In Malaysia, a big push towards going fully cashless

MORE Malaysians are relying less on using cash these days and turning more towards contactless payment options such as e-wallets for their daily spending.

According to latest available data from Malaysia’s central bank, consumers made an average of 221 e-payment transactions each in 2021 — higher than the 170 in 2020 and 150 in 2019. The number of active e-wallet users has also jumped to 13.5 million in 2021, from 8.7 million in 2020.

A recent study conducted by Visa on consumer payment attitudes in South-east Asia found that up to 74 per cent of Malaysian consumers have managed to go cashless, and that it will take just 3 more years for the country to become regarded as a cashless society.

Among all Asean countries, Malaysia is tops when it comes to making payments online for home deliveries, with 84 per cent of consumers doing so.

Serm Teck Choon, the co-founder and chief executive officer of marketing technology company Antsomi, described the growing popularity of digital payments as a “big leap”. Not too long ago, many consumers and business owners were reluctant to make use of digital payments, but he says the vast majority of them now have at least one active e-wallet app in their mobile phones.

“I can leave home without my wallet but not my phone,” he said with a laugh, adding that one can buy almost anything these days without having to fiddle with notes or coins.

An earlier survey by Visa found that 55 per cent of Malaysian respondents claim they could go more than a week without using cash, a sharp increase from just 13 per cent in 2020. More than a quarter of those polled — 28 per cent — said they will continue to go largely cashless from now on.

On the business side of things, digital-payment platform providers say they are seeing an increase in merchants asking for cashless payment services.

A spokesperson for Touch ‘n Go eWallet, the popular digital wallet and online payment platform, said the number of merchant acceptance points now stands at over 670,000, from just 277,000 in 2020.

Boost, the fintech arm of telco Axiata, said its Boost Biz merchant business has nearly 500,000 touchpoints nation-wide today, with its Boost Life app catering to over 10 million users.

Boost’s group chief executive officer Sheyantha Abeykoon noted that more than half of its merchant base are micro, small and medium-sized enterprises that have traditionally run cash-based operations, such as night-market traders, mom-and-pop shops, roadside stalls and neighbourhood grocers.

Lim Kim Heng, the founder and group executive chairman of consumer electric appliance retailer Senheng Electric, told The Business Times: “Malaysians who were once amazed by the cashless payment technologies in China are now seeing themselves doing it. It’s no longer a hype, as many have enjoyed the benefits of using digital payments.”

Lim noted that 75-80 per cent of customers now prefer cashless payments, and he expects this figure to rise to 90 per cent by the end of this year.

Despite the extra charges that digital payment platforms impose on merchants, Lim felt that these fees — typically less than 1 per cent of the sale amount — are worth it as it makes the operations smoother, as there’s no need to head to the bank every day to make cash deposits.

On its part, the Malaysian government has a national blueprint that aims to have the digital economy contribute 22.6 per cent to the country’s gross domestic product by 2025. The Malaysian Digital Economy Blueprint, as it is called, also aims to create 500,000 job opportunities.

The government is also doling out several initiatives to increase the adoption and acceptance of cashless transactions. A sum of RM300 million (S$94.5 million) was pumped into the new ePemula scheme, which saw 2 million youths aged between 18 and 20 years old and full-time university students getting RM150 each via their e-wallets.

But going digital too quickly does have its fair share of drawbacks as well. Even as Malaysia goes all out to promote a cashless society, observers stressed the need to ensure this push can include everyone including the older and less tech-savvy groups.

“Moving too fast could be detrimental to financial inclusion. To avoid a digital divide, the design of cashless payment platforms should guarantee accessibility for the most vulnerable groups in society,” said Jan Ondrus, an associate professor of information systems and associate dean of faculty at ESSEC Business School, Asia-Pacific.