JUSTPAY: DRIVING DIGITAL TRANSFORMATION IN PAYMENTS
LANKACLEAR’S digital payments platform JustPay had a phenomenal year. JustPay saw mobile phone-based transaction volumes soar 744% in 2019, its first full year in operation. While financial systems world over grapple with digital tech’s upheavals, LankaClear has taken on the role of change-agent. “We are committed to a mandate transforming a cash-based economy into a digital one,” says Channa de Silva, General Manager and Chief Executive Officer at LankaClear.
LankaClear, with backing from the Central Bank, has revolutionized and spearheaded the implementation of cutting-edge technology-based payment solutions in the country. Its flagship service is LankaPay, a national payment network that has connected the country’s banks for extremely fast, reliable, secure and affordable interbank payments aimed to deliver ultimate convenience to the general public. Earlier, interbank transfers and cheque clearance would take several days; with LankaPay these now take a fraction of the time.
JustPay is LankaClear’s latest offering and a critical backbone connecting the digital platforms of banks. The unique platform revolves around the ubiquitous smartphone, leveraging its versatility to usher in a host of benefits for consumers, merchants, banks, fintech companies and the economy as a whole. Mobile phone penetration among Sri Lanka’s 22 million population is 137%. Nearly half of these devices are smartphones.
JustPay allows a customer to make payments up to Rs10,000 with a single click on a smartphone, transferring funds directly from a customer’s bank account to that of the merchant in realtime. This is a much more convenient alternative to both cash and card-based payments, which is fast gaining traction worldwide. In China, around 92-95% of retail payment transactions are via mobile phones. Sri Lanka is still a cash-based economy.
Credit and debit cards have been around of decades, but have not made much headway. There are 23 million debit cards and 1.7 million credit cards issued in Sri Lanka. Point of sales (POS) terminals or devices number approximately 70,000 in the country. However, the average number of transactions per day per POS device is less than four. “Which means, if you consider the fact that supermarket chains process hundreds of card payments every day, likely, most small retailers don’t report even a single card-based sale for days,” says de Silva. This points to two factors: consumers prefer dealing with cash and small retailers prefer not to accept card payments. Banks charge up to 3% to support card transactions and this squeezes retailers’ margins. JustPay doesn’t need retailers to invest in POS terminals either and the transaction fee is less than 0.5% in most instances.
Sri Lanka has 5.7 million active users who access social media from their mobile devices thanks to growth in smartphone penetration. However, banks have not been able to gain much traction with their mobile banking apps even after making it easier to transact with people who have accounts at different banks.
JustPay benefits the entire financial sector because now their mobile apps have more reach. Fintechs and Internet startups also have access to a wider audience of customers for the same reason. Importantly, by facilitating a shift towards mobile payment modes, JustPay will allow payment app providers to tap into the large informal sector characterized by small-ticket transactions at corner shops or payments to hairdressers, barbers, laundry shops, tuk drivers or even plumbers.
“There’s Rs640 billion worth of currency in circulation as of 2018 because most people still transact in hard cash to buy everyday groceries or pay for services like a haircut,” de Silva says. With JustPay, LankaClear hopes to funnel the cash in the informal economy into the formal financial system, which can be efficiently reallocated to critical investment areas and thereby uplift the economy.
14 mobile payment apps have enabled customers to register their savings and current accounts through JustPay.
Buyer and seller no longer need to use the same bank or payment apps for seamless transactions. JustPay is a breakthrough payment product of LankaPay, Sri Lanka’s National Payment Network operated by LankaClear. The platform allows consumers to make retail payments directly to merchants’ or service providers’ bank accounts with their smart mobile devices. JustPay targets to convert over 95% of the current cash-based retail transactions into mobile digital payments.