Despite its benefits to mankind for centuries, cash has undoubtedly become the prime root cause of crime in today’s world.
History has proved that substantial amounts of cash are ever-present in large-scale criminal activities. An example of this would be the history of the Medellín drug cartel founded by Columbian drug lord Pablo Escobar; which dominated the cocaine trade and earned an estimated $420 million a week. All their dealings were in cash and much of it was stored in warehouses and fields.
Digital payment or e-payment is a method of paying for goods or services via an electronic medium without the use of cash or traditional cheques. This mode of payment would enable regulators to monitor transactions at various levels; thus, preventing any illegal activity.
Digitization of payments could potentially reduce financial crimes in Sri Lanka by a great degree as it increases the transparency of transactions; consequently, preventing the flow of unaccounted money and bringing nearly all transactions under the vigilance of authorities.
The transition of Sri Lanka into a cashless society would attract a range of benefits to the economy. Firstly, since cash is the primary mode of transaction in money laundering and terrorist financing, a cashless society would discourage such activities, which would make our society safer and reduce the rate of fraudulent activities. Additionally, the transparency of money transfers created through digitization would also reduce the level of corruption prevalent in the country.
Secondly, tax evasion is a global problem faced by many governments; the Sri Lankan government can have the advantage of having central control of the money supply in the country, which can be achieved through payment digitization. Digital payment would allow the government to monitor and regulate everyone’s income tax payments; this would make the country’s tax system work more efficiently, which would subsequently strengthen the nation’s economy.
Furthermore, this could also contribute to reducing the existence of other types of crimes such as theft, because it would diminish the likelihood of people being exposed to street crime due to the possession of cash. Therefore, payment digitization would allow Sri Lankans to handle monetary transactions securely.
Sweden is an example of a country that exercises the most digital transactions. It was the first European country to introduce banknotes in 1661, and it is now close to becoming the first to get rid of them; their total transaction value in the Digital Payments segment amounts to US$23,746m. The most well-known crime incident in Sweden that featured cash was in 2009, but the number of cash robberies involving Cash-in-Transit vehicles and ATMs has significantly diminished since then. This shows us that digitizing payments could substantially reduce cash-related crime in the country.
Despite the existence of 17 million debit cards and approximately 1.4 million credit cards in Sri Lanka, only 5% of our payments are currently digitized. With the increasing smartphone penetration along with the usage of QR codes and related payment mechanisms, Sri Lanka could accelerate payment digitization of its USD33 billion retail economy. Therefore, taking the required measures to create a secure and efficient society.
The Central Bank of Sri Lanka is making good initiatives regarding the payment digitization drive and is hoping to digitize the majority of payments by 2025. Considering the vast amounts spent on crime detection and related welfare measures, it is essential that the government considers payment digitization as a top priority and commence measures such as supporting SME’s with subsidized POS terminals; rebate systems, etc. in order to encourage digitized payments, whilst linking the digital payments to state-owned bank-related facilities, etc. to fast track this nationally important initiative.
Written by Indhuja Manivannan
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