Sri Lanka nears final approval for PayPal inward remittances

Sri Lanka is in the final phase of enabling PayPal-supported inward remittances, according to Secretary to the Ministry of Digital Economy Waruna Sri Dhanapala, marking a major step toward allowing local businesses to officially receive foreign payments.

Speaking on recent media reports, Dhanapala said he had consulted officials of the Central Bank of Sri Lanka responsible for bank supervision and payments. Although no formal announcement has yet been made, he confirmed that there has been clear progress. The Central Bank has indicated that the initiative is now in its final stage.

The move follows discussions and coordination between several private banks, PayPal, and its parent company PayPal Holdings, Inc.. The collaboration aims to remove long-standing restrictions that prevented Sri Lanka from receiving payments through PayPal.

Once implemented, the system will allow small and medium-scale businesses, including internet-based service providers, to receive foreign income through a formal online payment method. At present, many rely mainly on traditional credit and debit card payments to access international funds.

Dhanapala noted that the absence of a Sri Lankan address option on PayPal had forced some local businesses to use foreign or false addresses to open overseas accounts. This has led to a loss of valuable foreign exchange for the country.

He said that once the new facility is formalised, these transactions will come under the Central Bank’s regulatory framework. This will provide a faster and legitimate online payment channel for both consumers and entrepreneurs.

The initiative is also expected to improve transparency. Dhanapala acknowledged that informal remittance systems such as Undiyal still operate in the country. However, the new mechanism is expected to encourage users to shift from unofficial channels to a government-recognised system.

He added that any taxes due on these earnings can then be properly recorded and collected, bringing additional benefits to the government while strengthening the country’s formal financial system.