In the wake of a two-week lockdown announced by the government, some 30 million Malaysians are now restricted to leave the comfort of their house unless necessary (P.S. going for a walk at the park does not count). Alarmed by the government’s drastic measure to combat the Covid-19 outbreak, citizens have begun to practice social distancing. For many, this means not using cash for shopping, or ordering from delivery services such as GrabFood and Foodpanda to avoid physical contact altogether.
This brings a new light on the perks of having an e-wallet installed in your smartphone. Being an avid debit card user for years, never did the writer foresee that he would one day face the need to sign up for a mobile wallet – and he is not alone in this. In fact, Nielsen revealed that only 8% of Malaysians use mobile wallets for payments. Granted, there is a plethora of e-wallets in Malaysia, each offering different promotions and cashbacks, but they have not been able to spur widespread adoption as what we see in China, a country acclaimed for its e-wallet success. So, why is that?
1. Higher bank account penetration. Historically, China has a larger unbanked population compared to Malaysia (16% in China vs 7% in Malaysia). Accustomed to making payments with their cards, Malaysians are simply not incentivised to desert the banking system for mobile payment. Au contraire, due to its massive unbanked population and insufficient banking infrastructures, e-wallets offered unprecedented convenience to China’s cash-based economy.
2. Fragmented industry. Quite evidently, Malaysia’s e-wallet market is extremely fragmented, with more than 10 players battling for market share. This is in stark juxtaposition with China’s consolidated industry where WeChat Pay and Alipay account for more than 90% of the market. Tencent and Alibaba have been successful in creating an all-embracing ecosystem in which users pay for their food, utilities, insurance and more. Meanwhile, e-wallets in Malaysia lack usability as merchants and users alike have to choose from a dozen of platforms.
Notwithstanding that, the government recognizes the benefits of a digital economy – i.e. traceability of money, elimination of corruption, and effective monetary policy formulation, etc. It has also taken an active stance in encouraging Malaysians to go cashless, showcased through the introduction of e-wallet regulations as well as central bank’s commitment to deploy a system that unifies all e-wallets under a single system. More recently, the government launched a RM450 million programme (e-Tunai Rakyat initiative) to promote the use of Grab, Boost, and Touch ‘n Go’s e-wallet. However, up until now, policymakers’ endeavour has been lacklustre, to say the least, as the uptake of mobile wallets remains tepid. In that case, what can be done to foster the adoption of e-wallets?
1. Educating Malaysians. In this day and age where money laundering and pilferage are ubiquitous, the primary hurdle for e-wallet adoption remains that users associate them with debit and credit card fraud. However, the truth is all local e-wallet players are governed by the BNM and subject to data protection and security regulations. In response, the government and market players first need to address the misconception. The population should be informed of the multi-factor authentication process, and money-back guarantee offered by e-wallet providers to ease the adoption.
2. Targeting the right audience. The disappointing attempt by the government to stimulate e-wallet usage could be that they failed to target the right group of people. To elaborate, under the recent e-Tunai Rakyat initiative, only Malaysians above 18 years of age who earn less than RM100,000 annually are eligible to receive the RM30 in an e-wallet of their choice. By doing so, the government has essentially omitted individuals earning more than RM100,000 annually. Ironically, these are the people with higher disposable income, who are far more likely to be regular shoppers/spenders. They should, therefore, be part of the audience for subsequent programmes in the future.
3. Reaching out to the rural community. Looking at China as a reference, it is obvious that the unbanked population in rural areas have the biggest incentive to adopt e-wallets. Unfortunately, the majority of merchants and residents in Malaysia’s underdeveloped areas are unfamiliar with such technology. To encourage the use of e-wallets, the government needs to introduce the concept to rural dwellers through workshops, billboards, word of mouth, and other forms of marketing.
As an integral building block of a digital economy, e-wallets present a remedy to the dauting corruption issues in Malaysia. Needless to say, the country has a long road ahead in its journey towards cashlessness. Hence, the government and citizens share equal responsibility in building a cash-free nation where business transactions are facilitated, and money laundering can be curtailed.
This article was originally published on e27