E-money hits near RM40b in 5 years

The value of e-money transactions is on course to reach a record high of RM12b with 2b transactions by year-end

by RAHIMI YUNUS/ pic by TMR

THE usage of electronic money (e-money) has skyrocketed in the last five years, reaching a staggering RM40 billion as mobile wallets become the new norm in Malaysia.

According to statistics by Bank Negara Malaysia (BNM), e-money topped out at RM39.1 billion from 2014 to 2018 with a transaction volume that crossed eight billion in the previous five-year period.

For the first six months of this year, Malaysians spent RM7.3 billion via e-money in 996.5 million transactions.

The value of e-money transactions is on course to reach a record high of RM12 billion with two billion transactions by year-end.

In 2018, 1.92 billion transactions were made valued at RM11 billion, which was an 11-fold increase from the RM1 billion spent via 365.6 million transactions in 2005, the year when BNM liberalised its policy by allowing non-banking institutions to issue e-money.

According to the central bank’s website, there are 46 e-money issuers in the country, of which only five are banks, while the other 41 are non-banks.

E-money is defined as a payment instrument — whether tangible or intangible — that stores funds electronically in exchange of funds paid to the issuer, and is able to be used as a means of making payment to any person other than the issuer.

BNM stated that e-money can be issued in different forms, such as cardbased, including prepaid card, and network-based which can be accessed via the Internet, mobile phones or any other devices.

BNM assistant governor Adnan Zaylani Mohamad Zahid said mobile payment transaction volume had also increased 20-fold from just below two million to over 34 million within a year from 2017 to 2018.

“We’ve noticed the practice by some players in offering generous rewards including cashback to stimulate usage among users. While such a practice may be effective in driving e-wallet adoption at the initial stage, it is questionable whether such practice is sustainable in the longer run,” Adnan Zaylani said at the Malaysian E-Payments Excellence Awards 2019 held recently in Kuala Lumpur.

He said BNM has observed that the transaction volume of some players tends to fall significantly once the promotion period is over.

An e-wallet, as one of the e-money instruments, is becoming widely accepted as a payment option from parking, groceries, tolls and bills to movie tickets and food deliveries.

However, close to 50 e-money players for a population of about 33 million are overcrowding the e-wallet sphere in Malaysia.

In contrast, China — the world’s largest mobile payment market with a 1.4 billion population — has only two mighty e-wallet players, namely Alipay by Alibaba Group Holding Ltd and Tencent Holdings Ltd’s WeChat Pay.

Last year, China’s mobile payment services crossed 277 trillion yuan (RM163.4 trillion) out of 60.5 billion transactions — an over 27-time increase from five years ago, according to the central bank, the People’s Bank of China.

In Malaysia, consolidation among the players is forthcoming.

Axiata Digital Services Sdn Bhd CEO Khairil Abdullah, who is leading the e-wallet Boost, said Malaysia could be having only three major players 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 recently.

Khairil said the cost of running these e-wallet services is relatively high and that could force the smaller players to consolidate in the future.

The three dominant e-wallets in Malaysia are Boost, GrabPay and Touch ‘n Go eWallet.

Based on the last reported numbers, Boost had 4.4 million users and 90,000 merchant touch points in Malaysia.

GrabPay — which has penetrated eight countries and 336 cities — has 152 million downloads, in which one in every smartphone in South-East Asia has the mobile app.

Backed by CIMB Group Holdings Bhd and Ant Financial Services Group, Touch ‘n Go eWallet has more than 4.2 million users and about 70,000 merchants.