Sri Lanka goes live this week on real time fund transfers
Sri Lanka will, for the first time, make real time bank transfers for payments commencing this week kicked off by Lanka Clear, the infrastructure developer for the financial sector. Eight banks and financial institutions and the state-run Customs Department would be ready to go live from Thursday as scheduled by Lanka Clear that would be launching its newest product to make payment transfers within seconds, Lanka Clear General Manager/CEO Sunimal Weerasooriya told the Business Times.
At present the only fund transfer in the country that takes place rapidly is within one day for salaries shown as SLIPS transfers and that practice is expected to continue in 39 financial institutions, 26 of which are commercial banks. He noted that the financial institutions ready to make real time payments are Commercial Bank, Union Bank, Bank of Ceylon, People’s Bank, NDB, HNB, Lanka Orix Finance PLC and Commercial Leasing and Finance PLC.
This new system would ensure that for the first time in the retail payment system or the Common Electronic Fund Transfer Switch (CEFTS) a real time electronic payment could be made, Mr. Weerasooriya explained adding that this would be available to customers 24×7 and 365 days of the year.
At present one-day transfers are possible from one account to another within the banks that have this facility. This new system – a game changer in the market – would be accessible for customers via a kiosk, mobile phone, bank branch, Internet and ATMs, he said, adding that they would have complete freedom to carry out transactions.
This solution for which Lanka Clear has been involved in creating the backbone infrastructure would be useful for corporate and public that would facilitate real time electronic payments ensuring a reduced use of cash and cheques.
Transactions however, would be limited up to Rs. 5 million per transaction with charges levied regulated by Central Bank of up to Rs. 50 for Internet banking and Rs.100 for manual transactions carried out at bank branches.
Though Sri Lanka, compared to India, was early in developing cheque imaging and truncation they were late to join this new electronic fund transfer system, Mr. Weerasooriya explained. While the Customs Department would be the first to join this new system, it is believed that this would be beneficial even to other state institutions like the Inland Revenue Department as well, the CEO said.
With each bank having its own gaps in terms of technological advancements it was now up to the market to take on this new system and filter down to the end user, it was pointed out.
In fact with today’s customer demographics fast changing as generation X goes into retirement the biggest demographics are those technology savvy youth and the next challenge would be Generation Z who look for convenience, Mr. Weerasooriya asserted.He noted that the expectation was for all banks to join this system by the end of the year and the next challenge would be changing customer perspective as this would mean a cultural shift for most people.
Another key element of CEFTS is that if the customer has made an error in a transaction there would be an option of going in for a reversal of it as the transaction is carried out from one account to another; but chances of mistakes would be minimal since there would be a validation process, he said.