A Beginner's Guide to Payments in Malaysia for Even Newbies

I. Overview of the Malaysian payments market

Malaysia, the third largest economy in Southeast Asia, has seen its payments market grow rapidly in recent years. According to the latest data, Malaysia's e-payment transaction volume grew by more than 30% year-on-year in 2023, with the number of mobile wallet users surpassing 20 million. This growth is attributed to the government-driven cashless society initiative and consumers' growing preference for convenient payment methods.

In Malaysia's payment ecosystem, where tradition and modernity coexist, cash is still important for small transactions and in rural areas, but there is a clear trend towards cashlessness in urban areas. Bank transfers, credit/debit cards and e-wallets form the three pillars of modern payments.

It is worth noting that the differences in spending habits among the different ethnic groups (Malays, Chinese and Indians) are also reflected in the choice of payment methods: the Chinese community prefers to use e-wallets and credit cards; while the Malay community relies more on bank transfer services such as FPX; and the Indian community maintains a higher rate of cash usage.

II. Mainstream local payment methods in detail

1. FPX (Financial Process Exchange)

FPX is the most popular online bank transfer system in Malaysia and is operated by PayNet. It allows users to complete online payments directly from their bank accounts without having to enter credit card details or register for additional accounts. Banks that currently support FPX include Maybank, CIMB, Public Bank and almost all major commercial banks.

workflow::

• Select FPX as the payment method at checkout
• Select your bank from the list
• The system will redirect to the bank's login page
• Confirm payment amount and payee information after logging in
• Complete transaction via SMS OTP verification

Advantages include high security and instant payment; disadvantages are that each transaction requires Internet banking verification process is slightly cumbersome.

2. GrabPay and Touch 'n Go eWallet

GrabPay was initially launched as an add-on to Grab's taxi service, but has now evolved into a full-scene e-wallet. In addition to transport, it also supports food and beverage takeaways, retail shopping and even bill payments, featuring a "GrabRewards" points system that can be exchanged for a variety of coupons and service discount codes.

Touch 'n Go eWallet is a super app that has evolved from the motorway toll card, retaining the original transport payment function and expanding it to include parking payment, shopping malls and other scenarios, making it ideal for motorists. Both apps support QR code payment and scanning of the code at partner merchants.

In comparison, GrabPay has the advantage of being more internationalised and can be used in places such as Singapore, while Touch'n Go has a higher level of local acceptance, especially with its closer integration with the public transport system.

DuitNow real-time interbank transfer system

DuitNow is a national instant money transfer platform launched in 2018The best feature is that you only need to enter the payee's mobile phone number or ID number to complete the transferNo need to remember complex account informationMore than 40 financial institutions have access to the system.

Usage.
1. Open Mobile Banking App and select "DuitNow" function.
2. Enter the payee's registered mobile phone number or ID number.
3. Confirm the name of the payee (automatically displayed by the system).
4. Enter the amount and attach a message (optional).
5. Complete transfers through biometric or OTP authentication.

The system's limit is generally RM50,000 per transaction and up to RM150,000 per day depending on the bank's settings, making it convenient for large business transactions, as well as small amounts such as sharing meal expenses between individuals...

Three Popular International Channels in Cross-Border E-Commerce...

While localised solutions are important, cross-border e-commerce still needs international common tools Here are three options that have performed well in Malaysia.

Firstly, Alipay has partnered with a number of local organisations to achieve merchant coverage, especially in Chinese shopping areas and places frequented by Chinese tourists, followed by WeChat Pay, which is also gradually expanding its network of local merchants based on its large Chinese user base, and lastly, traditional credit cards, Visa/Mastercard, are still the preferred choice for online hotel bookings and high-end purchases. ...

III. Popular international payment channels in cross-border e-commerce

While localised payment solutions are important, cross-border e-commerce still needs international common tools. Here are three international payment options that perform well in Malaysia:

1. Alipay and WeChat Pay

Alipay has partnered with a number of local Malaysian organisations to achieve extensive merchant coverage. The acceptance is especially high in Chinese shopping areas and venues frequented by Chinese tourists. Data shows that the number of merchants accessing Alipay in Malaysia grew by 45% year-on-year in 2023.

WeChat Pay also relies on a large Chinese user base to gradually expand its network of local merchants. It is characterised by its perfect integration into the WeChat ecosystem, allowing users to make payments without having to switch apps.

Tips for use::

• Chinese travellers can use their domestic accounts directly
• Local residents are required to bind Malaysian bank cards
• Some merchants offer exclusive coupons

2. Visa/Mastercard credit cards

Traditional credit cards are still the preferred choice for online hotel bookings and premium spending. According to BNM, credit card transactions in Malaysia reached RM18 billion in the first quarter of 2023.

Comparative advantages::
| | Visa | Mastercard |
|—|—|—|
| acceptability | ★★★★★ | ★★★★☆ |
| Promotion | ★★★★☆ | ★★★★★ |
| foreign exchange rate | ~1%+ Exchange Rate Difference | ~1%+ Exchange Rate Difference |

We recommend choosing a travel card with no foreign exchange fees such as Maybank World Mastercard or CIMB Visa Signature.

3. PayPal online payment

As one of the world's largest third-party payment platforms, PayPal occupies an important position in cross-border e-commerce:

• Small transaction fee below RM200 4.4%+RM2
• Large transaction rates above RM200 reduced to 3.9%
• Supports cash withdrawals from 16 local banks that settle in MYR

It is especially suitable for Freelancer to receive overseas payments and purchase foreign goods online.

A Guide to Practical Scenarios for Everyday Life, IV...

From food markets to shopping malls, different scenarios need to be matched with appropriate strategies. The following are typical scenarios.

Supermarket/convenience shop checkout...
Large chains such as AEON and Tesco basically support.
✓ Touch 'n Go Proximity Payment (fastest)
✓ GrabPay (accumulate points)
✓ FPX online pre-loaded stored value card...

Note: Convenience shops such as 7-Eleven have a RM500 limit on e-wallets.

Dining & Entertainment Consumption...
Upscale restaurants generally accept credit cards but may charge a 2-3% processing fee; small and medium-sized restaurants prefer.
- DuitNow QR code transfer (remember to note table number)
- Boost eWallet (often with food and beverage promotions)...

Night Markets and Hawker Centres still require cash and change especially RM5/RM10 notes.

Five safe card fraud prevention tips...

As cashlessness spreads, so do financial scams Keep these rules in mind.

1️⃣ Two-factor authentication must be enabled
All banking apps and e-wallets should be enabled with a recommended combination of at least two authentication methods: fingerprint + SMS OTP or Face ID + PIN.

2️⃣ Be wary of phishing links
The latest scam sends out "account exception" emails disguised as TNG or Grab. Remember that officials never ask for passwords via email!

3️⃣ Setting transaction limits
It is recommended to set the daily spending limit of your e-wallet below RM1000 and disable the secret micro-payment function...

Actual Case:Q1 2023 The National Fraud Response Centre received 284 cases involving FPX with an average loss of RM8,750...