APRIL 11, 2018 | 10:02PM MYT | KUALA LUMPUR
Malaysia should forge ahead with greater vigour and perseverance to displace cash, as managing cash is expensive.
Bank Negara Malaysia (BNM) governor Tan Sri Muhammad Ibrahim said it was much cheaper, efficient and secure to adopt e-payments for cost-effective solution.
“With high penetration of debit cards and mobile devices, Malaysia is well-positioned to transition into a cashless society in the medium term,” he said in a keynote address at the Malaysian e-Payments Excellence Awards 2018, today.
Muhammad said payments are now at the top of everyone’s minds, hence, the financial system requires modernisation.
“Out of the US$27.4 billion (RM106.04 billion) raised globally for financial technology (fintech) funding in 2017, 30 per cent of the funds went to payment companies. In the third and fourth quarter of last year, four out of the top 10 global fintech deals were for payment services,” he added.
Muhammad said Malaysia’s payment system has significantly transformed over the last 25 years driven by digitisation, competition and innovation.
“The journey started in 1997, major changes to the payment landscape occurred with the consolidation of the three automated teller machine (ATM) networks in the country into Malaysian Electronic Payment System (MEPS),” he said.
Muhammad said the initiative removed duplication and enhanced the network multiplier effects, noting that Malaysia was among the first in the world to complete the migration to the more secure chip-based payment cards in 2005.
“In 2011, BNM developed a 10-year financial sector blueprint which amongst others, outlined the initiative to displace paper-based payment instruments, namely cheques and cash, in favour of the more convenient and cost effective e-payment methods,” he said.
According to BNM, it envisioned Payments Network Malaysia Sdn Bhd (Paynet) be a catalyst to drive its diverse members to foster competition and innovation, develop cost effective solutions and advance financial inclusion through digital payments.
PayNet Group is Malaysia's premier payments network and central infrastructure for financial markets.
“We should expect PayNet to ensure that the payment infrastructure of this country will always be at the cutting edge of technology. This will enable the economy to innovate, be competitive and productive,” he said.
BNM said payment card spending has increased by more than threefold since 2006 to RM176.9 billion in 2017.
Muhammad said Malaysia must continue its collective effort to ensure widespread adoption of e-payments by embracing digital disruption and intensifying public engagement and consumer protection.
“The use of big data will provide a competitive edge among payment service providers. Payment flows used to be an operational matter, but now have immense strategic value.
“It has to do with the enormous amount of data and information that the system collects on the payment habits of the public,” he said.
He said widespread digitisation, disruptive technologies and heightened competition have reshaped and magnified the potential of payment services.
“We should be bold in taking advantage of this great potential to deliver e-payments for all and realise the aspiration of making Malaysia a cashless society,” he said.
Copyright New Straits Times