HNB eliminates MDR for Lanka QR to net more SME
View(s):In a bid to bring more small and medium enterprises SMEs into financial inclusivity, HNB announced the elimination of Merchant Discount Rates (MDR) for LANKAQR transactions among appointed merchants in Sri Lanka.
At a media conference on Thursday to announce this move, Channa Silva, CEO of LankaPay and Director of SLCERT, noted that in the last calendar year, there were Rs. 1.8 trillion transactions/payments only within eight government departments, but of this, Rs. 1.3 trillion was made through cash payments. “There are 200 million online transactions amounting to Rs. 1.7 trillion. We have witnessed so much of digital transactions, but we also see that there is a lot of cash in the retail segment.”
LANKAQR, an interoperable quick response code, complies with EMVCO international standards and allows customers to scan and pay at LANKAQR merchants using any LankaQR-enabled mobile app. With over 410,000 LANKAQR merchants island-wide, the initiative aims to make digital payments more accessible and cost-effective for businesses. The initiative is targeted at the start of the Avurudu season and will be valid for three months from April 1st to June 30h, 2025. The LankaPay integrated LANKAQR ecosystem facilitates interoperable QR-based transactions, benefiting over 30,000 HNB-appointed LANKAQR merchants. The 0 per cent MDR offer is applicable only for transactions below Rs. 10,000.
Expressing his concerns over the lack of adoption in digital payments, Vasantha De Alwis, Assistant Governor, Central Bank, noted that in Sri Lanka, this rate isn’t as large as in India or China. The Government maintains that cash is a cost. Around 1.5 per cent of a country’s GDP is used to maintain this ecosystem. Since the transaction numbers of adoption in digital payments are low, they intend to work together with all financial institutions to promote this. He also noted that there are 585,000 digital payments in Sri Lanka worth Rs. 57 billion. He also noted that there have been 22 trillion digital transactions between customers, but there is a lack of visibility.
Mr De Silva noted that person-to-person payments, such as inter-daily wage earners, should be enabled through digital payments. They are working on it. “We need to complete the cycle, such as in UPI India. The payments need to be seamless.”
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