Malaysia’s total card payments value is projected to increase from US$50.4 billion in 2019 to US$81 billion in 2023, as the country makes steady progress to reduce cash dependence, said GlobalData in a report.
The share of cash in total payments will decline from 88.1 per cent in 2019 to 80 per cent in 2023, the data and analytics firm added.
“While cash continues to dominate overall payments, there has been significant progress in the adoption of card-based payments,” Ravi Sharma, senior payments analyst at GlobalData, said. “The government initiatives including the introduction of an interchange fee cap, the migration of payment cards to support personal identification number (PIN) and contactless payments, and the expansion of point-of-sale (POS) terminals have all contributed to the growth of the payment cards market.”
The Malaysian government set up Market Development Fund with plans to have 800,000 POS terminals in the country by the end of 2020.
The report also noted the “key role” of the Bank Negara Malaysia (BNM) in promoting electronic payments. The Malaysian central bank has completely waived interchange fees for any payments made via domestic debit cards to the government or its agencies until 31 December 2020.
Through the policy, the BNM hopes to incentivise the Malaysian government and its agencies to accept debit and prepaid cards.
Similarly, scheme providers are gradually reducing interchange fees. Effective from 1 January 2019, the interchange fee of Mastercard and Visa credit cards was lowered to 0.675 per cent, against 1.037 per cent in 2017; while American Express revised its interchange fee on credit cards to 0.575 per cent.
Reduced interchange fees will further boost payment card acceptance among merchants, said the report.
Mr Sharma said: “Improving payments infrastructure and lower card acceptance cost will further push the use of payment cards in Malaysia over the next five years.”