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E-Payment Usage Trends in Malaysia
The e-payment system has seen increasing acceptance among consumers in Malaysia. This can be observed from the increases in the non-cash retail transactions in recent years (Figure 2 [ PDF 27KB | 1 page ]). The volume of non-cash transactions per capita in Malaysia increased from 13.8 to 32.5 (from 2003 to 2007). In terms of value, e-payment's share of the total non-cash retail payments increased from 3% to 7% (from 2003 to 2007) (Bank Negara Malaysia 2007). The increase in the use of e-payment instruments is due to cost, with possible savings in security and insurance premiums, and safety, with the risk of theft, robbery and human error due to holding cash reduced. Also contributing to consumer willingness to use e-payments is the confidence conferred from security measures of e-payment instruments that provide protection against theft and fraud, such as the Bankcard security feature of requiring Personal Identification Numbers. Among e-payment instruments, the major instruments in use in Malaysia are credit cards, internet banking and IBG. Also in use, but of lesser importance, are charge cards and debit cards. E-money—a term generally used for mediums of settlement that use neither cash nor paper—refers specifically to prepaid instruments containing monetary value that can be used make purchases, at merchants that accept it as payment, the amount of which is automatically deducted from the e-money balance. There are currently two types of e-money: card-based, such as prepaid cards; and network-based, such as internet accounts that may be accessed via a mobile phone. Both of these are also of minor importance among e-payment instruments. Mobile banking is still not widely used (Figure 3 [ PDF 31.7KB | 1 page ]).
4.1 Credit Cards
Credit cards are the most widely used e-payment instruments in Malaysia in terms of volume of transactions and the second most widely used in terms of value of transactions. Both the value and volume of transactions per capita have increased from RM1,159 and 5.8 to RM2,047 and 8.7, respectively (from 2003 to 2007) (Figure 3 [ PDF 31.7KB | 1 page ]). Possible reasons for the continued high usage levels for credit cards are its acceptance by consumers due to it being the oldest e-payment instrument in Malaysia, and consumer demand for credit.
IBG is the leading e-payment instrument in terms of value of transaction per capita. IBG's value of transactions per capita has increased from RM294 to RM2,439 (from 2003 to 2007) (Figure 3). In terms of volume of transactions per capita, however, its usage is still low at 1.0 (2007). According to the central bank, the increase in 2007 was due to the three reasons: three additional banks joined the IBG system, usage in the government sector was encouraged by the government and corporate clients were aggressively recruited to adopt IBG (Bank Negara Malaysia 2007). Usage of IBG is expected to increase further, as the government sector has only begun to use it and acceptance of it in the corporate sector could grow.
4.2 Internet Banking
Internet banking registered strong growth in Malaysia (Figure 3). The value and volume of transactions per capita increased from RM403 and 0.3 to RM2,047 and 1.5 respectively (from 2003 to 2007). In addition, the use of internet banking among internet subscribers in Malaysia increased from 59% to 85% (from 2003 to 2007). The increased subscription rate was due to the extensive use of internet banking for salary and bill payments, third party fund transfers, and credit card settlement (Figure 4 [ PDF 28.3KB | 1 page ]) (Bank Negara Malaysia 2007).
Charge cards and e-money are the fourth and fifth most widely used e-payment instruments in terms of value of transactions per capita. From 2003 to 2007, the value of transactions per capita for both payment instruments showed a notable increase (Figure 3) from RM74.9 to RM81.7 for charge cards and from RM22.4 to RM59.0 for e-money. The volume of transactions per capita for e-money increased from 7.6 to 22.3, but volume of transactions per capita for charge cards was flat. The value of transactions per capita for debit cards showed a significant increase from RM3.5 to RM42.9. However, the volume of transaction per capita remained static. Mobile banking is still not widely used in Malaysia, with a very low value of transaction per capita of RM0.3 in 2007.
Check usage has been flat (Figure 2). The number of checks issued per capita declined from 7.7 to 7.5 (from 2003 to 2007). This decline could be due to the increasing availability of e-payment channels, which offer convenience and cost efficiency to consumers and business. In terms of the value of transactions, however, checks remained dominant, accounting for 93% of the total value of non-cash retail payments in 2007, although that was down from 98% in 2001 (Figure 5 [ PDF 28.7KB | 1 page ]).
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