Srilanka, Oct. 5 -- A three-wheeler driver navigates through the busy streets of Colombo while his passengers hand him crumpled bills after their short ride.

The same transaction process occurs two kilometres away in Bangalore where an Indian user scans a QR code to make a cashless and instant payment that leaves a digital trail. The tiny difference reveals that Sri Lanka faces a critical moment in its digital payment transformation although the country has not made the necessary transition.

Sri Lanka has introduced LankaQR to enable easy, cashless transactions. The tool exists as a paper-based system which aims to give power to micro-SMEs who operate as street vendors and trishaw drivers and small grocery stores and neighbourhood salon...