When did e-wallet start in Malaysia?

13 Mar 2024 By PAYCEC

E-wallet is an electronic payment system that allows users to store their payment information on a digital device and pay for services and products online or at the point of sale. E-wallets have become increasingly popular in Malaysia, especially during the COVID-19 pandemic, as it offer convenience, security, and rewards to consumers and merchants.

But when did e-wallet start in Malaysia? How did it evolve over time? And what are the factors that contribute to its growth and adoption? In this article, we will explore the history of e-wallets in Malaysia and the current trends and challenges in the industry.

The Early Days of E-Wallet in Malaysia

The concept of e-wallet is not new, as it has been around for more than two decades. The Coca-Cola Company was credited with launching the world’s first digital payment system back in 1997 with several vending machines in Helsinki. The company created a digital payment processing system that allowed customers to pay for their drinks via a text message on their mobile phones.

However, the modern-day e-wallet is different from that payment system, as it allows consumers and businesses to process payments and invoices online or at the point of sale. Additionally, e-wallet also uses encryption technology, which means they are safer and more secure than carrying around a traditional wallet, debit, or credit card.

The first e-wallet in Malaysia was introduced in 2005 by MOL AccessPortal Sdn Bhd, a subsidiary of MOL Global Inc., a leading e-payment service provider in Asia. The e-wallet, called MOLePoints, was an online micropayment system that enabled users to purchase online games, products, and services using prepaid cards or online banking.

In 2009, another e-wallet was launched in Malaysia by Mobile Money International Sdn Bhd, a company that provides mobile commerce and payment solutions. The e-wallet, called Mobile Money, was a mobile payment service that allowed users to transfer money, pay bills, buy airtime, and perform other transactions using their mobile phones.

The Rise of E-Wallet in Malaysia

The e-wallet industry in Malaysia started to grow rapidly in 2018, when more than 40 e-wallet providers emerged in the market, offering various features and benefits to suit different needs and preferences. Some of the popular e-wallets in Malaysia include Touch 'n Go, GrabPay, Boost, BigPay, FavePay and Maybank QRPay. These e-wallets allow users to pay for a wide range of services and products, such as transportation, food delivery, online shopping, bill payment, and more.

The wave of digitalization was partly driven by the initiatives and incentives of the government and the regulator to promote a cashless society and a digital economy. The government launched various programs and incentives to encourage e-wallet usage, such as the E-Tunai Rakyat program, the National QR Standard (DuitNow QR), and the Interoperable Credit Transfer Framework (ICTF). The regulator, Bank Negara Malaysia, also issued guidelines and regulations to ensure the safety and security of e-wallet transactions, such as the e-Money Guidelines and the Payment Systems Act 2003.

The consumer and merchant behavior also played a role in the adoption of e-wallets in Malaysia, as they perceived the benefits and advantages of using them. According to a report by PwC, 84 percent of Malaysian consumers said they are willing to adopt new payment methods, and 88 percent of Malaysian merchants said they are open to accepting new payment methods. The main reasons for using e-wallets among consumers and merchants are convenience, speed, security, and rewards.

The Future of E-Wallet in Malaysia

The e-wallet industry in Malaysia is expected to continue to grow and innovate in the future, as the demand for digital and mobile payments increases. According to a report by Statista, the transaction value of e-wallets in Malaysia was estimated at 8.1 billion U.S. dollars in 2022, and was projected to grow to 20.5 billion U.S. dollars by 2028.

However, the e-wallet industry in Malaysia also faces some challenges and opportunities, such as:

• The competition and consolidation: The e-wallet industry in Malaysia is highly competitive and fragmented, with more than 40 players in the market. This may lead to some consolidation and mergers among the e-wallet providers, as they seek to gain market share and economies of scale. The e-wallet providers may also need to differentiate themselves from their competitors by offering unique and value-added features and services to their users.

•  The regulation and compliance: The e-wallet industry in Malaysia is subject to the regulation and supervision of Bank Negara Malaysia, which aims to ensure the stability and integrity of the payment system and the protection of the consumers. The e-wallet providers need to comply with the relevant guidelines and regulations, such as the e-Money Guidelines, the Payment Systems Act 2003, the Anti-Money Laundering and Counter Financing of Terrorism Act 2001, and the Personal Data Protection Act 2010. The e-wallet providers also need to keep abreast of the changes and updates in the regulatory landscape, as the regulator may introduce new measures and standards to cope with the evolving risks and challenges in the industry.

• The innovation and collaboration: The e-wallet industry in Malaysia is constantly evolving and innovating, as the e-wallet providers seek to enhance their products and services and meet the changing needs and expectations of their users. The e-wallet providers may also need to collaborate with other stakeholders in the ecosystem, such as banks, telcos, merchants, government agencies, and other e-wallet providers, to create a seamless and interoperable payment experience for their users. The e-wallet providers may also need to leverage on new technologies and trends, such as blockchain, artificial intelligence, biometrics, and social media, to improve their security, efficiency, and user engagement.