Malaysia joined the credit card revolution in the mid-1970s, but today we are seeing a new chapter in cashless transactions due to the boom in digital technologies. A major milestone was achieved when Maybank2u burst into the scene in June 2000, becoming the first one-stop online financial portal in Malaysia.
Today, the country’s e-commerce market, including cashless and mobile payment ecosystems, is valued at over USD$4 billion (RM16.69 billion). Annual sales have expanded significantly since 2015, jumping 47.8 percent in 2017 alone.
Within this segment, the digital wallet is expected to experience the fastest growth from 2019 to 2021, with uptake increasing at a compound annual growth rate of 53 percent, according to projections by JP Morgan. PricewaterhouseCoopers is similarly optimistic, and expects Malaysia’s e-wallet market to be worth US$20 billion (RM83.8 billion) by 2024.
Today’s reality
Experts attribute this phenomenal growth to the country’s high internet and mobile penetration rates. Add to this the introduction of a wide range of mobile wallets into the market, offering not just the convenience and security of payment, but also extensive perks and benefits. This bodes well for digitally-savvy consumers who are always on the lookout for convenience and cost savings.
Fiona Jitab, a senior digital and analytics manager, is a typical user. She accesses a plethora of mobile wallets for a wide range of transactions daily thanks to the different rewards she obtains.
“I hardly ever carry much cash anymore as I tend to use mobile wallets for everything from food and commute, to bills and even unexpected purchases,” the Miri-born Fiona said.
“It’s easier to track all my expenses this way. Plus, I save more money with the cashback and points redemption on my next purchase,” she concluded.
Tomorrow’s aspiration
While the electronic and digital payment ecosystem in Malaysia is still nascent, both public and private sector players are pushing to expand into untapped markets and accelerate full migration to e-payment.
Bank Negara Malaysia (BNM), through its Financial Sector Blueprint 2011-2020 (FSBP), is working with industry players to improve and widen access to e-payment infrastructure, as well as identify and remove barriers to greater adoption. This includes rolling out the Interoperable Credit Transfer Framework (ICTF) that establishes a shared payment infrastructure connecting bank and non-bank accounts, as well as the Real-time Retail Payments Platform (RPP) to enable seamless and secure payments through simple identifiers, such as mobile phone, IC, and business registration number.
Towards a Cashless Society
The Covid-19 pandemic has accelerated the use of cashless payments amid safety issues and movement restriction orders set by the Malaysian Government. With concerns on the transmission of the virus through the passing of banknotes or the use of ATMs and credit card terminals, the public is shifting towards a cashless society.
A report by Mastercard Impact Studies noted an 18 percent rise in Malaysian consumers using cashless payments in April 2020. The usage of cash dropped 64 percent since the start of the pandemic. Meanwhile, the use of mobile/digital wallets rose by 40 percent, contactless debit cards surged by 26 percent, and contactless credit cards increased by 22 percent.
Looking beyond safety and convenience, the use of contactless payments and digital wallets also translates to improved transparency, better access to financial data, and easier tracking of transactions. The contactless mode of payment which began as a necessity in the Covid-19 era has now become the preferred way of payment, and the rise in its adoption rate is expected to continue.
*The article is updated on 20th October 2020
