Card payments continue to rise in Malaysia amid COVID-19
Malaysia has traditionally been a cash-dominant society. However, the COVID-19 pandemic has accelerated Malaysia’s push towards electronic payments, with card payments at point of sale (POS) terminals continuing to rise, according to GlobalData, a leading data and analytics company.
According to GlobalData estimates, card payments in Malaysia will grow by 4.3% to reach MYR214.4bn (US$52.4bn) while ATM cash withdrawals will increase marginally by 1.3% in 2020.
Ravi Sharma, Banking and Payments Lead Analyst at GlobalData, comments: “Malaysians are increasingly using digital channels for making payments with cash taking a back seat. While card payments are on the rise, the growth rate will be impacted due to the decline in consumer spending following COVID-19 pandemic.”
As wary consumers stay at home, they are expected to use online channels to purchase goods. The rise in e-commerce transaction will further support card payments as credit and debit cards account for 36.8% in the total e-commerce value in Malaysia, according to latest 2020 Banking & Payments Survey*.
Even while shopping in-stores, consumers are gradually shifting away from cash to digital payment tools to avoid exposure to potential disease vectors such as cash and POS terminals.
The central bank of Malaysia – Bank Negara Malaysia (BNM) has also been playing a key role in promoting card payments in the country. In 2019, BNM capped interchange fees on card transactions making card acceptance cost-effective for merchants. It even waived interchange fees on debit cards for payments of government services in the country until 31 December 2020.
Banks too are playing a key role in promoting card payments in the country. For instance, in June 2020, Hong Leong Bank launched the Cashless Lagi Senang campaign to provide mobile POS (mPOS) terminals to merchants at a lower cost.
POS installation and rental fee and merchant service charges are waived until 31 December 2020. This will allow merchants to start accepting all forms of payments (including contactless payments) via debit and credit cards, and also mobile wallets.
Mr Sharma concludes: “The COVID-19 crisis has adversely affected the Malaysian economy in the short-run. With the government gradually easing lockdown restrictions, a rise in business activities and consumer spending could be seen, which will further support card payments growth.”