How digital payments are transforming the Sri Lankan e-commerce landscape

E-commerce in Sri Lanka is booming, with online transactions increasing year on year. This growth is pushing the country toward digital payment methods and away from its traditional cash-on-delivery culture. For both local and international sellers, digital payments are more than just a convenience, they are a crucial foundation for trust, transparency, and global expansion.

For Sri Lankan small and medium-sized enterprises (SMEs) looking to reach international customers, integrating secure online payment systems with reliable delivery creates a seamless shopping experience that fosters confidence at every stage, from checkout to delivery. This guide explores how Sri Lanka’s e-commerce ecosystem is evolving, why cash on delivery in Sri Lanka is declining, the types of electronic payment systems shaping buyer preferences, and how dependable logistics can build lasting trust with global shoppers.

Why cash on delivery is losing ground in Sri Lanka

For years, cash on delivery in Sri Lanka (COD) was the reigning payment method for local e-commerce transactions¹. This system became popular for two main reasons: Trust and accessibility. Many Sri Lankan customers, particularly those without bank accounts or credit cards, relied on COD to shop online as it allowed them to inspect the goods before parting with their money.

However, as the market matured, consumer behaviour began to shift. More Sri Lankans started embracing digital payments, driving rapid growth across the sector. According to the Central Bank of Sri Lanka, the nation’s e-commerce transaction value surpassed US $4.61 billion in 2024, with card payments increasing by more than 27%², a clear sign of the country’s move toward digital-first transactions.

With this growing adoption, the limitations of COD have become harder for businesses to ignore. These include:

• High return rates and delayed cash flow for sellers
• Added processing and reconciliation costs
• Security and efficiency challenges for delivery teams³

These challenges have made COD increasingly unsustainable, particularly for businesses seeking international expansion. Since COD is largely incompatible with cross-border shipping and global fulfillment, many sellers have begun shifting towards more efficient and scalable payment solutions.

To stay competitive, businesses are now embracing prepaid and digital payment solutions that offer faster transactions, reduce fraud, and improve cash flow visibility. More importantly, these systems integrate easily with global logistics networks, allowing merchants to provide smoother checkout experiences and build greater customer trust.

This steady transition away from COD has accelerated the development of a robust electronic payment system in Sri Lanka, empowering businesses to serve both local and international customers with greater speed, security, and efficiency.

Types of digital payments powering Sri Lanka’s e-commerce

Sri Lanka’s e-commerce boom is fuelled by a growing range of digital payment methods that are transforming how consumers shop and how businesses connect with global markets. From globally accepted cards to localized mobile solutions, these payment options cater to diverse customer needs, build trust, and unlock new opportunities for global growth.

Credit and debit cards

• Widely recognized and accepted internationally
• Allows for instant transactions and multi-currency payments
• Pros: Trusted, familiar, and convenient for global shoppers
• Cons: Transaction fees for merchants and dependency on banking infrastructure

Mobile wallets and QR-based payments

• Examples include FriMi, eZ Cash, and mCash
• Supported by initiatives like LankaQR to simplify payments
• Pros: Fast, convenient, accessible to unbanked populations
• Cons: Limited international usage and variable adoption in rural areas

International payment gateways

• Examples include PayPal, Stripe, and 2Checkout
• Enable cross-border payments and provide built-in fraud protection
• Pros: Essential for international expansion, supports multiple currencies
• Cons: Higher fees and setup complexity for small businesses

Key challenges in digital payment adoption for Sri Lankan businesses

Despite growing adoption, some Sri Lankan businesses may struggle with digital payments due to technical, regulatory, and consumer-awareness gaps. Addressing these issues can streamline transactions and build trust with local and global customers.

1. Gateway fees and integration costs

Many payment providers charge setup or transaction fees, which can discourage smaller businesses from switching to digital payment methods.

Tip: Compare multiple providers to find competitive rates, and consider providers that scale fees with transaction volume. Integrating payment solutions that offer plug-and-play compatibility with popular e-commerce platforms can also reduce setup costs.

2. Cybersecurity concerns

Merchants and customers often worry about fraud and data breaches.

Tip: Implement SSL certificates, use verified payment gateways, and display trust signals (e.g., security badges, verified payment logos) prominently at checkout. Regularly updating security protocols can protect both your business and your customers.

3. Infrastructure and access gaps

Rural areas may lack reliable internet access or digital banking services, creating a divide in adoption.

Tip: Offer multiple payment options, including mobile wallets and QR-based solutions, to accommodate different access levels. Educating customers on safe digital payments can also build confidence in underserved regions.

Building customer trust with secure payments and reliable logistics

Secure digital payments are only one part of a seamless e-commerce experience. Shoppers are more likely to pre-pay when they trust that orders will arrive safely and on time. Reliable logistics provides this crucial layer of confidence, turning hesitant buyers into loyal customers.

Visibility builds confidence

Advanced tracking tools and clear shipping timelines give customers peace of mind, lowering perceived risk and encouraging digital payments.

Flexibility enhances experience

Flexible delivery options, including on-demand delivery, empower buyers to choose delivery times and locations that suit them. This control reinforces trust and enhances the overall shopping experience.

Partnering with a global courier like DHL transforms logistics from a cost center into a driver of customer confidence, supporting both local and international growth.

The future of e-commerce: Digital payments and logistics working together

As fintech innovation expands, cash on delivery will soon give way to secure, instant, and globally connected digital payment systems. Businesses that integrate secure digital payment methods with efficient, transparent logistics will stand out in a competitive marketplace. Reliable international shipping and strong delivery visibility are key to gaining global consumer trust.

DHL Express empowers this transformation with secure, timely deliveries, smooth customs management, and the ability to optimize e-commerce shipping fees while maintaining competitive international shipping rates and the reliability of a trusted global courier network.

Transform your e-commerce success with secure digital payments and fast, dependable delivery. Open a DHL Express business account today to simplify international shipping, enhance customer trust, and expand your brand across borders.