Malaysia’s card payments market is set to register sustained growth of 15.2 per cent in 2022, supported by the gradual rise in consumer spending, the government’s financial inclusion measures, as well as increasing preference for contactless payments, forecasts GlobalData.
In a statement Monday, the data and analytics company said the value of card payments in Malaysia recorded a growth of 15.9 per cent in 2021, after a 5.4 per cent decline in 2020 due to reduced consumer spending amid Covid-19 uncertainty.
According to GlobalData’s payment cards analytics, the value of card payments is estimated to register a compounded annual growth rate (CAGR) of 11.5 per cent in 2022-2026 to reach RM401.9 billion.
Senior banking and payments analyst Nikhil Reddy said Malaysia has made significant progress in the adoption of electronic payments during the last few years, supported by government initiatives, including the cap on interchange fees, migration of payment cards to EMV standards, and the expansion of point-of-sale infrastructure.
EMV, which is named after its original developers – Europay, MasterCard and Visa – is a secure payment technology standard that is used worldwide.
“While Covid-19 caused a dent in payment market growth in the short run, it has also fostered consumers’ shift from cash to digital payments,” Nikhil said.
He said improving economic activities are expected to spur consumer spending, which will support payment card growth.
Digital-only banks will complement traditional banks to increase financial inclusion in the country, which will in turn push card penetration and payment card usage, he added.
Bernama cited Bank Negara Malaysia (BNM) recently awarded five digital banking licenses, which are anticipated to commence operations within the next two years.
In addition, the central bank is working on further reducing the interchange fees to encourage card acceptance among merchants.
In December 2021, the central bank released a draft for a reduction of the interchange fee on debit cards to 0.10 per cent from the previous 0.15 per cent, and on credit cards from 1.10 per cent to 0.60 per cent.
This is in the consultation phase and is yet to be implemented.
According to BNM, two out of every three card payments at physical stores in 2021 were contactless, compared to one out of two in 2020.