QR code-based mobile payments to aid shift towards cashless payments in Malaysia, says GlobalData

Malaysia is making steady progress to reduce cash dependence with growing adoption of electronic payments. The total card payments’ value is set to increase from MYR208.2bn (US$50.4bn) in 2019 to MYR334.9bn (US$81bn) in 2023, according to GlobalData, a leading data and analytics company.

GlobalData’s report, ‘Malaysia Cards & Payments: Opportunities and Risks to 2023’, reveals that the rise in electronic payments is also supported by the growing adoption of mobile wallets, a trend that is prevalent in other Asian markets such as China and India. 

According to GlobalData’s 2019 Banking and Payments Survey, 56.5% of the respondents in Malaysia had mobile wallet and used it, and only 6.5% of the respondents never heard about mobile wallets.

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To encourage the adoption of mobile payments among consumers and SMEs, the government along with other payment participants is increasingly considering QR-based mobile payments as a viable alternative for cash.

One such ambitious initiative was the launch of a common QR code standard called DuitNow QR by Payments Network Malaysia (PayNet) in July 2019. Public Bank Berhad was the first to adopt the system and over 40 banks and e-wallet providers are set to support this system in the next few months.

Kartik Challa, Banking and Payments Analyst at GlobalData, explains: “These common standards really open up electronic payments by making them easier for a merchant to accept all options, and also making it easier for consumers to pay with their chosen option.”

QR code-based payment is becoming a major trend in Asia-Pacific with several countries such as China (eg. Alipay), Singapore (SGQR), and India (Paytm) having already adopted this mode of payment.

The preference for QR codes is mainly driven by its cost-effectiveness as banks and payment solution providers are finding it difficult to persuade smaller merchants to accept payment cards, which are expensive as this involves cost towards setting up POS terminals and have comparatively higher merchant service charge. QR code-based payment eliminates significant expenditure, as merchants can simply use a sticker with a QR code to accept electronic payments. Challa concludes: “The DuitNow QR system is an important milestone, and incentivizing consumers is a key factor to drive consumers’ interest in QR payment. With the DuitNow QR making a good headway, cash payments in Malaysia could soon become passé.”

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