ISSUE OF THE BULLETIN
W H AT YO U N E E D T O K N O W A B O U T E-WA L L E T S I N M A L AY S I A Back in the day, paying for something at the supermarket checkout line or at your local merchant was purely a cash transaction. You gave money equal to the value of the goods you paid for and then got some change back. The problem was that you needed to carry a wad of cash and coins to conduct transactions. Then along came credit and debit cards which offered some amount of convenience as you didn’t have to carry a reserve of cash wherever you go but you still need to carry a wallet around. Now, if you walk to any checkout till, you’re greeted by a host of colourful signs offering a veritable array of new digital payment providers all of which allow consumers new options to pay for goods and services. Some offer discounts if you shop or eat at certain restaurants or buy from certain merchants. Others give you cashback rewards with continued use. All of them make it easier and more tempting than ever to indulge in retail therapy with just your smartphone without the need for your wallet or for the matter, a credit or debit card. Welcome to the eWallet revolution.
What exactly are eWallets?
Downsides of eWallets
For the uninitiated, eWallets are a short form for the term electronic wallet. The terms mobile wallets or digital wallets also refer to the same thing. An eWallet is essentially a service provider that operates via an app on your smartphone to help track your payment instruments while offering other incentives like reward points, discounts, cashback benefits or other perks to continue using it.
Unfortunately, there are a few downsides when using eWallets. The biggest being that the sheer number of eWallets currently available in the market means that you will likely have to use a combination of them to get your shopping or other business transactions done as there is no one dominant eWallet at present in Malaysia that can cater to all your favourite shopping venues and interests nor will any one merchant necessarily accept any or all of the eWallets you are using.
In Malaysia, the eWallet industry is still considered in its infancy but it’s growing by leaps and bounds with dozens of eWallet providers in Malaysia at present vying for market share. Some eWallets help you manage your existing payment instruments like credit cards and debit cards but do not store monetary value. An example of this is Samsung Pay that allows you to use your credit and debit cards via your smartphone without having to carry the physical card itself but which does not issue any payment instrument of its own. Alternatively, you have an example like the Touch ‘n Go eWallet that you can store a sum of value in Ringgit that you can then use for purchases and for paying your fare at highway toll gates and LRTs. The latter example would be an eWallet that stores and allows for transactions in the form of e-money. The key difference here is that while there are many eWallets available, not all eWallets are able to store or use e-money as it is a licensed payment instrument that is under the purview of Bank Negara Malaysia. In the case of eWallets that don’t integrate e-money mechanisms, they usually piggyback on top of a bank’s existing payment systems. According to Bank Negara Malaysia, e-money is defined as E L E C T R O N I C M O N E Y ( E-M O N E Y ) I S A PAY M E N T I N S T R U M E N T T H AT C O N TA I N S M O N E TA R Y VA L U E T H AT I S PA I D I N A D VA N C E B Y T H E U S E R T O T H E E-M O N E Y I S S U E R . T H E U S E R O F E-M O N E Y C A N M A K E PAY M E N T S FOR PURCHASES OF GOODS AND SERVICES TO M E R C H A N T S W H O A C C E P T T H E E-M O N E Y A S PAY M E N T.
Including the aforementioned Touch ‘n Go there are, at present, a total of 46 e-money issuers available in Malaysia in 2019 with the total list available at Bank Negara Malaysia’s website at https://www.bnm.gov.my/index. php?ch=ps&pg=ps_regulatees
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Why use an eWallet? An eWallet offers quite a few benefits. Using an eWallet to pay for goods and services makes things considerably more convenient, especially in situations where you’re in a hurry like paying for parking fees when exiting a car park or paying for groceries at the checkout till so that you needn’t have to fish for change. Depending on which eWallet you sign up for, users can also get rewards or discounts for selected services too especially if you frequent an establishment such as a favourite restaurant so that you can get extra discounts or other perks. Adopting an eWallet also makes for a much slimmer physical wallet too as well as the benefit of having a chance to recover the stored value in your eWallet if you happen to lose your phone. Granted, a negligent user can end up losing or getting scammed of the contents of their eWallet too but that’s still better than carrying physical currency around which, if lost, will be unrecoverable. This level of convenience is liberating indeed and makes paying for stuff a breeze.
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SHOUT 2019 BUMPER EDITION
Another limitation to the plethora of eWallets out there is that they may not necessarily be able to transfer value across to each other for personal transactions. If you’re using one type of eWallet and your associate that you want to pay is using another eWallet, you likely won’t be able to transfer money in any form to each other. This also works the other way around. You may have to top up the value in an eWallet manually or via a credit card but have limited means to cash out whatever value that you’ve put into an eWallet. Having all those extra eWallet apps also takes up valuable storage space on your phone. This also has the added downside of having to store multiple different passwords and eWallet apps too and keeping track of them all will be a chore in and of itself. Even worse, if you forget to bring your phone out or lose it, you temporarily lose access to all your eWallets which can make for a rather embarrassing outing if you didn’t bring enough cash in your wallet and neglected to bring along your credit cards too.
Future of eWallets in Malaysia That aside, the future is bright for eWallets in Malaysia but what will make it exciting is that Bank Negara Malaysia has introduced the Interoperable Credit Transfer Framework (ICTF) that aims to address the disparate number of eWallets out there and allow for a shared payment network with interoperable QR codes that will enable payments outside of a given eWallets ecosystem to other users and merchants. This effectively means that eWallet A can transfer funds to eWallet B via a compatible QR code and to other merchants too. With the high smartphone penetration rate in Malaysia, the prevalence and eventual standardisation of payment systems means that eWallets will be here to stay and it’s simply a matter of time before they become a way of life.
