Sri Lanka Is Finally Getting Full PayPal Access — Here’s Everything You Need to Know

The 15-Year Battle for PayPal in Sri Lanka

Let’s start from the beginning, because this story deserves to be told in full.

Sri Lanka has technically been listed as a PayPal-supported country for years. But “supported” is a misleading word. While Sri Lankan users could send money abroad or buy things online, they could never receive money into their accounts or withdraw funds to a local bank. That limitation devastated an entire generation of digital workers.

Imagine being a skilled software developer in Colombo, earning clients from the USA, UK, or Australia — but being unable to accept payment through the world’s most common digital wallet. Imagine being a graphic designer on Fiverr or Upwork and watching your earnings sit locked in a foreign account because your own country’s banking system couldn’t connect to it.

That has been the reality for hundreds of thousands of Sri Lankans.

The Central Bank of Sri Lanka (CBSL) has been in discussions with PayPal for nearly 15 years. Former President Ranil Wickremesinghe himself announced plans to bring PayPal functionality to Sri Lanka back in 2023 — yet the finish line kept moving further away.

Until now.

---

What Waruna Sri Dhanapala Actually Said

Dhanapala spoke clearly at a recent press conference, and his words carry weight. As the Secretary to the Ministry of Digital Economy — and the former Chairperson of the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) — he sits at the center of this negotiation.

“I spoke to a relevant official at the Central Bank involved in banking oversight and payments. Officially there is no such announcement made yet. However, there is progress made among certain private sector banks with PayPal. I think it is in the last stage of finalisation — that’s what the CBSL has also indicated.”

He confirmed that several Sri Lankan private sector banks have progressed in direct talks with PayPal and its parent company. These banks are working to integrate PayPal’s payment infrastructure within Sri Lanka’s existing foreign exchange and regulatory framework.

This is a three-way collaboration: PayPal, private Sri Lankan banks, and the Central Bank working together to unlock full payment functionality for the country.

---

Is PayPal Already Available in Sri Lanka? Let’s Clear Up the Confusion

In late February 2026, social media exploded with posts claiming that “PayPal has finally arrived in Sri Lanka” and that users can now receive international payments as of February 24, 2026.

Those posts went viral — in English and Sinhala — and sparked massive excitement across the country’s digital community.

But here’s the truth after careful verification:

PayPal is NOT yet fully operational in Sri Lanka.

Fact-checkers compared the PayPal dashboards of Sri Lankan users with those of Filipino users — a country where PayPal works completely. The difference was clear. Sri Lankan accounts are still missing critical business features like:

• Invoicing tools
• Payment request links
• The ability to receive money from international clients
• Bank account withdrawal functionality

While the option to “add a bank account” appears in Sri Lankan dashboards, it remains inactive and non-functional.

When asked directly, the Central Bank of Sri Lanka responded: “We still cannot officially declare that PayPal is fully operational, but we are continuing to work towards full operationalisation.”

The Ministry of Digital Economy’s Media Secretary added: “The country is in the final phase of enabling PayPal inward remittances, but there is still no official launch date announced.”

So to be absolutely clear — full PayPal functionality is coming, but it is not here yet.

---

Why Did This Take So Long?

The delay is not a result of laziness or indifference. It comes from the complex web of foreign exchange regulations, banking compliance rules, and international financial law that governs how money moves across borders.

Sri Lankan law has historically prevented foreign funds from entering local accounts through third-party digital wallets. PayPal’s own support documentation acknowledges this, noting that full functionality in Sri Lanka is limited due to the “complexities of local finance laws.”

Every dollar that enters Sri Lanka through digital channels must pass through CBSL-approved mechanisms. Until now, PayPal had no legal pathway to move money into Sri Lankan bank accounts in a way that satisfies those requirements.

Building that pathway requires not just political will — it requires technical integration between PayPal’s global systems, individual Sri Lankan banks’ infrastructure, and the Central Bank’s regulatory oversight tools.

That work is now, reportedly, nearly complete.

---

What This Means for Freelancers and Small Businesses

This is where the story gets truly exciting.

Sri Lanka has a massive and growing community of freelancers, remote workers, and internet-based entrepreneurs. These include software engineers, content creators, UI/UX designers, digital marketers, virtual assistants, and online educators — most of whom earn primarily in foreign currency.

Right now, many of these workers rely on:

• Card-based payments through Visa/Mastercard, which carry high fees and processing delays
• Wise (formerly TransferWise) and similar platforms — useful, but not universally accepted
• Friends’ foreign PayPal accounts — risky, informal, and technically a violation of PayPal’s terms
• Undiyal — an ancient informal remittance system that operates completely outside government oversight

Dhanapala directly addressed the foreign-account workaround problem. “What we saw before was that due to the inability of opening a PayPal account from Sri Lanka, most businesses and individuals would use alternate means such as using the foreign accounts of friends. So there is a level of remittances lost because of these barriers.”

By enabling PayPal officially, Sri Lanka will:

Capture billions in previously lost foreign exchange — money that currently flows through informal channels will now enter the formal banking system. This directly strengthens Sri Lanka’s foreign reserves, which have been a critical concern following the 2022 economic crisis.

Protect freelancers from platform bans — using fake foreign addresses or third-party accounts violates PayPal’s terms of service. Sri Lankan users risk permanent bans. Official access eliminates that risk entirely.

Create a transparent, traceable income record — this matters for freelancers who want to apply for loans, mortgages, or visas. Formal PayPal income becomes documentable income.

Simplify cross-border business — no more delays, no more workarounds, no more explaining to international clients why you can’t accept PayPal.

---

The VAT Complication — A Cloud Over the Good News

Here’s where things get complicated.

The Sri Lankan government announced in its 2025 budget that it would introduce an 18% Value Added Tax (VAT) on digital services provided by foreign companies to Sri Lankan consumers, effective April 1, 2025.

This tax targets platforms like Netflix, Spotify, Adobe, and — potentially — PayPal.

If applied, PayPal would be required to charge Sri Lankan users an additional 18% VAT on top of its existing transaction fees. For a freelancer receiving $1,000 through PayPal, this could mean losing $180 simply to VAT, on top of PayPal’s standard 3-5% transaction fee.

The freelance community is deeply concerned. Many argue that this tax — designed to capture revenue from consumer-facing digital services — should not apply to payment processing tools used by earners, not consumers.

The government introduced the VAT measure partly as compensation for dropping the Imputed Rental Income tax that the IMF had recommended. It forms part of Sri Lanka’s broader revenue consolidation program under the IMF bailout agreement the country entered following the 2022 economic collapse.

Clarity on how this VAT will apply to PayPal for receiving income — as opposed to purchasing services — is urgently needed. Without it, the excitement around PayPal’s arrival risks being significantly dampened.

---

What Happens Next — The Road to Full Launch

Based on all available information, here is what we know about the path forward:

The Central Bank continues to finalize the regulatory framework. Private sector banks are completing their technical integration with PayPal’s systems. PayPal itself is working through compliance requirements with local banking partners.

No official launch date exists yet. But all signals point to a launch within weeks or months, not years.

When it happens, Sri Lanka will join a long list of countries — including India, Bangladesh, Pakistan, and the Philippines — where PayPal operates with full send-and-receive functionality.

The Ministry of Digital Economy has emphasized that the rollout will initially focus on small and medium enterprises (SMEs) and internet-based service providers, with broader consumer features to follow.

---

The Bigger Picture — Sri Lanka’s Digital Economy Ambitions

PayPal access is not just a convenience story. It is a national economic strategy.

Sri Lanka’s digital economy is one of the few sectors that grew during the country’s devastating 2022 economic crisis. Remote work, software exports, and digital freelancing provided income to thousands of families when traditional industries collapsed.

The government recognizes this. The Ministry of Digital Economy, the CBSL, and the broader policy establishment are all pushing to make Sri Lanka more attractive as a remote work hub and digital export destination.

Enabling PayPal — properly, transparently, and within regulatory bounds — is a foundational step in that direction.

---

Final Thoughts

Sri Lanka has waited 15 years for this moment. The finish line is finally visible.

For every freelancer who has ever used a friend’s overseas account, faked a foreign address, or lost clients because PayPal wasn’t an option — your wait is nearly over.

The system is not perfect. The VAT question remains unanswered. The launch date remains unknown. But the progress is real, the commitment is genuine, and the momentum is undeniable.