required creditworthiness (a quota submitted by PayPal regulators) to be attractive enough for PayPal to come to Sri Lanka. Likewise, the same reason was also backed by the Central Bank in 2017, stating that “PayPal has been hesitant over the years, as there will be low transaction volumes and certainly not because of regulatory limitations”.
When asked about the current status of the Government’s stance with regard to PayPal, Central Bank Governor Prof. W.D. Lakshman, during the Monetary Policy Review on 19 January 2021, revealed that the progress regarding facilitating inward remittances will need further effort.
However, in August 2020, Central Bank Payments and Settlements Department Director D. Kumaratunge told The Sunday Morning Business that regional PayPal officials are in the process of assessing opportunities in Sri Lanka to grant the PayPal money-receiving facility.
“The Central Bank is continuing communication with regional PayPal officials to obtain the PayPal facility to Sri Lanka,” Kumaratunge had stated.
In March 2018, Sri Lanka was developing a National Financial Inclusion Strategy (NFIS) to facilitate online payment gateways and digital financial services. In October the same year, the Government said that it was changing laws so that tech industry workers can receive payments from PayPal by 2020. However, it’s 2021, and the solution to this is yet to be reached.
In 2014, negotiations between the parties began, and the Central Bank assured PayPal that it would ease restrictions to allow inward payments. The Government that was elected in January 2015 neither made any progress in getting PayPal, nor did it publicly discuss the payment platform up until early 2016. In March 2016, the Government announced plans to get “Stripe”, a new start-up reportedly similar to PayPal.
Years of discussion, no improvement?
Adding to the statements mentioned earlier, Weeramunda asserted that the people complaining about not having PayPal are those who haven't tried other alternative platforms available in Sri Lanka.
“Mastercard is also a well-known brand and a company, and they provide the payment platform called ‘Mastercard Payment Gateway’, which is also a trusted platform. Similarly, Visa has also provided a payment platform named ‘Fiber Source’, which is available in Sri Lanka. Hence I do not see a big challenge of accepting payments through these networks,” he added.
Furthermore, while digital banking and technology evolves to encompass payments, the needs and wants of consumers are also evolving. Hence government officials, along with the Central Bank, have taken measures to provide alternative platforms for entrepreneurs to use instead of PayPal.
“Accepting alternative networks is not a challenge, but a perceptual issue of the clients and the customers involved. WEBXPAY, DirectPay, and PayHere have more than millions of transactions recorded within their operating period, and all these companies are bringing in money to Sri Lanka; hence we cannot say that without PayPal, the transaction process is affected, without trying the alternatives,” Weeramunda emphasised.
“There are a lot of measures and innovations taken by the Sri Lankan card companies; hence it is time for Sri Lankans to start trusting to accept the platform to continue their payment methods,” he concluded.
"Any client will prefer to transfer money at PayPal without a doubt, because it is a globally preferred bank, whereas the alternatives available in Sri Lanka are not known by the international entrepreneurs; hence transferring money through this is questioned, as it is not yet globally trusted and recognised" DirectPay Director/Founder Kanishka Weeramunda[/caption]
What is PayPal?
PayPal Holdings, Inc. is an American company operating a worldwide online payment system that supports online money transfers and serves as an electronic alternative to traditional paper methods. Located in San Jose, California, PayPal was founded in 1998.
PayPal has quickly become a global leader in online payment solutions, with more than 325 million accounts worldwide. Available in 202 countries and 25 currencies around the world, PayPal enables global ecommerce by making payments possible across different locations, currencies, and languages. Sri Lankans have been using PayPal for outward remittances, but receiving inward remittances has long been a struggle for ecommerce businesses, graphic designers, web developers, and ICT (information communications technology) professionals.
However, as Cabraal noted, a number of digital payment platforms are available in Sri Lanka.
PayHere
PayHere is the first non-bank Internet Payment Gateway (IPG) service in Sri Lanka launched in 2016 by founder Dhanika Perera. This platform was launched to address the issue facing entrepreneurs in receiving payment transfers from abroad.
In 2017, PayHere partnered with Sampath Bank to make services more efficient, by resolving issues such as getting approval of clearance from the regulators. After a few additional months to ensure PayHere was 100% compliant with regulations, the Central Bank of Sri Lanka submitted its approval for PayHere to resume operations in 2018.
PayHere has three flexible service plans to fulfill different business needs, whether a start-up or a large enterprise, which are PayHere Lite, PayHere PLUS, and PayHere Premium.
WEBXPAY
WEBXPAY was launched to provide a variety of essential solutions, such as website building tools, embedded shopping carts, and an array of payment gateways. WEBXPAY today is connected to multiple international payment brands such as Visa, Mastercard, China Union Pay, American Express, Discover, and Diner's Club, and also connected to local payment brands such as Nations Trust Bank's virtual wallet FriMi, Upay, Genie, Ezcash, Mcash, and Sampath Vishwa.
Subsequently, the other payment app providers such as UPay, IPay, OrelPay, mCash, and eZ Cash, also started taking quite a lot of initiatives in terms of facilitating such transactions, and to promote ecommerce within Sri Lanka.
Accordingly, with technology as the backbone, innovation in products, processes, payments, and customer service have helped fintechs in Sri Lanka to grow more than expected. This platform also plays a major role as of today, after receiving the approval of the Central Bank.
The vision statement of WEBXPAY is “to enable micro, small, and medium businesses all over Sri Lanka to go digital and be part of the digital revolution, whilst committing to empowering SMEs (small and medium enterprises) across multiple socio-economic dimensions”.
Mastercard
This is another platform established to support the local entrepreneurs by enabling fintechs to ride on Mastercard innovation, and to further innovate and support cross-border payments. The purpose of Mastercard is to "connect and power an inclusive digital economy that benefits everyone, everywhere, by making transactions safe, simple, smart, and accessible".
The advantage of using Mastercard is that it supports peer-to-peer (P2P) fund transfers across countries, where freelancers don’t need to really worry about how they get paid. In addition to that, Simplify Commerce by Mastercard is another such platform that is aimed at making it easier for businesses to accept electronic payments, regardless of a payment brand, in Sri Lanka.
“Using secure data and networks, partnerships, and passion, our innovations and solutions help individuals, financial institutions, governments, and businesses realise their greatest potential”, is the vision statement of Mastercard.
Accordingly, this service is available through banks such as HSBC, Commercial Bank, Bank of Ceylon, and many more.
How PayPal stands out
Due to the different geographical locations of the customer and the client, the market would be an online/distant payment facility; hence the transaction will require a credit in a different geographical location, or it could be a cross-border transaction. When considering the alternatives available in Sri Lanka, the most preferred one would be a transaction through a card payment, which requires an IPG to transfer money.
In terms of financial transactions, the international client usually prefers a well-known IPG and a trusted platform such as PayPal to make the transaction process complete. Speaking to The Sunday Morning, DirectPay Director/Founder Kanishka Weeramunda said that international clients prefer to only use PayPal as a transaction platform due to perception of the brand and the trust the platform has created over the past years.
“Any client will prefer to transfer money at PayPal without a doubt, because it is a globally preferred bank, whereas the alternatives available in Sri Lanka are not known by the international entrepreneurs; hence transferring money through this is questioned, as it is not yet globally trusted and recognised,” Weeramunda explained.
Furthermore, another vital reason is that local freelancers and entrepreneurs receive their payment after two to three working days due to the long five-stage process involved while transferring money from another country to Sri Lanka, known as the T+2 transactional process.
Accordingly, five main parties are included in the transactional process, which comprises the customer depositing money into the bank, the IGP provider, the merchant of the acquiring bank who will provide the IPG service or a payment aggregator, and finally the issuing bank (cardholder’s bank).
The transaction process is as follows:
Firstly, the acquiring bank will check with the issuing bank if funds required for the transaction are available. If yes, authorisation from the bank is required for the second stage of the transaction. If this authorisation is given, the merchant of the acquiring bank will send a notification to the depositor saying that the “payment is accepted”.
Secondly, both banks conduct an interbank settlement, which will take another day. For instance, the issuing bank will transfer to the Visa or Mastercard platform, which will then transfer to the acquiring bank.
During the third stage, the acquiring bank will execute the reconciliation process (to understand which merchant they will have to credit the money to), as these funds are sent in bulk. “Due to this process, it will definitely take at least two days for the client to receive the money from the depositor. However, the process is also the same with PayPal,” Weeramunda added.
Sri Lanka's progress thus far
The struggle for establishing PayPal in Sri Lanka to receive inward remittances has remained the same, regardless of over six years of discussions with officials. To date, no progress has yet been achieved with PayPal to install infrastructure facilities in Sri Lanka due to a number of known and unknown reasons.
Sri Lanka began negotiations with US-based PayPal to become a domestic partner bank for inward remittances in 2014, when current State Minister of Money and Capital Market and State Enterprise Reforms Cabraal was the Governor of the Central Bank of Sri Lanka.
Speaking further, Weeramunda said that as a country we have not reached the required creditworthiness (a quota submitted by PayPal regulators) to be attractive enough for PayPal to come to Sri Lanka. Likewise, the same reason was also backed by the Central Bank in 2017, stating that “PayPal has been hesitant over the years, as there will be low transaction volumes and certainly not because of regulatory limitations”.
When asked about the current status of the Government’s stance with regard to PayPal, Central Bank Governor Prof. W.D. Lakshman, during the Monetary Policy Review on 19 January 2021, revealed that the progress regarding facilitating inward remittances will need further effort.
However, in August 2020, Central Bank Payments and Settlements Department Director D. Kumaratunge told The Sunday Morning Business that regional PayPal officials are in the process of assessing opportunities in Sri Lanka to grant the PayPal money-receiving facility.
“The Central Bank is continuing communication with regional PayPal officials to obtain the PayPal facility to Sri Lanka,” Kumaratunge had stated.
In March 2018, Sri Lanka was developing a National Financial Inclusion Strategy (NFIS) to facilitate online payment gateways and digital financial services. In October the same year, the Government said that it was changing laws so that tech industry workers can receive payments from PayPal by 2020. However, it’s 2021, and the solution to this is yet to be reached.
In 2014, negotiations between the parties began, and the Central Bank assured PayPal that it would ease restrictions to allow inward payments. The Government that was elected in January 2015 neither made any progress in getting PayPal, nor did it publicly discuss the payment platform up until early 2016. In March 2016, the Government announced plans to get “Stripe”, a new start-up reportedly similar to PayPal.
Years of discussion, no improvement?
Adding to the statements mentioned earlier, Weeramunda asserted that the people complaining about not having PayPal are those who haven't tried other alternative platforms available in Sri Lanka.
“Mastercard is also a well-known brand and a company, and they provide the payment platform called ‘Mastercard Payment Gateway’, which is also a trusted platform. Similarly, Visa has also provided a payment platform named ‘Fiber Source’, which is available in Sri Lanka. Hence I do not see a big challenge of accepting payments through these networks,” he added.
Furthermore, while digital banking and technology evolves to encompass payments, the needs and wants of consumers are also evolving. Hence government officials, along with the Central Bank, have taken measures to provide alternative platforms for entrepreneurs to use instead of PayPal.
“Accepting alternative networks is not a challenge, but a perceptual issue of the clients and the customers involved. WEBXPAY, DirectPay, and PayHere have more than millions of transactions recorded within their operating period, and all these companies are bringing in money to Sri Lanka; hence we cannot say that without PayPal, the transaction process is affected, without trying the alternatives,” Weeramunda emphasised.
“There are a lot of measures and innovations taken by the Sri Lankan card companies; hence it is time for Sri Lankans to start trusting to accept the platform to continue their payment methods,” he concluded.