The improvement in banking infrastructure, development of new products, robust economic development and the increasing acceptance of card-based payments at POS terminals as well as public transport are some of the major factors driving the Malaysian Cards and Payments Market growth. The adoption of standards such as Visa (EMV), MasterCard, and Europay combined with the emergence of contactless technology has also aided the growth of the Malaysia Cards and Payments Market.
The average transaction value in Malaysia is comparatively lower when compared to Thailand and China, but is greater than that of countries like India and Australia. Further, Australia recorded the highest frequency of transactions which is comparatively low in Malaysia. The highest level of card penetration is recorded in China, followed by Australia, Malaysia, Thailand, and India.
Rapid shift towards the adoption of electronic and cashless payments
The Bank Negara Malaysia (BNM) has launched initiatives for encouraging electronic and cashless payments and has strived towards reducing the use of payment methods like checks, expanding the electronic payment acceptance by merchants, and increasing the adoption of cashless payments by consumers, businesses, and the government. The reduction in fees for inter-bank giro transactions and the increase in processing fees are a few of the measures taken to boost cashless transactions among Malaysian citizens. Owing to such initiatives, rapid growth in the cards and payments market of Malaysia is expected.
Prepaid cards segment being driven by Touch n Go
The increasing use of Touch n Go payments system on the public transport systems has also acted as a major boost to the Malaysia prepaid cards market. This system was launched in 1997 and is the first to offer transactions through cards in the country. More than 98 percent of all the e-money transactions in the country was done through TNG cards in terms of transaction volume. TNG was initially developed as a toll card and has expanded in application to include transactions at theme parks, public transport, parking, and retail outlets. The card can also be reloaded at many locations such as customer service centers in petrol stations, highways, TNG hubs, and at cash deposit machines and ATMs.
Increasing adoption of contactless technology aiding the growth of card-based transactions
Malaysia is experiencing a robust rollout of contactless payments across the country. The Mobile Operator Maxis announced in 2012 the launching of a new NFC enabled iPhone accessory, iCarte, for making contactless payments with TNG. In 2009, the world’s first commercial NFC payment service for mobile phones was introduced by Visa in collaboration with Nokia and the Maybank retail bank. The FastTap service by Maxis allows customers using Nokia NFC phones for making contactless payments at Visa payWave merchant outlets.
Credit Card issuing impacted by stringent regulatory measures
The undertaking of stricter regulations pertaining to the issuing of credit cards such as the new regulations on the eligibility requirements for credit cards restricting their issuing to an income group, reduction of credit limits, has encouraged responsible lending by issuers and has led to zero gain in the number of issued credit cards. However, these regulations have had a negligible impact on the overall credit card transaction value, which has continued to increase in value.
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