Malaysia is at a turning point in the migration to electronic payments, according to the central bank, Bank Negara Malaysia (BNM).
RM1.8bn ($560m) was allocated in Malaysia’s 2014 budget for the implementation of the second phase of the High-Speed Broadband project, that will enhance electronic payments’ offer.
BNM’s deputy governor, Datuk Muhammad Ibrahim, said the central bank had called on banks to widen access points for the public to conduct electronic payments, including via ATM networks.
"While Malaysia’s population stands at 29.7 m, there are 41m ATM cards with debit application that can be used to make purchases at merchant outlets.
"This provides an opportunity for banks and businesses to leverage on, to improve the coverage of point-of-sale terminals to facilitate the use of the debit card as a means to reduce the need for cash as well as to increase tourist spending at more merchant outlets," he said in his keynote address at the Payment System Forum and Exhibition on 9 December.
To start the systematic migration to electronic payments, BNM had set targets in the financial sector blueprint to reduce the number of cheques processed per annum by half to 100m in 2020 from 204m in 2012, he added.
In addition, Muhammad said there were also targets to increase the number of point-of-sale terminals to 25 units per 1,000 inhabitants from nine in 2012 and to increase electronic payment transactions per capita to 200 by 2020 from 56 in 2012.
Only by migrating from cheques and cash to electronic payments, he said, could Malaysia achieve further cost savings and efficiency gains.
"Another notable achievement in the country’s payment system infrastructure was in the migration from magnetic stripe payment cards to chip payment cards, where Malaysia was the first country in the Asia Pacific region to do so," said Muhammad.
Furthermore, with a safer payment card infrastructure, Muhammad said tourists had increased their spending via credit cards in Malaysia to RM7.7bn in 2012 from RM4.7bn in 2006, recording an annual growth of 9% per annum.
"Research has suggested that a successful migration to electronic payments has the potential to drive further efficiency gains and cost savings of about one per cent of gross domestic product annually," he added.