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The Rise of E-Commerce in Sri Lanka: The Impact of E-Money

The Rise of E-Commerce in Sri Lanka: The Impact of E-Money

Sep 07 2023

The rapid growth of e-commerce in Sri Lanka has been driven by advancements in technology and the increasing use of smart devices, especially during the COVID-19 pandemic. With the country's digital economy accounting for 4.37 percent of its GDP in 2022, it is evident that e-commerce has become an integral part of Sri Lanka's business landscape. In this article, we will explore the role of e-money in stimulating the e-commerce boom in Sri Lanka and how it has transformed the way people shop and conduct business.

The Growth of E-Commerce in Sri Lanka

Internet and Smart Devices: Catalysts for Change

The widespread use of the internet and smart devices has played a significant role in fueling the growth of e-commerce in Sri Lanka. According to the Information and Communication Technology Agency (ICTA) of Sri Lanka and the United Nations Conference on Trade and Development, approximately 43 percent of the estimated 11 million internet users in Sri Lanka have made online purchases. This increased internet penetration, coupled with the convenience and accessibility of smartphones and tablets, has made it easier for consumers to engage in online shopping.

Product Categories and Buyer Behavior

The most frequently purchased products in the Sri Lankan e-commerce market are electronics, apparel, and personal care products. This reflects the changing consumer preferences and the shift towards online shopping for everyday items. In fact, around 56 percent of internet users in Sri Lanka state that they have made a purchase after seeing an advertisement on the internet, highlighting the influence of digital marketing in driving e-commerce sales.

Regional Distribution and Market Size

While e-commerce is gaining popularity across Sri Lanka, the Western Province stands out as the largest market geographically, accounting for approximately 50 percent of total orders. This can be attributed to the higher population density and better infrastructure in the region. However, with the increasing adoption of e-commerce, other regions are also experiencing growth in online shopping activities.

The Role of E-Money in Sri Lanka's E-Commerce Boom

E-Payments and Online Banking

E-money, also known as electronic money or digital currency, has played a crucial role in facilitating e-commerce transactions in Sri Lanka. The increased utilization of e-payments and online banking services has made it easier for consumers to make purchases online. All commercial banks in Sri Lanka offer online banking services, allowing customers to transfer funds, pay bills, and make online purchases conveniently.

Government Initiatives and Online Services

The Sri Lankan government has recognized the potential of e-commerce and is committed to increasing the use of online applications and payments for government services. Various government web portals, such as the Inland Revenue web service portal and the online vehicle revenue license renewal platform, have been introduced to streamline certain government services. These initiatives aim to enhance efficiency and convenience for citizens while promoting the growth of e-commerce in the country.

Cross-Border E-Commerce and Limitations

While Sri Lankan consumers have access to global e-commerce sites like eBay and Amazon, there are limitations due to inadequate refund mechanisms and inward receipts. The stamp duty of 2.5 percent applies to credit card transactions in foreign currency, discouraging some consumers from engaging in cross-border online shopping. However, transactions in the local currency are exempt from this duty, making it more favorable for domestic e-commerce activities.

Local E-Commerce Business Service Provider Ecosystem

Internet Access and Mobile Technology

Internet access is growing rapidly in Sri Lanka, with a significant percentage of the population having mobile broadband access. The expansion of 3G, 4G, and the pilot applications of 5G technology by private telecommunications companies have further facilitated the growth of e-commerce. Moreover, the development of payment gateways by financial institutions has provided reliable online payment services, supporting the expansion of e-commerce in the country.

Social Media and Small Businesses

Small and medium enterprises (SMEs) in Sri Lanka are increasingly leveraging social media sites to advertise their products, take orders, and accept payments. Platforms like Facebook, Instagram, and WhatsApp have become essential tools for SMEs to establish an online presence and connect with potential customers. This trend has opened up new opportunities for local businesses to thrive in the e-commerce space.

Intellectual Property Rights and Regulations

Sri Lanka has laws in place to protect intellectual property rights in the e-commerce sector. Acts such as the Evidence (Special Provisions) Act, the Intellectual Property Act, the Electronic Transactions Act, and the Computer Crimes Act ensure legal certainty and international validity for e-commerce and e-business providers. However, there is currently no local body to regulate e-commerce businesses, and there have been calls for the government to consider implementing regulations, especially in light of increased competition from international e-commerce sites.


The rise of e-commerce in Sri Lanka has been fueled by the increased use of the internet, smart devices, and e-money. With a growing digital economy and changing consumer behavior, e-commerce has become an integral part of the country's business landscape. The government's initiatives to promote online services and payments, coupled with the efforts of local businesses to leverage social media, have further accelerated the growth of e-commerce in Sri Lanka. As the country continues to develop its infrastructure and regulatory framework, the future of e-commerce looks promising, offering immense opportunities for businesses and consumers alike.

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as legal or financial advice. Please consult with professionals for specific guidance related to e-commerce activities in Sri Lanka.

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