By NG MIN SHEN / Pic By ISMAIL CHE RUS
Going cashless could help to reduce corruption in Malaysia, said Finance Minister Lim Guan Eng, as the country continues to drive e-payments in order to realise cost savings, increase efficiency and safeguard financial stability.
In his keynote address at a WeChat Pay exhibition in Kuala Lumpur yesterday, Lim said applications like WeChat — a messaging, social media and mobile payment platform developed by Chinese technology giant Tencent Holdings Ltd — can help digitalise payments in Malaysia and create an environment conducive for big data analytics and other relevant Industry 4.0 technologies.
“Enablers like WeChat foster fertile ground for further innovation to take place. When talking about a cashless system, another very important benefit is that it will cut down corruption.” “I’m sure that corruption is much reduced in China, partly because of the cashless system. So, technology can help to cut down corruption. As the way forward, this is good for every country and especially for Malaysia,” he said.
Lim also said Malaysian consumers are now seeking safer and more convenient payment methods as opposed to carrying around large quantities of cash.
Cash usage remains relatively high in the country, although Bank Negara Malaysia (BNM) data shows there was RM106 billion worth of cash circulating in the economy last year.
At 7.4% of domestic GDP, this was lower than 7.7% and 7.9% recorded in 2017 and 2016 respectively, in line with the wider application of mobile and online payments in Malaysia.
“In contrast, a largely cashless economy would have around 2% of cash in circulation or lower, based on International Monetary Fund calculations,” Lim said.
According to a January 2019 Nielsen report, 67% of Malaysian consumers have used cashless payments, with debit cards and online banking being the most preferred non-cash channels.
However, only 10% of respondents surveyed said they used e-wallets as forms of payment, despite 88% of participants being familiar with the payment method.
BNM data also shows around 92% of Malaysians have access to bank accounts while 91% have access to online banking.
“Yes, e-wallet adoption rate is still low but WeChat is betting on Malaysia’s tremendous growth potential. Local vendors are already at ease with e-wallets because they increase payment speed while reducing capital expenditure for payment infrastructure,” said Lim.
“I have been informed that this is one of the reasons why there are more than 3,500 merchants in Malaysia now accepting WeChat Pay for mobile top-ups, flight tickets, movies and more,” he added.
In order to expand its user and merchant base in Malaysia, WeChat Pay — the mobile payment feature of WeChat — will be localising its features with offers such as online ordering services at mamak restaurants in the Klang Valley and petrol purchases.
On the government’s plan to introduce a targeted petrol subsidy this year, WeChat Pay Malaysia CEO Jason Siew said the usage of e-wallets could help in ensuring that the subsidy is implemented appropriately.
“From a technology standpoint, the government’s concerns (such as control and monitoring of stock) can be addressed — maybe not fully, but some can be addressed by technology, (but) that depends on what the government wants and needs,” he said.
However, he said WeChat Pay Malaysia, which was launched locally in August 2018, has not approached the government on the possibility of participating in the petrol subsidy roll-out.
As at December last year, WeChat and Weixin (the China version of WeChat) combined had 1.01 billion monthly active user accounts (MAUs), while WeChat Pay had over 800 million MAUs as of the second quarter of 2018.
In Malaysia, the mobile payment app currently supports mobile credit top-ups, flight and bus ticket purchases, and offline transactions at retail outlets.
Meanwhile, the finance minister dismissed rumours that the RM50 banknote will be replaced by the RM60 banknote, released by BNM in 2017 to celebrate the 60th anniversary of Malaya’s independence in 1957.
“Let me assure the public that we have both RM50 and RM60 notes. It is not true that the RM60 note is replacing the RM50 note. Both are still legal tender,” Lim said.
He said only 60,000 RM60 banknotes are in existence, while there were 900 million pieces of RM50 notes circulating in the economy last year.
“While the RM60 note is legal tender, I advise you not to use it. Instead, put it somewhere for safekeeping because there are only 60,000 pieces. If you keep it long enough, it may have value,” Lim quipped.