Professional Documents
Culture Documents
C
6
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie
How can I help you? settings ACCEPT
ThisThe
website uses cookies
Cashless Trend to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie
How can I help you? settings ACCEPT
While cash remains the primary method of payment, there has been a declining trend in its use with developments in
payment virtualization, digital technology and systems infrastructure. The growth of e-commerce and apps has
become embedded into our everyday lives. The physical act of paying is fast becoming redundant now that there are
mobile and Internet channels for banking services. One by-product of this technological expansion and a key driving
force in the increasing volume of digital transactions is eWallet.
eWallet, or digital wallet, is an alternative payment option to cash – based on encryption software that stores payment
information much like a traditional wallet. Its utility is similar to that of a credit or a debit card. However, instead of a
physical card, eWallet is an internet-based payment system where transactions can be made online using a smart
phone or computer. It can work through an app on a smartphone by scanning a quick response (QR) code, e-commerce
websites, or by a tap on a smartphone at a cash register deployed at retail stores or other point-of-sale (POS) terminals
for instant payment i.e. transactions using a technology known as near-field communication (NFC) compatible reader
pad.
Essentially, it is an online prepaid account (that can be linked to an individual’s bank account) protected with a
password where cash value and personal identity information are stored on an electronic device. Users are able to use
it for future transfers or transactions, such as for flight tickets, among others. In return for making transactions, users
are rewarded with cash-back bonuses, loyalty redemptions and other incentives.
C
6
Market Response
ThiseWallet
websitepropagation
uses cookiesistointensifying
improve your
onexperience. We'll
a global level withassume
PayPal,you're
Googleok Pay,
withApple
this, but
Payyou
andcan opt-outPay
Samsung if you wish. Cookie
achieving
Howmass.
critical can I Ithelp you? to expand with different
continues wallet models
settings giving way to market fragmentation. According to
ACCEPT
Market Research Report, the global eWallet market is expected to grow at a compound annual growth rate (CAGR) of
15% and estimated to reach market size of approximately USD 2.1 trillion by the end of forecast period 2017- 2023 (as
illustrated in the diagram below).
Markets in various regions are at different stages in the adoption of eWallets. China, the world’s current e-commerce
market leader, is leading the pack with 60% of its transactions made via eWallets. China’s adoption grew as a result of
the rise of Alipay and WeChat Pay, which dominate the market share. Its success is owed to legions of growing Chinese
tourists (Chinese tourists’ overseas spending reached a record $261 billion last year according to the World Tourism
Organization) that find it more convenient to use their phones to pay when travelling. Furthermore, China’s regulatory
framework is less mature allowing wallet players to innovate thus facilitating the quick expansion of eWallet in China.
India is the next biggest eWallet market, and the fastest growing e-commerce market in the world, triggered by a period
of rapid digitalization following its banknote demonetization move, which has since gathered momentum. Going
cashless is advantageous for countries with small currency denomination like Indian Rupees and large consumer mass.
Meanwhile, eWallet is slowly catching up in the US as cards remain to lead its payment mode due to customers’
security concerns over payments, according to American
Bankers Association
Interestingly, technologically advanced Japan is still lagging behind and is predominantly cash-based despite being a
pioneer in eWallet since 2004.
According to a survey by the Bank of Japan in 2016, only 6% of Japanese people use mobile phone payments due to
Japanese consumers’ lack of trust on “invisible” payment. Cashless payment terminals are still unavailable in many
areas due to lack of investments in eWallet infrastructure. Furthermore, it is difficult to break into Japan’s local
payments market – unless a local bank is willing to cooperate, which is tough as Japan’s banking industry is facing
negative interest rate. Malaysian players have also built a substantial consumer base driven by strong domestic
demand. AirAsia has recently entered the eWallet race with BigPay, strategically tapping into its 63-million passenger
database, which also feature FX remittance and peer-to-peer (P2P) lending. AEON Credit Service (M) Bhd is also
launching its own called AEON Wallet, focusing on QR integration. Last year, Malaysia’s Treasury announced a pilot
project for eWallet Take Action Pay (TaPay) to be carried out in Cyberjaya with the aim of making it Malaysia’s first
cashless city.
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie
Conclusion
How can I help you? settings ACCEPT
Whilst banks are traditionally the apex of Malaysian payment services, eWallet is redefining the payment system
although it is bolstering the existing financial system rather than obliterating traditional payment. The eWallet race will
intensify now that banks are rethinking their payment strategy and entering the competition, leveraging on its existing
relationship with customers and the general perception of improved security features and digital infrastructure. This
will further lead Malaysia towards a cashless society, in line with BNM’s Financial Sector Blueprint 2011-2020, which
aims to accelerate the migration to electronic payments and increase e-payment transactions to its 200 per capita
target by 2020. However, as it is still a developing FinTech, eWallets should continuously be monitored with appropriate
controls and regulations to keep them on the same footing as banks.
——————–
“ADGM Launches eKYC Utility Project With Consortium Of Key UAE Financial Institutions.” FINTECH AT ADGM, Abu
Dhabi Global Market, Feb. 2018.
Havaldar, Krishna K. Business Marketing: Text and Cases. McGraw-Hill Education (Australia), 2015.
“E Wallet Market.” Online Travel Market Research Report – Global Forecast to 2023 | MRFR, MarketResearchFuture,
Aug. 2018.
Written by:
Dato’ Azmi Mohd Ali (Senior Partner) azmi@azmilaw.com
Syaizta Kamal (general@azmilaw.com)
Related Articles
C
6
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie
How can I help you? settings ACCEPT
A Closer Look into Malaysia’s First Carbon Auction by Bursa Carbon
Exchange
Azmilaw.Editor May 17, 2023
C
6
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie
How can I help you? settings ACCEPT
Is Public Interest Litigation Becoming More Prevalent in Malaysia?
Azmilaw.Editor April 17, 2023
C
6
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie
How can I help you? settings ACCEPT