forbesindia.com: Enormous contingents of Indian visitors may be seen entering Colombo through the Bandaranaike International Airport. Sri Lanka is recovering from its greatest economic crisis two years ago and seeing an increase in activity. After the political impasse, the nation has also grown in popularity among Indian tourists and replaced the Maldives as a travel destination. PhonePe, an Indian digital payments business, is well-positioned to capitalize on the increased traffic.
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PhonePe stated on May 15 that, in partnership with LankaPay, the country’s main payment network, it had made UPI payments accepted. Indian visitors to Sri Lanka can now make fast payments without carrying cash or figuring out currency conversions by scanning the LankaQR code and using the Unified Payments Interface (UPI). When PhonePe debits their account in Indian rupees, they will display the exchange rate. LankaPay’s collaboration with NPCI International Payments Limited (NIPL) makes PhonePe’s alliance possible.
Cross-border UPI payments
To complete a transaction, any Sri Lankan PhonePe or UPI user can scan a LankaQR code at a merchant. The user’s bank account will be debited in Indian rupees, but the merchant will receive a settlement in Lankan rupees. According to Ritesh Pai, CEO of foreign payments at PhonePe, NPCI handles currency conversion in the meantime with forbesindia.com.
Merchants incur the merchant discount rate (MDR) as a cost. They transfer a portion of the MDR to the issuer. As this transaction crosses borders, currency translation becomes necessary. The speaker further notes that they may apply a small markup during the debit from Sri Lankan rupees to Indian rupees to accommodate exchange rate fluctuations.
This action follows the launch of UPI services in Mauritius and Sri Lanka on February 12. While they are still developing, Singapore, Bhutan, Nepal, the United Arab Emirates, and France are among the nations that accept UPI. Digital payments have become more popular in India since their introduction in 2016. The volume of transactions increased from 92 crore in 2017–18 to 8,375 crore in 2022–2023. Between 2017 and 2018, its worth increased to Rs 1 lakh crore, and by 2022–2023, it reached Rs 139 lakh crore.
The National Payments Corporation of India, the umbrella organization in charge of managing retail payments in India, is actively pushing for UPI’s acceptability throughout the world. It is forming alliances with foreign payment service providers (PSPs) and assisting in the UPI’s integration into global payment networks. In order to provide the service, Indian payment apps like PhonePe, Paytm, Amazon Pay, and Google Pay have begun connecting their systems. The intention is to facilitate cross-border UPI payment transactions for Indian tourists and to stimulate the development of digital payment ecosystems in other nations.
PhonePe was the first to include UPI International. It’s available in the UAE, Sri Lanka, Singapore, Mauritius, Nepal, and Bhutan at local QR code merchant locations. The payments giant, controlled by Walmart, claims over 530 million registered customers and 38 million retailers in its network. They accept digital payments. PhonePe handles over 230 million transactions daily. Its total payment value annually exceeds $1.5 trillion at forbesindia.com.
PhonePe, the leading UPI app in India based on market size, reported revenue of Rs 2,914 crore for the fiscal year that ended on March 31, 2023, up about 77% from Rs 1,646 crore for the previous year. In 2015, the firm attributed the rise in income to expanding bill payments, cellphone recharges, and money transfers. Flipkart, along with its parent company, Walmart, purchased PhonePe just a year after its introduction.
“This partnership will provide greater convenience to Indian tourists and business travelers,” stated Channa de Silva, CEO of LankaPay. They can make seamless UPI payments at all LankaQR merchant points in Sri Lanka via the PhonePe app.
In comparison to other South Asian countries, Sri Lanka has a higher-than-average number of bank account owners; nonetheless, both financial literacy and the number of inactive accounts are low. The uptake of mobile money, insurance, and retirement plans is similarly low. The economy may benefit from more active use of bank accounts and financial services. This rise is due to the growing digitization of payments. Talal Rafi, an economic policy analyst at the Asian Development Bank in Colombo, states this.
India sends the most tourists to Sri Lanka. Integrated digital payments with India can boost travel. India’s economy is growing rapidly. Its middle class is expanding. Sri Lanka stands to benefit more from this in the medium to long run.
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