Businesses looking to expand in Malaysia need to offer digital wallet payment options, as these cover a much greater proportion of the population than credit cards.
Bank Negara Malaysia, which regulates the nation’s financial industry, has so far issued 46 e-money licences, only five of which have gone to players in the traditional banking space.
“It’s really a war of the e-wallets in Malaysia,” according to Johnny Chong, head of sales at Kuala Lumpur-headquartered payment company, iPay88 Holding.
Speaking at the recent Ecommerce Expo Asia, he explained that about “65 to 70% of transactions” take place through online banking, versus about a third or so through credit cards. (For more, read WARC’s report: Five payment trends to watch out for in Malaysia.)
Among the major players, Boost and Touch ‘n Go each have more than 5 million subscribers, while GrabPay claims that it is used by two out of three Malaysians.
“I see the traction going upwards every day, every month,” Chong said, citing several factors in Malaysia that favour continued growth in e-wallet payments.
One of these factors is its young population, many of whom are digital natives, with 45% comprising millennials. “These are young adults, Gen Z and Gen Y, who are mobile-first users. For everything, they eat, sleep and drink mobile phones.” A related issue is that 21 is the minimum age to apply for a credit card.
The Malaysian government is also encouraging a cashless society. At the same time, e-money issuers are pushing for e-wallet adoption with attractive promotions that can drive traffic to stores.
“I get cashback every time I use e-wallets,” said Chong. “If I send US$24 (RM100), I get US$2.40 (RM10) back. That’s 10% cashback. When I use cash, I don’t get anything. If I use a credit card, I might get points, but it’s not as good as what e-wallets offer.”
Based on figures from the Malaysian Statistics Department, the total population stands a 32.6 million, while credit card circulation, according to Bank Negara Malaysia, is about 10.3 million.
“If you only offer credit card payments in Malaysia, you might not see your business grow,” said Chong, adding that offering major e-wallet payment options should be seriously considered by any business looking to grow in the market.
Sourced from WARC