Yohan Wijesiriwardane, CEO/ Co-founder of PAYable, shares insights into the future of digital payments in Sri Lanka and PAYable’s efforts to transform the economy by going beyond developing innovative solutions and making digital technology accessible and affordable to a lot more businesses, particularly small and medium enterprises that comprise the backbone of the Sri Lankan economy.
Wijesiriwardane begins by giving us a snap-shot of PAYable’s journey and evolution as a market disruptor in the cashless payment landscape in Sri Lanka:
In 2016, the cashless landscape in Sri Lanka had a limited number of payment points, with approximately 37,000 spread across the entire island, equating to about one payment point for every thousand people. In comparison, developed nations such as America, Singapore, and Europe had more than 20 payment points for every thousand people, and developing countries like Malaysia and Thailand had around five to six terminals or payment points per thousand people.
We recognized that Sri Lanka had a yawning gap, and we determined our goal was to bridge it by increasing the number of payment points from one to five as a starting point. To achieve this, we introduced our MPOS (Mobile Point of Sale) product as a free solution, adopting a pay-as-you-go approach with no rental fees or commitments. We aim to make it incredibly easy for merchants to accept payments.
Fast forward to today, and we have successfully onboarded around 35,000 merchants into the payment ecosystem, resulting in approximately 85,000 payment points. This achievement was made possible by disruptive technology that significantly reduced the cost of our product. Previously, a terminal would cost around $400, but we brought that down to approximately $30 per reader, a tenfold decrease.
We also played a pivotal role in removing the barriers for merchants. By partnering with banks and collaborating with the central bank, we successfully lobbied processes for merchants, becoming a significant catalyst for growth as it eliminated the need for extensive documentation and business registration copies. Instead, merchants only required an ID copy and a bank account to avail themselves of a digital payments solution.
Beyond disrupting the market, our efforts empowered these merchants to enter the cashless economy and integrate into the financial system. We take pride in the transformation that PAYable enabled, having evolved from a platform with almost no merchants to a network of over 35,000 merchants today. Among them, around 25,000 are SMEs and the rest are medium-scale businesses, a testament to our significant contribution to the growth and development of Sri Lanka’s digital payments landscape.
How does PAYable’s new digital payment solution aim to disrupt the market and address the challenges faced by traditional payment systems and expensive payment terminals?
Our latest solution uses Tap-on-Phone technology, allowing any NFC-enabled Android smartphone to accept payments. With the increasing smartphone penetration and the majority of cards in the market being NFC-enabled (about 95%), we have eliminated the need for dedicated payment hardware. Now, anyone with an NFC phone can easily accept payments, removing the barrier of investing in expensive hardware to build a digital payments ecosystem.
We are optimistic about the potential of Tap-on-Phone technology in the coming years, despite some challenges in the local context, such as import regulations that are gradually leading to the conversion of phones into NFC-enabled devices. We anticipate this segment to experience significant growth soon, particularly with the integration of sales force automation and related functionalities, where businesses can empower their entire sales team, even if they consist of a thousand agents, to accept payments without incurring heavy capital expenditure. This advancement will be a boon to the economy as it provides a cost-effective and accessible way for businesses to leverage their sales force and drive financial transactions.
What role do smartphone technology and NFC-enabled devices play in this disruption?
Smartphones play a crucial role. The limited availability of NFC-enabled phones in the country was a challenge, with prices ranging from around Rs40,000 to Rs50,000. To address this, we have actively advocated for an increase in the importation of low-end smartphones with NFC capabilities. However, we have recently observed a positive shift in the market with new smartphone models equipped with NFC technology entering the market, which is a promising development.
How does the company view its role in empowering businesses? How does PAYable bridge gaps and build solutions that empower merchants and contribute to their success?
From the very beginning, our focus at PAYable has been to empower small merchants and help them grow their businesses while bringing them into the financial system. These merchants have long been excluded and limited to cash transactions. We recognized the importance of tapping into the digitally-savvy consumer market to enhance their sales potential.
Consider this scenario: You visit a shop with a limited amount of cash, but you come across a tempting sale item that you would purchase if you had the necessary funds. We aimed to address such situations by providing convenience to both merchants and consumers. By enabling digital payments, we empowered our merchants to capture additional sales opportunities, even when customers didn’t have enough cash in hand. Instead of running to an ATM, customers could make purchases instantly, resulting in increased sales for the merchants.
This approach not only benefited the merchants but also brought value to the consumers. While some might initially focus on fees, we emphasized the freedom and advantages of embracing digital payments.
Our solution was driven by the recognition of a prevailing issue in Sri Lanka – despite being a well-banked country, there was a significant reliance on cash transactions. We identified this gap and set out to address it. Our initial focus was on solving this cash dependence.
Subsequently, we expanded our efforts to support medium-sized businesses that often faced service level limitations compared to larger enterprises. We aimed to empower them and provide guidance on optimizing their financial practices and overall business operations.
At the core of our approach is building strong relationships with our merchants. By understanding their specific needs and challenges, we develop tailored solutions. For instance, we introduced our Link Payment feature to facilitate future payments, eliminating the hassle of manual transactions. We are also integrating this feature into mobile devices, allowing merchants to accept card-present as well as card-not-present transactions. This means that grocery stores, for example, can seamlessly process orders received over the phone by sending a payment link to customers for immediate payment, enabling smooth and efficient delivery services.
We continually analyse use cases and develop solutions that address specific problems faced by merchants in different industries, such as restaurants. Our focus is on providing practical and effective tools that align with their unique requirements and ultimately enhance their business operations.
With the ongoing economic crisis impacting the introduction of new technology and systems in the payment industry, how has PAYable navigated these challenges to continue innovating and providing accessible payment solutions?
One significant advantage we had as a local solution was that we ensured that all funds remained within the country, except hardware purchases. This commitment drove us to introduce Tap-on-Phone as a device-less solution, reducing the burden of economic or forex crises on the economy.
Even before the recent events, we recognized the need to bring a device-less solution to the market. It became evident that deploying traditional devices for a large number of merchants, such as 100,000, would require substantial funding. This realization acted as a catalyst for us to pursue the next level of innovation. We became pioneers in rolling out this solution globally, setting us apart in the industry.
The advantages of our solution became even more apparent during challenging times when sales were down. Since we did not have fixed costs associated with device procurement, our business model remained resilient. Whether we had 100,000 or fewer merchants, our costs remained consistent. In hindsight, our decision to build rather than license the solution proved to be a strategic move that helped us navigate difficult periods.
Overall, our commitment to a locally developed solution and the foresight to invest in device-less innovation enabled us to overcome obstacles and maintain stability during uncertain times.
What strategies has PAYable employed to drive user adoption of its technology and change behaviour towards digital payments?
One of our initial priorities was to make the payment process trilingual, addressing a significant gap in the Sri Lankan market. Until 2016, payment acceptance systems lacked multilingual capabilities, and the language used to communicate with merchants was often confusing and technically complex. To overcome this, we developed our app with simplicity in mind, using plain language and clear error messages. For example, instead of displaying a cryptic error code, the app would straightforwardly indicate if there was no internet connection and prompt the merchant to reconnect. Usability was at the core of our solution development, as we recognized that if a software application is user-friendly, people are more likely to embrace it.
Additionally, we focused on educating and supporting merchants in this segment. Contrary to common misconceptions, the main challenges were not the fees associated with digital payments. Instead, it was essential to provide merchants with knowledge and foster their comfort with the new payment methods. We observed that during peak seasons like December, many previously inactive merchants were compelled to become active due to consumer demand for credit and instalment payments. As they engaged in a certain number of transactions, typically around 20 or 30, they developed a level of comfort and trust in the system, leading to their continued participation.
What are your plans to grow your merchant base?
Currently, we have a merchant base of around 35,000, but we aim to expand this local base to reach 100,000 merchants. To achieve this, we are collaborating with our partner banks and card schemes to implement various initiatives that will activate and enable these merchants. Our primary target within the next two to two and a half years is to double our base and reach the milestone of 100,000 local merchant.
In addition to our local goals, PAYable is also exploring opportunities in neighbouring regions and similar markets. We have identified countries like Nepal and select African markets as potential areas where we can make a meaningful impact in emerging markets. Each of these markets comes with its own set of technological barriers, but leveraging our experience in an emerging market like Sri Lanka, we plan to adapt and customize our solutions to effectively roll them out in these new markets. It is an important goal for our company to expand our reach and learn from these experiences while catering to the specific needs of each market.
How does the company plan to overcome obstacles and drive further adoption of its latest app-based solutions? Additionally, where does PAYable see the most significant opportunities for growth, including potential areas and industries?
Our primary focus with Tap-on-Phone technology is to address the NFC acceptability barrier on smartphones. To ensure this feature is readily available, we are actively engaging with phone importers, encouraging them to include NFC capabilities in the models they bring to the market. It is a relatively simple addition for them, and we are promoting these NFC-enabled models to merchants who are interested in upgrading their devices.
The launch of our new product offering largely depends on the fulfilment of these NFC-related conditions. However, we have observed significant improvement compared to six months ago, indicating a positive trend. We are gradually working towards meeting these requirements and expanding our reach.
This solution also has potential in industries such as sales force automation. Previously, we faced limitations in providing solutions for companies with large sales forces, but with some customization, we can now disrupt and empower such industries. We are exploring partnerships with insurance companies to leverage our solutions for their benefit.
In addition, we continue to see opportunities for growth among general merchants. Despite progress, cash still dominates approximately 95% of our economy. We believe there is untapped potential in encouraging more merchants to embrace digital payments, both debit and credit cards.
Overall, we are actively addressing the NFC barrier, exploring new industry partnerships, and aiming to penetrate further into the market to drive the adoption of digital payments.