Based on Visa Covid-19 study, 3 out of 5 Malaysians prefer using digital payments compared to cash amid Covid-19 pandemic
by SHAHEERA AZNAM SHAH/ pic by BLOOMBERG
THE demand for credit cards is gradually recovering after it took a dive in April when the Malaysian economy was hit by the Covid-19 pandemic, sending unemployment on the rise.
According to data from Bank Negara Malaysia (BNM), the number of credit card applications stood at 72,200 in April, a 70.62% plunge from 245,800 in March, with an approval rate of 32.43%.
The data showed the numbers of applications increased to 183,200 in June with a 38.37% approval rate or 70,300 cards.
Meanwhile, the number of electronic payments through credit cards has risen since April from 26.4 million transactions valued at RM6.2 billion to 38.6 million transactions worth RM10.1 billion in June.
Malaysia began its “lockdown” period on March 18 with four extensions, before entering the Recovery Movement Control Order on June 10.
The restrictions, along with the lockdowns in other countries, have sent Malaysia’s unemployment on the rise, reaching 5.3% in May to a high of 826,100 during the month.
However, as the economy started to improve, Malaysian consumers are seen to rely more on contactless payment in their spending to adapt to the “new norm”.
Visa Malaysia country manager Ng Kong Boon said according to a survey conducted by the financial service firm, more than 70% of Malaysians choose digital payment.
“Based on the Visa Covid-19 study, three out of five Malaysians prefer using digital payments compared to cash amid the pandemic.
“We believe that digital payments will continue to be the preferred mode of payment in the near future. As the pandemic has created sensitivity to touched surfaces, including cash and check, we see this manifesting interest and usage in tap method in payment,” he told The Malaysian Reserve (TMR).
He said changes in consumer spending payment behaviour will help digitise cash across the retail chain, which previously increased an average of 20% in mature markets globally.
Malaysia is one of the fastest-growing countries in Asia Pacific to adopt contactless payments. BNM’s data showed the average circulation of principal credit cards has risen from the lowest in the currently available data in 2014 at 7.1 million to 9.1 million last year. The figure slightly decreased to nine million for May and June.
BNM data also showed credit card impaired loans, which rose noticeably in March, have been normalising below average in June.
The impaired loans stood at RM262.5 million in June, a decline of 17.42% compared to May. It rose 8.6% to RM391.2 million in March compared to RM360.8 million in February.
Mastercard country manager for Malaysia and Brunei Perry Ong said the firm has also seen an increase in utilisation in its products for contactless payment.
“The pandemic has accelerated Malaysia’s cashless adoption as we saw people increase the transactions on their cards. We even saw more people doing digital payments, especially online payments and mobile wallets reload,” Ong told TMR.
Ong said the uptick in cashless adoption and card usage is due to necessity created by the pandemic, where safer means are required to minimise social contact.
“When we look at such trends in Malaysia and in other parts of the world, we’re confident that cashless payment methods, especially via contactless, will become the new normal.”
According to Mastercard Impact Studies, 40% of Malaysian consumers have reported increasing their mobile and digital wallets usage, followed by contactless debit cards and contactless credit cards.