In the first article of this series, we looked at what exactly the National Payment Platform was and how it worked. We then saw what exactly the ICTA was doing for the past two years to make this project a reality. But now here we are in the present day, where the NPP is one of the latest controversies to rock the Yahapalanaya government. So what exactly is the current status of the NPP? Here’s what we know so far.
On the 11th of August 2017, Hon. Anura Dissanayake – JVP MP and Chief Opposition Whip, asked in Parliament, “A company named Total Pay has been selected to operate the NPP. We need to know the basis of selection and awarding. The ICTA in 2015 announced that three companies were shortlisted for the project and later announced that Total Pay was selected. However, the said company is a newly-established company and it has been registered only in March 2016. How can the ICTA shortlist a company that did not exist in 2015?”
Dr. Harsha De Silva – Deputy Minister of National Policies and Economic Affairs responded by saying that the management of the National Payment Platform was not handed over to any private company. He added that TotalPay was shortlisted as a potential organization to inspect the software of the NPP.
Yet he later said, “Hon. Dissanayake raised a question. In order to reply the Prime Minister requested responses from both the ICTA and the Central Bank. I replied MP Dissanayake in the absence of the Prime Minister. Later we learnt that the details found on those responses were inaccurate. So I contacted the ICTA Chairperson and wanted her to stop the NPP-related matters.”
Dr. Harsha also shared that the Prime Minister and his Secretary were informed of this as well. Thus, instructions were given to start an investigation. Once the results of this investigation are presented to the Parliament, it will be up for debate as to whether to continue the development of the National Payment Platform or halt it.
Much of the confusion and controversy regarding the NPP initially lied regarding the question, “Who would be the one regulating it?” The Central Bank argues that the regulation of the NPP should fall under its jurisdiction. Its argument is that while the NPP is a messaging platform, it is one that deals with financial transactions. As such, the Central Bank states, “any factors relating to a payment transaction, such as payment messaging, will also fall under the scope of a payment transaction and therefore be subject to regulation by the Central Bank of Sri Lanka.”
However, Muhunthan Canagey – then CEO of the ICTA, argued that the NPP should not be put under the jurisdiction of the Central Bank. His reasoning was that by definition the NPP is a messaging platform. As such, it would be impractical and may set a precedent for the Central Bank to regulate other messaging platforms and applications available.
Speaking to ReadMe he said, “If you can have SMS switches which are not regulated by the Central Bank, which is also messages and can carry payment requests why should other messaging platforms not be allowed to operate? I categorically say all telecom operators have SMS switches carry payment requests and none of those switches are regulated by Central Bank. Are we going to apply regulations on all these operators from around the world including Facebook messenger and Twitter? Regulations must start from the institutions that are licensed such as the banks.”
However, the Central Bank also stated that it is not in the position to comment on the viability of the National Payment Platform. The Central Bank states that on the 13th of May 2016, it requested additional details of the project from the ICTA. These details were regarding the system development, operation manuals, system security, compliance with system standards and the external system audit framework. However, the Central Bank says that the ICTA did not respond to these requests, despite both parties holding multiple meetings since that date.
But soon after, focus on the controversy and confusion shifted from the regulator to TotalPay. Following multiple reports by NewsFirst and MP. Anura Dissanayake’s statement in Parliament, the impression is that ICTA is now trying to hand over control of the NPP to a mysterious private company, which was only registered last year. As such the questions on everyone’s minds are, “How did TotalPay become an operator in 2015 when it was only registered in 2016?”
Before answering this question, it’s important to remember that TotalPay is not the developers of the National Payment Platform. As such, they have no real control of the NPP. Rather they are merely a facilitator that use this platform to help you make digital payments. And to do so they build apps that connect to the NPP. Furthermore, ICTA hasn’t paid any money to these operators for building these apps. The original three operators were selected merely to test the NPP and see if it can facilitate digital payments.
Now when we return to the question, we see that both NewsFirst and various politicians describe TotalPay as an operator. Yet, while they do use the right words, the message they send is completely different. The message that is being sent is that ICTA has handed over control of the NPP to a private company that was registered only last year.
And this is not the case. The only private company that even remotely has some power over the NPP at the moment is 99X Technology. This is because they are the developers building the platform. Nonetheless, the original question on how TotalPay became an operator when it was registered in 2016 is a valid one. And this question can be answered by digging into the history of the company where you’ll find its original name: Simato Solutions Pvt. Ltd.
Founded in 2008, Simato Solutions provides customized content solutions in Mobile and Fixed telecommunications. These solutions include content solutions, advertising, web and wap development, value-added-services and audio/video production solutions.
In 2015, when ICTA published their advertisement calling for expressions of interest, Simato Solutions applied to be a digital infrastructure provider. Following the selection and evaluation process, Simato was shortlisted by the technical evaluation committee as one of the three digital infrastructure providers. Later the company, spun off its operations to build a digital payment application into a separate company. Thus, TotalPay was born in 2016.
Of course, one could ask, “What experience does Simato Solutions have in building apps to facilitate digital payments?” After all, TotalPay is now set to be one of the three DIP’s of the National Payment Platform. Yet, the company hasn’t shown that it has expertise build apps to facilitate digital payments. Therefore, TotalPay’s qualifications are indeed questionable. However, with the tender process being a closed one, it’s unlikely that we will know exactly what Simato Solutions proposed to the technical evaluation committee for the company to be shortlisted as a Digital Infrastructure Provider.
Ultimately, while TotalPay’s qualifications are don’t inspire confidence, their selection as a Digital Infrastructure Provider shows what the end vision was for the NPP. The NPP was to be a platform that would allow anyone to build applications and accept payments. It would’ve eliminated the existing tedious process of obtaining payment gateways from a bank. Instead, all you’d have to do is add a few lines of code and your app could accept digital payments from anyone.
Such a system has been long sought after by the Sri Lankan e-commerce industry. This is because not only is the current process tedious, but it also prevents smaller businesses from moving into the digital world. Last year we saw startups like PayHere and PAYable try to change this status quo. These startups were working towards making digital payments more accessible for small businesses. And the results of these efforts have been mixed. Some like PAYable have found success, but then we saw PayHere being shut down by the regulators with the single stroke of a pen.
Yet, one might argue that before we implement such systems, we should aim towards increasing the circulation and usage of credit/debit cards. But according to the Central Bank of Sri Lanka, there are 1.3 million credit cards and 17.7 million debit cards in use across Sri Lanka as of Q4 2016. The total value of credit card transactions was Rs. 48.7 billion and debit card transactions were Rs. 30.3 billion. This shows that Rs. 79 billion worth of transactions were made in Sri Lanka using credit and debit cards in Q4 of 2016 alone.
As such, one could further argue that it’s high time that we introduce a system like the National Payment Platform. A system that would simplify the process for businesses to accept digital payments. For there is a market worth Rs. 79 billion that is ripe for disruption. And while the usage of credit and debit cards are on the rise, one could argue that with the use of a platform like the NPP, this usage could increase exponentially. This is because, in theory, it eliminates the existing tedious process businesses have to go through to accept digital payments.
Of course, this isn’t to say that the National Payment Platform is the perfect solution. There is still a debate as to whether which entity should be the one to regulate it the Central Bank or the ICTA. Furthermore, another key issue the NPP and many other digital initiatives being pursued by the government face is the lack of a Data Protection Act in Sri Lanka. With initiatives like the NPP storing and utilizing much of our personal information, such legal protections are vital to ensure the privacy of every citizen. If not, then it would mean that we are readily handing over everything a government would need to create a surveillance state.
At the moment, the fate of the NPP is currently questionable. It will only be decided once the ongoing investigation concludes and its results are presented in Parliament. Once these results are presented, only then will we know the ultimate fate of the NPP. If it is to die, then the National Payment Platform will die as a good idea. In theory, it would’ve simplified the digital payments landscape of Sri Lanka and made it accessible to the masses. And while not perfect, its greatest flaws lied more so in the execution of the idea rather than the idea itself. But if it survives, then there are hard questions related to its regulation and data privacy that will need to be answered sooner rather than later.
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