The rising use of e-wallets across the Southeast Asian region has brought Malaysia to the limelight in the digital revolution. Consumers are shifting from cash to contactless payments, as they find the modern convenience of managing their everyday finance via their mobile phones much more pleasant. However, The E-Wallet Trends In Malaysia is moving at an even faster pace because of the reduction of cash usage experienced during the covid pandemic.
Seeing the increasing demand for digital payment solutions in Malaysia, more and more digital wallet providers are now offering innovative solutions in the market.
A Study by Mastercard in 2020 revealed that Malaysia is leading its Southeast Asian (SEA) neighboring countries in terms of usage of digital wallets. The study also found that the use of e-wallets in Malaysia is at 40 percent, followed by the Philippines at 36 percent, Thailand at 27%, and Singapore at 26%. Mastercard gathered data from 10,000 consumers across the Asia Pacific region.
Where customers use E-Wallets?
Across SEA nations, the use of e-wallets has risen by 8% from 2019. Among all the payment methods, cash was still the most preferred payment method for the SEA population in 2020, followed by credit/debit cards at 22.7%, and e-wallets at 22%.
Another study regarding e-wallet trends in Malaysia by Oppotus, found that 60% of the Malaysian customers have used an e-wallet in Q3 2020, which is more than double the number from 27% in Q3 2019. The study also revealed that on average, Malaysian customers used 2-3 e-wallets during Q3 2020.
The surge in the number of users utilizing the power of contactless payment technology is fueled by several industries supporting digital payments. Food & Beverages, Convenience Stores, and the Groceries industry continue to see growth in the number of customers paying via e-wallets. It is due to the continuous promotion of contactless payments (via offers and discounts). Needless to mention that the e-Penjana campaign also elevated the growth chart.
The food delivery services also saw an upsurge in the payments via e-wallets as everyone was trying to stay indoors during the pandemic. Other areas, including Transportation and fuel, realized this increase too.
Another study by BCG (Boston Consulting Group) provided a different view of the market. It revealed that adoption of e-wallet is highest among banked consumers (31%), followed by underbanked at 17%, and unbanked at 9%.
In its study, BCG also discovered that almost 33 percent of the SEA consumers are willing to prioritise choosing non-bank digital solutions for some of their banking activities. The consulting company believes that 12 percent of the credit card and 10 percent of the deposits could shift to non-bank digital solution providers in Malaysia, Thailand, and Vietnam.
Which customer segment uses e-wallets the most?
The report by Oppotus also found that Gen Z has the highest adoption rate for e-wallets in Malaysia, with 71 percent of the respondents using digital payment solutions in Q3 2020. They are followed by millennials, GenX, and Baby Boomers at 60 percent, 59 percent, and 43 percent, respectively.
The study also revealed that households with a median monthly income (between 7,001 and 10,000 RM) use e-wallets the most – at a 73 percent adoption rate. Whereas with 67 percent, high-earning families rank second, and the lower-income families rank in third place with 55 percent rate.
In an earlier study in 2019, the company found that Malaysian males have a slightly higher e-wallet adoption rate (52 percent) than females (48 percent).
Another study by Facebook and Bian & Co., Malaysia found that with 83 percent, Malaysia has the highest percentage of digital customers in the SEA region. Followed by Singapore and the Philippines at 79 and 74 percent, respectively.
The highest adoption of digital customers in the SEA region by Malaysia can be due to the highest smartphone penetration. A report by Statista forecasted that the figure is 94 percent in 2020, and will grow to 97.4 percent by 2022.
E-wallet landscape in Malaysia
With Bank Negara Malaysia licensing more non-banking institutes, Malaysia is set to embrace the vision for a cashless society, in which the residents will have a variety of methods to make mobile/online payments.
Although considering the e-wallet trends in Malaysia, the market is still in its infancy. As many banking, as well as non-banking financial institutions, focus on gaining access to merchants and customers. The increasing mobile penetration will result in a lucrative market for e-wallets in Malaysia.
The development of the tech industry and e-commerce has also added to the increasing popularity of digital payments in Malaysia. While convenience remains the foremost reason why customers prefer paying via e-wallets. Financial transaction security, reward points and cashbacks schemes have also contributed to the growth of e-wallets in the Malaysian market.
As per a report by Fintech Malaysia in 2019, there were a total of 53 e-wallets in Malaysia, with the industry occupying 19 percent of the FinTech space.
Boost, Samsung Pay, and Maybank QRPay are among the top three e-wallets (as per market share) in the Malaysia market, followed by BigPay, Fave Pay, Alipay, GrabPay, and others. Let’s go through them one by one and understand how they’re operating in Malaysia.
With an 18 percent market share, Boost is the top e-wallet in the Malaysian market. Boost is an award-winning lifestyle e-wallet, which was launched in 2017 by Axiata Group Berhad, a telecommunications giant in Malaysia.
The e-wallet has partnered with 17 banks, including Maybank, RHB Bank, CIMB, Hong Leong Bank, Public Bank, and many others.
Boost is home to 7 million consumers, and the user base is still growing. The e-wallet service is available at over 140,000 customer touchpoints, covering both brick and mortar stores and online stores in Malaysia.
Boost also allows its customers to pay to any merchant that accepts UnionPay cards. Moreover, their signature Shake Rewards offers up to eight times more cashback, coins, Golden Tickets, and prizes.
In May last year, Samsung Pay integrated Boost e-wallet into their app to provide customers with a seamless and secure payment option. Boost has also partnered with Shell stations to allow the consumers to pay for petrol at 800+ Shell stations across the country. The users would get RM5 cashback with every spend of a minimum of RM40 at Shell stations.
The growth strategy of Boost also includes the partnership with Astro, Syabas, and Telekom for bill payments, and with Dewan Bandaraya Kuala Lumpur’s (DBKL) car parks for parking payments.
Till now, around 60 percent of merchants that use Boost are small and micro businesses, including ‘Pasar Malam’ vendors, ‘nasi lemak’ sellers, and food truck operators. Its latest feature, Boost Partner Wallet, allows consumers to earn cashback by making payments to the participating merchants. The users can use the cashback next time when they pay those merchants.
2. Touch ‘n Go
Launched by China’s Ant Group and Malaysia’s Commerce International Merchant Bankers (CIMB), Touch ‘n Go (TNG) is in talks with investors to raise $150 million to fund expansion plans.
The e-wallet was launched in July 2017 as a joint venture between Touch ‘n Go and Ant Financial. TNG allows users to pay at over 280,000 merchant touch points via QR codes. The wallet users can pay for tolls, street parking, car-sharing apps, and taxis via RFID; and even top-up their prepaid phones.
BigPay is quite different from typical e-wallets. It works in tandem with a physical debit card. Therefore, it doesn’t actually eliminate the need for physical cards. On the positive side, with BigPay, the users can make payments where physical cards aren’t accepted.
Other than the need for a physical card to load money, the app pretty much functions like other e-wallets. The users can make payments and check transaction history. But, the exceptional feature of BigPay is that it allows users to withdraw funds from ATMs.
Except for Israel and North Korea, the users can make payments using BigPay across the world at over 40 million merchants.
4. Maybank QRPay
Maybank Anytime and Everywhere, aka the MAE QRPay e-wallet, is a banking e-wallet that is open to non-Maybank customers too. During digital onboarding, users are asked to register for a virtual Maybank account (if they don’t have one already). The users would get a Maybank account number and a virtual debit card after registration and KYC.
As the MAE e-wallet app provides users with a bank account with Maybank, the users can receive money into their bank account, make online bank transfers, and even withdraw cash from ATMs. The wallet app is already integrated with the Maybank2U app; hence there won’t be any need for the users to download another app for banking services.
The e-wallet app allows users to make payments, transfer money, split and pay bills via QR codes at more than 200,000 merchants. Also, the users can book flight and movie tickets through the app. The wallet allows users to store upto RM4,999.99 and pay upto RM2,999.99 per transaction.
5. Samsung Pay
Unlike other leading e-wallets in the Malaysia market, Samsung Pay doesn’t actually store funds. It instead keeps payment card information and acts as an additional layer between the card and POS.
What makes it worth using is its unique proprietary MFT technology, which enables smartphones to mimic the magnetic strip on a debit/credit card. Hence, the users can make payments wherever card payments are accepted.
The only downside of Samsung Pay is its exclusiveness. Samsung Pay app is only confined to selected Smasung phones and wearables. MFT support is only available on high-end Samsung mobile phones. However, the support for Galaxy Watches has made it more convenient for users to pay for their lunch without even having to unlock their phone.
6. Fave Pay
Unlike other e-wallets in Malaysia, FavePay doesn’t have the ability to store money. It instead is linked to the user’s physical cards or GrabPay.
Using FavePay is advantageous for the users if they want to earn cash back when they make payments to merchants. But, why would anyone use FavePay when many other e-wallets in Malaysia offer similar cashback rewards, as well as allow users to store money?
The biggest draw of FavePay is that it has a variety of partner merchants ranging from beauty and retail establishments, food and beverages, entertainment, and more. Users receive discounts or cash rebates when they pay at the partner merchants. For instance, the customers can earn a 5% discount for the next purchase at their favorite clothing shop.
Due to the Grab Platform ecosystem, GrabPay has an advantage over other trending e-wallets in Malaysia. The e-wallet allows users to pay while ordering food, paying for rides, shopping for groceries and goods, or transferring GrabPay credits. Each GrabPay transaction earns users reward points that they can redeem for deals or for their future purchases.
GrabPay enables users to top-up their mobile phones directly via the GrabPay app. The service is available for most of the popular telecom service providers in Malaysia including, Maxis, Digi, Celcom, TuneTalk, and U Mobile. The company has also partnered with Maybank to allow its customers to pay the merchants that accept Maybank Pay.
Indeed like many countries have experienced around the world, the pandemic has devastated the Malaysian economy. But it has also brought new opportunities and circumstances for the FinTech industry to grow and thrive. The e-wallet segment of FinTech is at its highest pace that it has been, as the need for contactless payments is growing in the Southeast Asian market.
Even without the pandemic, there was positive growth in the e-wallet trend in Malaysia, as the residents as well as the government are in support of a cashless economy.
All in all, the experts anticipate that the e-wallet trend in Malaysia will continue to expand, easing finance handling and enabling contactless payments for the customers. The increasing investment by foreign investors as well as domestic investors also proves this argument to be valid.