E-wallets set to redefine payment system in country

THE entry of global electronic wallet (e-wallet) providers is expected to transform the payment system landscape in Malaysia.

The Government said in report that mobile-based applications are dominating lifestyles including the daily purchase of goods and services.

“The use of e-wallets is gaining popularity fast. Global mobile wallet transactions were valued at US$594bil in 2016 and are expected to reach US$3.1 trillion by 2022, growing at an annual compounded rate of 32% between 2017 and 2022,” it said, citing a report by Zion Market Research.

As of July 2017, e-wallet providers in Malaysia, which are subject to the Financial Services Act 2013 and Islamic Financial Services Act 2013, are Alipay, Visa Checkout, Masterpass, CIMB Pay and Samsung Pay.

The emergence of e-wallets contributes to the further development of e-commerce and enhances retail payment systems by offering fast, easy and secure payment processes. It supports the global move towards cashless societies.

The Government added that the digitisation of money will enhance financial inclusion as it is more effective to provide infrastructure for e-wallet accessibility in remote areas.

Under Bank Negara’s Financial Sector Blueprint 2011-2020, one key objective is to promote greater economic efficiency through e-payments, it said.

According to the central bank, as of 2016, the average e-payment transactions for individuals stood at 97 compared with 49 in 2011.

The Government noted that with the launching of the digital free trade zone this year, significant developments have taken place for Malaysia’s e-wallet market.

This includes the collaboration of Ant Financial Services, the operator of Alipay, with Touch ‘n Go, which is expected to transform the payment system landscape in Malaysia. The entry of global players into the Malaysian market will drive competition and encourage more players to participate in the e-wallet segment, it said.

In conclusion, the Government pointed out that as the e-wallet segment evolves, enhancements and innovations are expected, particularly on the technological front, such as possibilities of e-wallet analytics.

E-wallet providers can leverage on data analytics and data mining for targeted marketing, given their ability to capture data by tracking and connecting users’ actions across different services and retailers, it said.