Payment methods in Malaysia 🇲🇾

The Malaysian e-commerce market sees a big surge. Technological strides and altered consumer habits fuel this rise. Now, the scene greatly favors digital transactions. A clear tilt towards non-cash payments emerges. As the digital domain grows, payment methods too evolve, meeting the demand.

This piece explores Malaysia’s e-commerce payment methods. It zeroes in on card payments, bank transfers, and installments like Buy Now Pay Later (BNPL). It also covers digital wallets like X-Pay. Each part sheds light on the growth, key players, and impacts of these methods on the 2023 e-commerce scene.

Payment by card in Malaysia

The card payment market in Malaysia is set to grow by 20.8% in 2023, reaching MYR 371.8 billion (USD 84.5 billion)​¹​. This growth is driven by a shift towards non-cash payments and recovering consumer spending​¹​​²​. Government initiatives and enhanced payment infrastructure are also contributing factors​²​. Cards were a favored online payment method, representing 36% of the online market in 2019​³​. This figure is projected to reach 39% by 2023​³​.

In 2022, 31% of e-commerce purchases in Malaysia were made via card-based payment​⁴​. Visa led the card schemes, handling 58% of e-commerce transactions in 2022​⁵​. This hints at a continued trend into 2023​⁵​. On the local front, MyDebit is a notable player, managed by PayNet​⁶​​⁷​. It facilitates electronic payments, enhancing domestic payment solutions​⁶​​⁷​.

PayNet partnered with Fasspay to accelerate MyDebit acceptance, underlining efforts to bolster local payment infrastructure​⁷​. Diversified payment options, including MyDebit, play a pivotal role in supporting e-commerce growth in Malaysia​⁶​​⁷​​⁸​. They are integral to the nation’s digital transformation endeavors​⁶​​⁷​​⁸​.

Local actor: MyDebit

 

Payment by bank transfer

Bank transfers remain a key method for e-commerce payments in Malaysia in 2023​¹​. They are one of the five main payment methods, alongside cards, digital wallets, cash payments, and Apple Pay​¹​. High bank penetration in Malaysia makes bank transfers a convenient choice​¹​. In 2022, 96% of the population had access to bank services​¹​.

Instant payments between banks are evolving in Malaysia​²​. They may be referred to as IBFT payments or DuitNow Transfer by some banks​²​. The Financial Process Exchange (FPX) is a secure payment system based in Malaysia​³​. FPX enhances trust in bank transfers for online transactions​³​.

In 2022, account-to-account (A2A) or direct transfers were highly popular for e-commerce payments in Malaysia​⁴​. They represented 37% of all e-commerce payments​⁴​. The FPX system partners with almost all banks in Malaysia​³​. This partnership facilitates smooth transaction experiences for online shopping​³​.

Bank transfers are a reliable and popular choice for both consumers and businesses in the e-commerce sector​³​. Other secure payment services like eGHL, iPay88, and Stripe are also available​³​. Local banks introduce their own e-commerce payment options like Maybank2U Pay and CIMB Clicks​³​.

This variety of bank transfer and instant payment options support the robust e-commerce growth projected for 2023​³​. They are integral to Malaysia’s digital payment advancement​³​.

Local actors: Maybank, CIMB Clicks, PayNet / FPX, RHB, DuitNow, Bank Islam, Public Bank, AmBank, AffinBank, Hong Leong Bank

                  

 

Payment by installment and BNPL

The “Buy Now Pay Later” (BNPL) trend is escalating in Malaysia’s e-commerce arena in 2023. BNPL payments are surging. They are projected to grow by 23.6% annually, hitting a value of US$2,298.6 million in 2023​¹​. This upswing is fueled by the burgeoning e-commerce penetration. Moreover, a steady adoption growth rate of 12.9% is forecasted for the BNPL sector from 2023 to 2028​²​.

Several major players are propelling the Malaysian BNPL market forward. These include Atome, Rely, Sugar (formerly Split), Grab, PayLater, Hoolah, and various banks​²​. Among them, Sugar stands unique. It’s Malaysia’s first Shariah-compliant BNPL platform. It presents a three-month installment plan without any late payment fees​³​.

A remarkable partnership has blossomed between TikTok Shop and Atome. They have introduced installment payments in Malaysia. This alliance signifies a fusion of social commerce with flexible payment avenues​⁴​. The consistent growth of BNPL mirrors a wider trend across the Asia Pacific region. Here, BNPL adoption is poised to register a Compound Annual Growth Rate (CAGR) of 13.6% during 2023-2028​⁵​.

The ascent of BNPL and installment payment options is noteworthy. It heralds a shift towards more adaptable payment methods in e-commerce. This shift caters to consumers seeking manageable payment schemes. Consequently, Malaysian e-commerce platforms are extending a more accommodating shopping ambiance. This extension is aiding the broader expansion of the digital commerce realm.

Local actors: Paylater, Ablr, IOUpay, Sugar

      

 

Payment by digital wallet and X-Pay

In 2023, digital wallets are rapidly expanding in Malaysia as payment methods​¹​. The country is leading in Southeast Asia for digital wallet usage. At least half the population utilized digital wallets daily in 2022.

The COVID-19 pandemic especially accelerated e-wallet adoption. People increased their online shopping activities. E-wallets are adopted by both urban and non-urban Malaysians.

The usage frequency soared 60% on average. It went from 10.5 times per month to 16.8 times per month. The Malaysian government initiated efforts to prompt digital wallet adoption and boost consumer spending.

In 2021, the number of active e-wallet users jumped to 13.5 million from 8.7 million in 2020. In Q1 2022, nearly 68% of all Malaysians used an e-wallet for payments.

As the usage grows, the choice of digital wallet providers is increasing. Leading e-wallets in Malaysia include GrabPay by Grab, Boost owned by Axiata, and Touch ‘n Go by TNG Digital.

They offer various services like in-store purchases, bill payments, and prepaid reloads. The e-wallets provide automatic transaction recording, helping users track their spending easily.

Local actors : Boost, MAE by Maybank, Touch’nGo wallet, Bigpay

      

 

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