A new facility for the rural communities.
Offered by banking institutions through mobile phone, mobile banking is gaining momentum all over the world. In keeping up with rapidly changing technology, Sri Lanka, however, takes the edge as its postal department has been playing the role mostly played by banks in other parts of the world. Offering banking services through a chain of post offices is an innovative concept for remote rural towns and villages having no direct access to banking services.
In June 2014 Sri Lanka Post introduced M-ePay, a new mobile electronic payment system. Connecting all sub-post offices to the main post offices through mobile phones, the system was primarily implemented by the postal department using post offices as banks to reduce the duration it takes for money to travel across the island.
The M-ePay is a web service based mobile application which helps local people make all kinds of payments and financial transactions by using mobile phones in nearby sub-post offices, instead of going to banks located in specific areas. In a very short time, the new initiative came out to be a revolutionary step, which was mainly taken by the Sri Lankan government to facilitate both the urban and rural population. The reason behind the huge success of the new payment system was simple: it has provided citizens across the island the means to carry out a range of financial transactions and payments, such as utility bill payment, money transfer, etc. using their mobile phones.
In Sri Lanka, post offices are divided into two categories, - main-post offices and sub-post offices. Main post offices are located in rather developed urban areas, while sub-post offices operate as branches of the main offices and are generally located in remote rural areas. Main post offices are systematically
linked to a centralized server through the internet but sub-post offices in rural areas are not linked to the main server because of no internet connectivity.
As telecommunication services are available across the island, the M-ePay system links sub-post offices to the centralized system using mobile phones. To use the service, users must have a mobile phone with a unique user identification (ID), which is provided by the Sri Lanka Post. To obtain a personal ID, a user needs to fill and submit a compulsory application form to the nearest sub-post office, which forwards it to the ICT division of Sri Lanka Post for further processing and verification. Once the application is approved, the user is provided with a unique ID, which also serves as a password to enter the mobile payment system. The information about the newly-registered users with their particular user-IDs is also shared with the sub postmaster who may carry out transactions on behalf of the user when asked.
In sub-post offices, every postmaster has a separate user identity which allows him to make payments through a pre-formatted text message by accessing the main server. Sent from the postmaster’s registered mobile number, a small SMS is enough to make any financial transaction on a user’s behalf. The postmaster also receives a confirmation message as soon as the transaction is made. The best part of this system is that it does not require users to have expensive, high-end phones, as transactions are based on simple text messages that can be delivered and received through any phone.
In rural parts of the South Asian countries, a postmaster always enjoys high regard in his village and stays closer to the people in a wider social context. As he is the person who is responsible for their letters, parcels and money orders, villagers do not hesitate to hand over money to him. The tradition has played a leading role in making M-ePay a phenomenal success, particularly in such rural communities where the literacy ratio is poor and people face many difficulties in using new payment systems.
Local people utilize this system for a variety of purposes such as making utility bill payments and money transfers, receiving EPF (employees’ provident fund) and ETF (employees’ trust fund) payments and other money transactions. The M-ePay service uses GovSMS, the government SMS gateway and enables people to send and receive SMSs from government departments across GSM and CDMA networks.
In Sri Lanka, the number of bank branches per 10,000 populations aged 16 and above is 14.12, while almost 98% of these banks operate in urban areas only. The rural areas in Sri Lanka comprise more than 80% of the national population, but being in a clear majority these areas don’t normally have banks or similar financial institutions.
On the other hand, the country has a sizeable network of post offices with 654 main post offices and around 3,410 sub-post offices in rural towns and villages. Almost every village has a sub-post office that plays a pivotal role in enhancing the living standards of the rural community.
The M-ePay mobile transaction service has turned the governmentoperated postal platform in Sri Lanka into a profitable institution that has an ever-growing customer base with sizeable earnings every year. According to statistics, since the implementation of the mobile payment system in June 2014, the Sri Lanka Post has earned around 1.3 lakh Sri Lankan rupees (LKR) from 8,540 phone bill payments, around LKR3.7 lakh from 5,537 money transfers and around 64 lakh rupees (LKR) through 396,040 electricity bill payment transactions.
Working under the Ministry of Telecommunications and Posts, Sri Lanka Post has 4738 offices with over 17,000 employees working in different departments, divisions and main and sub-post offices all over the Island. Besides delivering letters and parcels, these sub-post offices have started delivering money under the new system and that too in a matter of seconds. For the most part, the revolutionary M-ePay platform has appeared to be a financial lifeline for the rural communities in Sri Lanka who normally don’t have an easy access to conventional banking services compared to the mainstream urban areas.
If sent by offline money transfer channels, it would take some days to deliver money to its destination in Sri Lanka. Sometimes it takes even more than a week to send money from one point to another, considering the long distances, rough terrain as well as the lengthy times involved to reach far flung rural areas. Moreover, the financial transactions that are carried out through manual methods in a paper environment lead to many mistakes and errors. The modern mobile transaction medium has reduced these errors manifold, leading the entire system to better productivity, efficiency and direction.
Living in distant rural towns and villages, rural people keep moving to access basic utilities and the muchneeded banking services. In addition, the thought of suburbs, slums and shanties, brings forward impressions of backward, ignorant masses deprived of basic civic services. However, Sri Lanka’s M-ePay platform serves as an epitome of good governance as it has empowered its more than 80% rural population by bringing to the fore instant access to banking solutions through mobile phones. The success story also shows how a small, communication device can make a big impact on the lives of rural populations.