Malaysian Payments in Alibaba and Amazon

Alibaba and Amazon have adopted different strategies in Malaysia's payment ecosystem to suit local market needs. Here are the key analyses:

I. Alibaba system (Lazada/Taobao)

  1. Alipay+ Cross Border Solutions
  • Integration of 7 major e-wallets in Malaysia (Touch 'n Go eWallet, GrabPay, etc.) through "Alipay+" to reach over 80% local users
  • Support the direct use of MYR settlement, real-time exchange rate conversion to reduce exchange losses

  1. Localised payment infrastructure
  • Lazada Accessed:
    • FPX Bank Direct Connect (42% of online volume)
    • DuitNow QR Code Payment (Central Bank NRF System)
    • Boost e-wallet instalments

  1. Innovative Scenario Applications
  • Launch of "Scan & Pay at 7-11" service in 2023, increasing the online rate of offline COD orders by 27%

Second, Amazon Southeast Asia layout

  1. Credit card-led strategy
  • Visa/Mastercard transactions account for 68%
  • Amazon Pay only supports bundled international cards (local card issuer Maybank/Public Bank)

  1. Logistics collection limitations
  • Cash on Delivery is only available in Peninsular West Malaysia, prepayment is required in East Malaysia.

III. Amazon's Payment Challenges and Responses in Malaysia

1. Limitations of credit card reliance

  • Conflicting local payment habits: Only about 35% of Malaysian internet users have credit cards (2023 data), while the share of e-wallet users is over 60%. Amazon's international card strategy has led to the loss of some users.
  • Solution Attempts::
    • 2024 test accessDuitNow Online(a real-time money transfer system introduced by Bank Negara Malaysia), but has not yet been fully opened.
    • Lower the credit card threshold by partnering with local banks to launch 'virtual cards' (e.g. Maybank2u co-branded card).

2. Geographical limitations of COD (cash on delivery)

  • Coverage issues: COD only supports major cities in West Malaysia (Kuala Lumpur, Penang, etc.), while East Malaysia (Sabah, Sarawak) requires pre-payment due to high logistics costs, resulting in a low order conversion rate 15%-20%.
  • Innovative attempts: Co-operation with 7-Eleven on 'offline cash top-up' service, which allows users to top up their account balance in advance before placing an order, but the usage rate is less than 5%.

3. Lack of localisation of Prime member payments

  • Amazon Prime still requires international credit card bindings in Malaysia and does not allow the use of local eWallets or bank debits, limiting subscription growth. In contrast, Lazada Premium allows auto-renewal via Boost or TNG eWallet.

IV. Summary of Core Differences between Alibaba vs. Amazon

dimension (math.) Alibaba/Lazada Strategy Amazon strategy
payment method Alipay + integration with multiple e-wallets + full FPX/DuitNow coverage Visa/Mastercard based + COD limited coverage
Exchange rate advantages MYR Direct Billing + Alipay + No Currency Conversion Fee USD/MYR Dynamic Conversion + 1.5% Cross Border Fee
Sinking market penetration AGROUP programme supports rural agents to pay on their behalf Dependent on bank channels, no agent network   
BNPL Buy Now Pay Later   ｜ Boost/AEON Credit instalment plan popularity｜No localised instalment plan yet ｜

V. Projections of future trends

  1. Amazon's possible localisation breakthrough::
    -Acquiring or investing in local e-wallets (e.g. Setel or ShopeePay Malay operations)
    -Expands DuitNow QR code payment application to fresh food e-commerce company Fresh Malaysia

2.Alibaba Eco-Deepening Direction
Pilot Central Bank Digital Currency (DCBD) Sandbox Project, exploring the application of wholesale CBDC in B2B cross-border trade
-Provides supply chain financial solutions for small and medium-sized merchants through ant chain technology