Khairil says the cost of running e-wallet services is relatively high and that alone would force smaller players to consolidate
by SULHI KHALID/ pic by MUHD AMIN NAHARUL
THE local e-wallet sector would comprise several key and smaller niche players as the high running cost and absence of a critical mass market would force the smaller players to seek consolidation, said Axiata Digital Services Sdn Bhd CEO Khairil Abdullah.
He said presently, there are a lot of e-wallet service providers in Malaysia as consumers’ confidence rises due to the convenience and reliability of the payment platforms.
Khairil said the cost of running these e-wallet services is relatively high and that alone would force the smaller players to consolidate in the future.
“My view is that, it’s going to be three major players because in the long term, we can’t have 40-over players.
There’ll be a few niche players (specific use cases) on top of these major players,” he told The Malaysian Reserve at the Malaysia Cashless Day Carnival in Kuala Lumpur last week.
E-wallets allow consumers to pay everything from parking charges to groceries, tolls, bills, movie tickets and food deliveries. It has become the latest financial craze hitting the country. Consumers will store a specific value into their respective e-wallets and spend as they wish.
Based on the central bank’s figures, there are 46 digital money (e-money) issuers comprising five banks and 41 non-bank firms. These institutions are governed by Bank Negara Malaysia (BNM).
E-money transactions are expected to cross RM12 billion this year. Based on the central bank’s electronic payment data, there were 1.92 billion transactions for e-money with a total value of RM11 billion.
For the January-May 2019 period alone, 832 million e-money transactions were recorded with a total value of RM6.3 billion.
On the nation’s readiness to become a cashless society, Khairil applauded the central bank’s move to support the new digital payment ecosystem by ensuring every user who has bank accounts is carrying cashless products.
“There are many forms of cashless (products), including credit cards, debit cards, and I see this cashless trend is going to move very quickly in the next few years,” he said.
BNM’s Financial Sector Blueprint (2011-2020) outlines the aim to realise the benefit of e-payment, while increasing the efficiency of existing payment’s system. By next year, the central bank is targeting 200 e-payment transactions per person and 30 debit card transactions per person.
Axiata Digital’s Boost Pay is one of the leading e-wallet service providers, serving over 4.5 million users and 100,000 touch points.
According to the Nielsen Payment Landscape Report 2018, 67% of Malaysian consumers had used cashless payments, mainly debit cards and online banking. However, mobile wallets accounted for only 8% among the non-cash payment methods as security emerges as a major distractor.
Nielsen noted that 50% of non-users are concerned about fraud related to digital money, overspending (34%) and low merchant acceptance (27%).
ipay88 co-founder and ED Chan Kok Long said the emergence of more e-wallet players has driven the interest of consumers towards the new payment technology.
“Obviously, we see a lot of wallets these days, and at the end of the day, providers with substantial branding and deep pockets will survive in this space,” he said.
“We have international players like WeChat and Alipay which actually enhance the e-wallet adoption by bringing expertise and know-how from China to the ecosystem,” Chan said.