Sharp Move to Digital Payments?

UOB Kay Hian Research (“UOB Kay Hian”) reports Malaysia’s e-payment industry is poised to deliver net profit compound annual growth rate (CAGR) of 37% for 2021-2023. Consumer adoption continues to be accelerated by the COVID-19 pandemic with government support for cashless payment.

UOB Kay Hian expects the number of electronic data capture terminals to grow 15% in 2020-2022 while the e-commerce industry is expected to grow 21% for 2020-2025.

Analyst Jacquelyn Yow Hui Li  says “Studies show that the growth of e-wallet and digital payments grew 48.9% year-on-year (yoy) in 2020 and has risen 51.4% yoy year-to-date (YTD)”.

Currently, Malaysia boasts the highest use of mobile and digital wallets in Southeast Asia. According to the Mastercard Impact Study 2020, Malaysia led its neighbours in Southeast Asia with usage that stood at 40%.

In 2020, Malaysia’s gross merchandise value (GMV) grew 120% yoy with a total of 489,000 micro SMEs having adopted e-commerce and 378,000 SMEs having been trained to utilise e-commerce platforms. Between 2018 and 2020, the value of mobile banking and e-money transactions grew at a CAGR of 114% and 64%.

The Government has been encouraging the public to use e-wallets by giving out RM150 e-wallet credit to two million Malaysians. It further targets to have 400 electronic payment transactions made per capita by 2022 (2019: 150) with all government agencies to provide cashless payment options in 2022.

Malaysia’s plan to release digital banking licences in 2022 may help to indirectly grow the captive market for e-payment providers.

Older folks are another market to adapt and adopt changes. Cash is being discouraged because of the pandemic and it makes good sense to do payments electronically. The key problem is security. If hackers have their way, we will have a real issue with new payment mechanisms. But that should not deter the march towards digital payments.

Source: https://www.thestar.com.my

Reference:

Flight to digital: Quick adoption to fuel Malaysia’s e-payment growth, Cheah Chor Sook, Focus Malaysia, 18 Aug 2021