Cashing in on the ewallet trend
You’re walking about the Kuching Food Festival, getting food and delicacies at the surrounding stalls. You make your way to the cashier – but you don’t have any cash on hand!
Instead, you pull out your phone, click on an app, scan the QR code by the cashier counter, press a few more buttons – and poof! You’re done and on your way to feast.
Such is the ease of li fe thanks to electronic wallets, or e-wallets as they come by – a trend gaining traction in Malaysia as companies try to gain a competitive edge in this unique subsegment of financial technology while consumers grow more tech- savvy.
The use of e-wallets has the potential to benefit all segments of society, especially people who do not have a bank account as well as businesses – both big and small – from roadside stalls to hypermarkets and more.
For businesses, a cashless environment eliminates costs and risks of storing cash and payment bottlenecks in the supply chain.
This is likely the reason why a boom in e-wallets happened in the country within the past few years.
Mainland China is perhaps the global tech leader taking the e-wallet industry to the next level, with its two leading giants – AliPay and Wechat Pay – said to have also reached Malaysian shores.
Singapore - based Grab rolled- out its digital payments service GrabPay to third-party merchants in November last year, making QR code payments available in hawker centers and restaurants throughout the city- state.
An update is that GrabPay will be rolled into Grab Financial, its new service offering loans and insurance products to the firm’s drivers, online-to- offline agents, and merchants.
AMMB Holdings Bhd (AmBank Group) is expected to launch an e-wallet payment plat form next month in cooperation with one of the largest telecommunication ( telco) companies in the country, according to group chief executive officer Datuk Sulaiman Mohd Tahir who said the e-wallet would enable the telco’s subscribers to make payments at more than 50,000 existing merchants.
“An announcement on this will be made in the next month or so,” he told a press conference after the company’s annual general meeting earlier this week.
This was in addition to all telecommunication players – Celcom Axiata Bhd, Maxis Bhd and Digi.com Bhd – as well as a variety of key industry players such as AirAsia Bhd (AirAsia), Samsung Malaysia and even Lazada Malaysia offering its own version of an e-wallet.
Even Sarawak joins the fray with its very own Sarawak Pay app, initially designed to ease the process of bill payments but now expanded to offer much more. Growing figures
Adopt ion of elect ronic payments is encouraging, according to Bank Negara Malaysia’s Annual Report 2017 released earlier this year, as the number of e- payment transactions per capita has more than doubled to 111.
This comes as the volume of cheques declined by 41.9 per cent to 119 million or four cheques per capita.
Meanwhile, the number of point- of- sale terminals has expanded rapidly and the volume of debit card transactions increased by more than six times to 162.3 million transactions or 5.1 transactions per capita.
The central bank said a major milestone in 2017 was the smooth transition from signature to the more secure PIN-based payment cards on July 1, 2017, which was achieved without disruptions to payment transactions.
“In 2018, the bank will focus on initiatives to promote mobile payments to complement debit cards in displacing cash.
“An area of primary focus will be the operationalisation of the Interoperable Credit Transfer Framework ( ICTF).
“By ensuring fair and open access to a shared payment infrastructure by banks and nonbanks, the ICTF is envisioned to drive greater competition, spur the development of innovative payment services to cater to the needs of different customer segments, and foster greater financial inclusion.”
Maxis’ head of consumer business Dushyan Vaithiyanathan said the proliferation of smartphones and an accelerating data usage are encouraging a shift in purchasing behaviour towards more transactions via mobile.
“The government’s push for a cashless ecosystem further amplifiesthegrowingimportance of digital payments or e-wallets as the inevitable future of commerce,” he said to BizHive Weekly in an interview.
“However, we see some challenges in mass adoption, which is triggered by a number of things. One of them is a sizeable underserved market – those without bank accounts – who have very little means of participating in today’s digital commerce.
“We do see a lot of potential in this space, which is why we have been building micro- offerings that are tailored for this segment, predominately within in our prepaid customer base, to help them play a more active role in mobile commerce.”
For an ewallet to serve its purpose, Dushyan said the entire ecosystem needs to be interoperable and seamless.
Otherwise, “it is nothing more than an enabler or technology platform,” he said.
This is why we need partnerships to establish the many components that will ensure an effective and successful ecosystem,” he added.
“As I’ve mentioned, there is little to no interoperability for e-wallets due to the relatively new mobile payments industry. Merchant acquisition is getting more challenging, and also user trends still point towards cash or a high dependency on credit cards.
“There are factors that will enable this interoperable ecosystem, and eventually lead to greater acceptance and adoption of e-wallets.
“One of them is security, which ultimately leads to a higher level of trust by the consumer that is needed to influence greater adoption.”