Malaysia Payment Market Status and Future Trends

May, Mon, 2025
deekpay
Malaysia Payments

Malaysia's payments market has grown rapidly in recent years, characterised by diversification and digitisation. Below is an analysis of its current status and future trends:

1. Current state of the payments market

(1) Cash remains significant

Despite the rapid growth of electronic payments, cash remains an important means of daily transactions, especially among rural and small merchants.
BNM (Bank Negara Malaysia) data shows that there will still be about 40% of transactions using cash in 2022.

(2) Rapid growth in electronic payments

card payment: Visa and Mastercard are widely used, and local Debit cards (e.g. MyDebit) are highly popular.
Mobile Wallet Explosion::
- Touch 'n Go eWallet(with Alipay) is one of the biggest players;
- GrabPay(Integration of the Grab ecosystem);
- Boost(under Axiata);
- Bank-based wallets such as MAE by Maybank are also growing.
QR code payments are popular: the DuitNow QR standard unifies code scanning interoperability across platforms.

(3) The rise of BNPL (buy now pay later)

Services such as Atome, Split and Grab PayLater are popular among the youth and e-commerce consumers.

(4) Real-Time Payments (RTPs)

DuitNow offers instant money transfers to drive efficiency in P2P and merchant collections.

2. Key drivers

✅ Government policy support

BNM launches Financial Sector Blueprint 2025, targeting 400 non-cash transactions per capita per year.
eKYC simplifies the account opening process to promote the cardless trend.

✅ Digital Infrastructure Improvement

The FPX system operated by MyClear supports online bank transfers;
DuitNow enables real-time clearing across banks.

✅ E-commerce and the takeaway economy
Platforms such as Lazada and Shopee drive e-wallet-bound spending; Foodpanda/Grab stimulate demand for small, high-frequency mobile payments.

✅ youth dividend
Under 30s account for over 35%, are highly receptive to technology and prefer contactless payment methods.

3. Projections of future development trends

🔮 (1) Breakthrough in cross-border payments
As ASEAN integration advances, programmes such as "DuitNow-Thailand" may be expanded to more countries; and the penetration of Alipay/WeChat payments may be further increased to serve Chinese tourists and cross-border e-commerce sellers.

🔮 (2) Super App Integrates Financial Ecosystem
A full-scene financial services model similar to Grab's expansion from travel to insurance and lending will be a key point of competition - Touch 'n Go has already begun experimenting with a closed-loop strategy of transport + retail + payments.

🔮 (3) High likelihood of CBDC pilot landing
Bank Negara Malaysia is working on the digital ringgit (CBDC), which is expected to enter a sandbox testing phase by 2025 to enhance the efficiency of monetary policy transmission and combat grey economy trading practices .

🔮(4)BNPL regulation tightens but continues to grow
BNPL may face new regulations similar to Singapore's MAS (e.g. mandatory credit assessment) due to the rising risk of over-borrowing, but the market size will continue to grow at an annualised rate of 20% or more until it reaches the US$1bn level by around 2026.

▶️ Conclusion:

In the short term, Malaysia will maintain a "multi-stakeholder" landscape - traditional banking institutions (Maybank/CIMB), tech giants (Grab/Axiata), and international companies (Visa/Alipay) competing for market share; In the long run, whoever can win users' trust through lower rates, smoother cross-border experience or unique scenarios of stickiness will dominate the construction of the next-generation financial infrastructure in Southeast Asia's third-largest Internet economy (after Indonesia and Thailand).

4. Key challenges in the payments market
Despite the rapid growth of e-payments in Malaysia, it still faces a number of structural challenges:

(1) Urban-rural digital divide
- High urban penetration: e-payment acceptance exceeds 60% in major cities such as Kuala Lumpur and Penang, but rural areas still rely on cash.
- Insufficient network coverage: 4G signals are unstable in some remote areas of East Malaysia (Sabah and Sarawak), affecting the use of mobile payment.

(2) Cost resistance on the merchant side
- Micro, Small and Medium Enterprises (MSMEs) are sensitive to transaction fees, with traditional POS rates around 1.5%-3%, while DuitNow QR is as low as 0.5% but still needs to educate the market.
- Cash management inertia: Many small merchants are still accustomed to daily cash settlements to avoid reconciliation complexities.

(3) Rising security and fraud risks
- BNM report shows 27% year-on-year increase in e-payment fraud in 2022, with common tactics including phishing texts (posing as bank links) and fake customer service scams.
- Biometric authentication (e.g., fingerprint/face) is not yet fully prevalent, with some wallets relying only on OTP verification.

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5. Segmentation opportunity analysis
(1) Blue Ocean Market for B2B Payments
✅ *Status quo*: enterprise-level payments are still dominated by bank transfers and cheques, which are inefficient; supply chain finance is under-penetrated by 10%.
✅ *Opportunity*:
- API-embedded financial solutions (e.g., automated payments with direct ERP system integration);
- Pilot applications of Blockchain in trade finance (e.g. digitisation of letters of credit).

(2) Social Commerce + Payments Convergence
The rise of social e-commerce such as TikTok Shop and WhatsApp Business has created new demand - for example:
- Instagram has a built-in "pay by code" feature;
- TikTok has partnered with local wallets to launch "Live Shopping Instant Checkout".

(3) Islamic FinTech Compliance Innovation
Malaysia being one of the global Islamic financial centres, the "Sharia-compliant BNPL" or profit sharing model (P2P financing) could be a differentiator.

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<受地缘政治影响(数据本地化要求)| ||

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▶️ recommendations for action:
To enter the Malaysian market, the following routes can be prioritised:

🚀 Targeting young urbanites: develop scenario-based products (e.g. education instalment + vocational training course bundles) in partnership with the BNPL platform;

🌍 Aiming at cross-border pain points: Provide aggregated collection service (support DuitNow/Alipay+/FPX and other multi-channel one-click clearing) to reduce the exchange rate loss of foreign trade SMEs;

📱 Deep-tap into offline micro-merchants: Promote low-cost smart terminals (similar to China's "code licence" model) and overlay value-added inventory management SaaS functionality to increase stickiness.

In the end, success will come to those who can balance"Localised operational depth"(e.g. support for Malay language interface and Bank Rakyat local account access) vs."Globalised technology export"(real-time AML systems or cross-chain settlement protocols) hybrid players - a market that requires both patience to cultivate user habits and a quick response to the window of opportunity created by regulatory changes.

Malaysia Payment Market Status and Future Trends