08 Jun 2021
Posted in Banking
Card payments in Malaysia to rebound with 10.6% growth in 2021, forecasts GlobalData
The Malaysian card payments market, supported by a gradual rise in consumer spending, is set to rebound strongly registering 10.6% growth in 2021 after a slowdown in 2020 due to COVID-19 pandemic, says GlobalData, a leading data and analytics company.
According to GlobalData’s Payment Cards Analytics, the value of card payments in Malaysia recorded a slower growth of 4.3% in 2020, much less compared to 11.5% in 2019.
The Government’s lockdown and social distancing restrictions to contain the virus spread have resulted in reduced consumer spending and closing of brick-and-mortar shops have invariably affected the card payments growth. However, with the improving economic conditions and vaccination program gathering pace, card payments is set to rebound with 10.6% growth in 2021.
The value of card payments is forecasted to grow further and register a compound annual growth rate (CAGR) of 8.0% to reach MYR298.9bn (US$74.3bn) in 2024.
Nikhil Reddy, Senior Payments Analyst at GlobalData, comments: “Despite being a cash-dominant nation, Malaysia made a significant progress in the adoption of card payments, mainly supported by increasing banked population, and rising merchant acceptance with introduction of cap on interchange fee. While ‘card payments’ was affected in the short-run due to the COVID-19 pandemic, it is expected to rebound as consumers shift from cash to non-cash payments tools to avoid getting infected.”
The Malaysian payment card space is dominated by credit and charge cards, accounting for 73.1% of total card payments value in 2020 while debit cards account for the remaining 26.9%. With COVID-19 restrictions being eased and consumer spending rising, both debit and credit cards transactions will increase.
GlobalData’s Payment Cards Analytics reveals that credit and charge cards payment is set to grow by 5.5% in 2021 while debit cards will grow by 24.4% during the same period.
‘Contactless’ has been among the key drivers of card payments growth in Malaysia. According to the Central Bank of Malaysia, contactless card transactions accounted for 50% of all card payments in 2020, up 33% in 2019. Malaysian government has also been taking several initiatives to push the card payments in the country. The introduction of cap on interchange fee at 0.15% for domestic debit card, ‘MyDebit’ in 2015 being one such initiative. This fee was completely waived for payments to the government or its agencies until the end of December 2020.
In April 2021, PayNet, the national payments network collaborated with Fasspay, a payment services provider, to enable smaller merchants to accept MyDebit card payments using Fasstap app on mobile phones, without the need of card reader.
Mr Reddy concludes: “The Malaysian payments card market registered sustained growth in the last few years. Although, the current COVID-19 crisis has hampered the growth trajectory, improving payments infrastructure, and rising demand for contactless and online shopping will aid the payment cards market growth over the next few years.”