‘Don’t neglect cash users’

Call to improve digital financial literacy: A woman making cashless payment at a kiosk in a restaurant in Petaling Jaya. — AZHAR MAHFOF/The Star

PETALING JAYA: While Malaysians are encouraged to go cashless, experts have questioned if this would sideline certain segments of society.

Think tank Social and Economic Research Initiative managing director Rashaad Ali said there was a lack of supporting infrastructure such as Internet coverage in semi-urban and rural areas, as well as a nationwide lack of access to devices.

“While payment providers may educate users on how to use their services, not enough is being done to provide Malaysians with digital financial education.

“If cashless transactions become a basic social and public function, are we meeting the needs of the most vulnerable in society?

“Do we give them the tools to understand the implications of these services, while also not falling prey to financial scams?” asked Rashaad.

In Budget 2024, the government announced a framework to encourage cashless transactions among the rakyat and at the same time, ease their financial burden.

Rashaad said despite the government’s initiatives, there was still a need to address the root causes why people are unable or unwilling to use cashless options.

“The problems are many: economic exclusion of the unbanked and underbanked, digital literacy, as well as available and affordable access to devices and the Internet,” he added.

“This may perpetuate cycles of inequality in vulnerable groups, such as women, who make up most of the numbers in the informal economy,” he said, adding that consumers should always be given a choice.

In 2022, Khazanah Research Institute (KRI) deputy director Rachel Gong said low levels of financial literacy could hinder the uptake of digital banking.

“Earlier research by KRI reports that seniors unfamiliar with technology such as online payments struggle to find appropriate education, guidance and support.

“They are vulnerable to financial fraud and scams.

“Improving digital literacy as well as financial literacy is an important part of financial inclusion.

“Without good governance that prioritises inclusion by design, digital banking may offer up more services that realistically will only be accessed by a few,” said Gong.

Consumers Association of Penang president Mohideen Ab Kadir said cashless transactions tend to facilitate wasteful spending.

“With cashless transactions, there is the tendency to spend on unnecessary purchases.

“In a cash transaction, you are conscious of the cash you have, thus limiting your spending. Recent reports of increasing numbers of young bankrupts can be attributed to cashless spending.

“It requires strict financial discipline on the part of consumers to spend wisely within their means and many do not have that,” said Mohideen.

Malay Businessmen and Industrialist Association of Malaysia president Mohd Azamanizam Baharon said all micro, small and medium businesses should switch to cashless.

“However, the main worry of being cashless is the fear of being scammed and misuse of personal data.

“Even the educated worry about going cashless as the country still has to have the infrastructure to support cashless transactions,” he said.

Hair salon chain owner Datuk Irwin Cheong said although not everyone would opt to go cashless, many businesses are keen to use ewallets as the set-up is through a smartphone.

“Initially, there were some issues where some outlets were unable to obtain the money after the QR scan.

“With the increase in security levels, now most are going cashless – not through credit cards but ewallets,” he said.