Consumer demand for real-time payments on the rise in Malaysia

KUCHING: Consumer demand for real-time payments is on the rise in Malaysia as the pandemic accelerates digitisation of payments, according to new research from ACI Worldwide and YouGov.

More than half of consumers (52 per cent) in Malaysia selected real-time payment methods – such as DuitNow – as a preferred way to pay in 2021, behind only cash (62 per cent) and digital wallets requiring cash or card top-ups (62 per cent).

This shift towards real-time payments has been dramatically accelerated by changing payment necessities and preferences caused by the Covid19 pandemic.

One third (32 per cent) of consumers in Malaysia have reduced their usage of traditional payment methods such as cash, credit cards and debit cards since the onset of Covid-19. As a result, almost half (45 per cent) are now using realtime payments more than they were prior to the pandemic.

Due to rapid technological change, consumers now expect mobile-first and realtime experiences — however, payments have often lagged. The development of real-time payment systems enables consumers, merchants and financial institutions to pay friends and customers, settle bills and transfer money instantaneously.

While cash has always represented an “immediate” mode of payment, the advent of real-time payment rails brings this concept into the digital age with faster settlement periods, notifications and consolidated reporting.

“This fundamental shift in consumer demand and payment expectations sets forth a challenge for Southeast Asia’s banks, financial institutions and merchants,” said ACI Worldwide Asia managing director Leslie Choo.

“These organisations can illafford to put their modernisation projects on hold, despite the challenges caused by Covid-19. On the contrary, they can drive growth by joining the region’s emerging real-time payments ecosystem, which will improve their ability to innovate and transform while reducing the cost of infrastructure and operations.”

The ACI Worldwide and YouGov study also reveals how consumers in Malaysia expect the benefits of using real-time payments domestically to extend across borders once they begin to travel internationally again, as well as when they shop cross border.

For future international travel, consumers have elevated expectations for the transparency, safety and convenience of their payments when compared to their travel experiences pre-pandemic.

Almost half (49 per cent) of Malaysian consumers who have travelled internationally in the past expect their usage of real-time payment methods to increase when they next travel.

Meanwhile, 70 percent say the ability to use their preferred payment methods while travelling abroad will be more important now. As a result, a quarter (25 per cent) expect their usage of traditional payment methods such as cash to reduce when they next travel.

Three quarters (76 per cent) say payment safety and fraud prevention is more important now, while two thirds (67 per cent) say transparency of interchange rates is now of greater importance.

While the number of Malaysian consumers who are making international eCommerce purchases has increased over the past year, consumers are looking for further guarantees about payments to encourage them to do so more in the future.

A quarter (25 per cent) of consumers are shopping more with merchants based in other Southeast Asia countries since the start of the pandemic, while a similar amount (23 per cent) are shopping more in stores outside of Southeast Asia.

“A focus on payments modernisation is vital for financial institutions that want to ride the wave of the region’s biggest and most transformative payments trend — the emergence of a cross-border, real-time payments ecosystem,” added Choo.

“Unencumbered by legacy payment systems that can impede innovation in mature markets, countries in Southeast Asia can leverage robust domestic central payment infrastructures as the foundations for cross-border real-time payments, which will be a catalyst for growth and trade in the coming years.”

This fundamental shift in consumer demand and payment expectations sets forth a challenge for Southeast Asia’s banks, financial institutions and merchants.

Leslie Choo