• Digital payments to save Sri Lanka 1-1.5% of GDP annually
• Over 40 m bank accounts poised to access GovPay services
• Rs. 1.8 t in transactions processed in 2024 for 8 Govt. entities
• GovPay to connect 30 additional institutions by early 2025

The Digital Economy Ministry plans to reduce the transaction cost for online payments from Rs. 20 to Rs. 15 as part of the Government’s initiative to digitise all financial transactions in State institutions by January 2025, according to the Ministry’s Coordinating Secretary Sumudu Rathnayaka.

Rathnayaka told The Sunday Morning that the Government was working to reduce additional costs associated with online payments. 

“Currently, a 3% surcharge applies to Point of Sale (POS) transactions, but any online payment incurs a flat fee of Rs. 20. Through this project, we aim to reduce that cost to Rs. 15,” Rathnayaka explained.

With the Government’s announcement to digitise all financial transactions for State institutions by January 2025, this transformation aims to enhance efficiency, transparency, and accessibility, with the GovPay platform at the centre of these efforts.

GovPay, an entity under LankaPay, has been Sri Lanka’s online payment platform for many years. 

LankaPay Chief Executive Officer (CEO) Channa de Silva highlighted that GovPay was already integrated with 16 institutions, with 30 more set to join. 

He anticipated that most departments would adopt the system by January, with even more entities joining in the first quarter of 2025. 

“This platform enables real-time payment processing and automatically generates receipts, ensuring seamless and transparent transactions for citizens and institutions alike,” he said.

According to Rathnayaka, GovPay simplifies processes by connecting institutions to basic banking infrastructure and executing transactions through Application Programming Interfaces (API). 

He further noted that Sri Lanka spends 1-1.5% of its Gross Domestic Product (GDP) on cash production and management, adding that developing a digital economy could save a significant portion of this expenditure.

Rathnayaka stressed that digitisation could effectively combat corruption and financial mismanagement in Government institutions. 

He added that the Digital Economy Ministry would facilitate the project, while LankaPay would enforce it under the name GovPay.

The Digital Economy Ministry is working closely with LankaPay, the Information and Communication Technology Agency (ICTA), and domestic banks to integrate mobile banking apps and other payment gateways, enabling citizens to make payments conveniently.

Meanwhile, de Silva elaborated on LankaPay’s pivotal role in the initiative. 

LankaPay, a Public-Private Partnership (PPP) owned 47% by the Central Bank of Sri Lanka and 53% by commercial banks, has been modernising digital payments since 2017.

“The project began as a solution to a problem faced by Customs, where banking transactions could only be made during banking hours. Ships arriving outside these hours incurred demurrage charges. We resolved this by integrating the Customs Automated System for Customs Data (ASYCUDA) portal with our online payment gateway. Payments are now reflected in real-time for Customs and customers receive updates through their banks,” de Silva explained.

Since its inception, the platform has processed over Rs. 19.3 trillion in transactions, including payments for Customs, the Inland Revenue Department, the Sri Lanka Ports Authority, and the Board of Investment. These entities were part of the pilot project to introduce GovPay, which has since expanded to 16 Government institutions.

De Silva emphasised that LankaPay’s technology allows real-time updates to Government systems, eliminating delays and inefficiencies. For example, Customs payments, previously restricted to weekday banking hours due to manual processing, now operate seamlessly through an integrated system, even on weekends.

With over 40 million bank accounts in Sri Lanka, digital payments will be accessible to nearly every citizen, significantly reducing the 1-1.5% of GDP currently spent on cash production and management. De Silva added that this initiative also combated corruption by minimising cash handling.

LankaPay’s systems adhere to the highest global security standards, with regular internal and external audits. While vulnerabilities like One-Time Password (OTP)-sharing scams exist, robust measures are in place to safeguard transactions. “Even NASA can be hacked, so hacking cannot be entirely ruled out, but I can assure you that we meet the highest global security certifications,” de Silva said.

De Silva also explained that any person with a bank account could make payments online to the relevant Government institutions.

In 2024 alone, transactions processed through LankaPay for eight Government institutions totalled Rs. 1.8 trillion.

De Silva noted that the existing manual system for recording financial information could continue alongside the digital framework, with invoices sent to customers before payment. However, he admitted that subsequent changes might be introduced to further streamline the process.