The Hindu Business Line : ‘S. Asian countries need to move towards electronic payments’

Dr R.H. Patil, Chairman, Clearing Corporation of India (left), with Dr Ranee Jayamaha, Deputy Governor, Central Bank of Sri Lanka, at the conference on Payments Annual Summit 2008 in Mumbai on Friday.

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Mumbai, May 16 Development of the retail payment system is crucial for the development of financial markets in South Asia. But currently, the SAARC region countries are way behind their counterparts in Latin American and European countries when it comes to paperless or electronic and Internet-based clearing and settlement systems, said Dr Ranee Jayamaha, Deputy Governor, Central Bank of Sri Lanka.

Addressing a seminar, organised by the Indian Banks’ Association, in Mumbai today, Dr Jayamaha said that despite inherent inefficiencies of cheques, they are still popular due to easy accessibility.

While ATMs, debit cards, automated clearing house networks and credit cards have achieved a fair degree of penetration, smart cards and some e-cash payments, electronic bill payments and person-to-person Internet payment methods are yet to catch up.

“Accessibility, but at a high price, can also put off people from opting to use such payment methods or instruments,” she said.

She gave examples of the Netherlands, where there are no cheques at all and Brazil, where cheques have decreased from 57 per cent to 25 per cent between 2000 and 2006. But in India, cheque use has reduced at a slow pace from 84 per cent in 2004, to 73 per cent in 2007 and in Sri Lanka, from 75 per cent to 65 per cent, which indicates the dominance of cheques.

Dr Jayamaha said that there is a need to promote electronic payments by providing low-cost current and savings accounts that can be accessed with a cash dispenser card. “The use of non-cash payment instruments, mobile and telephone banking in particular, can be promoted together with the use of high security standards, which would ensure reliability of the payment instrument,” she said.

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