By Kay Tan
Just a decade ago, the idea of making payments on our mobile phone might seem far-fetched. Today, digital payments are the new normal. With a high mobile and internet penetration rate, coupled with the population of an average age of 28.7, Malaysia scores a place in the top 10 fastest growing digital economies in South East Asia.
The paradigm of the payment industry has now shifted substantially to suit the current generation of consumers. We are increasingly used to swiping (phones, tablets), instant gratification (I don’t want to wait), and the 8-second filter (you need to work hard to grab my attention). Many are fast replacing their traditional wallets with their smartphones. This shift is a good thing. It means that there is now faster and easier access to money for consumers across the region. Just last year, digital payments in Malaysia amounted to over 1.4 billion in transactions and RM10.6 billion in value.
As if we were not accelerating fast enough, the COVID-19 pandemic stepped in and pressed the accelerator pedal, propelling us further into digitalisation. Let’s take a look at the lasting impact of COVID-19 on Malaysia’s Payment Landscape in the ‘New Normal’.
Enabling the adoption of a thriving Digital Economy
The widespread pandemic meant that we had to hit the pause button on our economy. With the full force of Movement Control Order (MCO) in place, we adapted to the new norm of #StayAtHome. This broke the supply chain and ruptured the demands and market trends since many of us were being mandated to work from home and limit movement.
Despite the setback, forward thinking businesses recognized the potential and hastened their digital transformation to meet the needs and expectations of consumers. It was vital for them to change the way of doing business to the new normal and adapt to where the consumers are, in order survive. I was privileged to witness the shift and also to be part of the digital transformation journey as we saw an increase of nearly double of new merchants looking to go online and to accept digital payments since the lockdown.
This directly impacted market behaviours, as online sales surged to over 149 percent on a year-on-year Gross Merchandise Volume (GMV).
Furthermore, in light of the fasting month falling right in the middle of MCO, all physical Ramadhan bazaars were prohibited from opening. It’s at this time and from the most unlikely of places, we see the fastest rate of adoption of digital payments. The Mak Cik and Pak Cik of your favourite Bazaar stalls have now taken onto Social Media to start selling online and they accept digital payments too, just so you can have your favourite Roti John, Ayam Percik and Kuih Muih for Ramadhan.
While most economic sectors are allowed to be reopened, there are strict Standard Operating Procedures (SOP) to adhere to. Similar to China where restaurants now close earlier, not all restaurants allow you to sit inside, and its one person per table; very few people wander around after meal time. Instead, most people order packed lunches and dinner. Businesses have to be cautious not to reignite infection rates.
With social distancing being the new normal, authorities are encouraging cashless payments and online orders. This protects us from having direct contact or physical interactions dealing with notes and coins. In times like these, it is a win-win situation for both merchants and consumers.
The Mobile Lifestyle: Driving Demand for Cashless Payments
This ripple effect of MCO has also given spur to the growth of M-Commerce as it helped fast track our behaviour in conducting cashless payments. According to a Visa Survey in 2018, 65 percent of Malaysians have said they prefer to pay through their e-wallet, with convenience (70 percent) cited as the main factor, followed by wide acceptance (51 percent) and getting more comfortable with paying using cashless methods (49 percent). Imminently, these numbers will only increase as cashless payments are no longer just a convenience, but a crucial part of the ‘new normal’.
On the Horizon: A look at the future of Digital Payments
We have made leaps and bounds in the past month, so what’s next? As we gear up to get ready to get back to work and reopen our economy, we still need to stay safe and be vigilant. That means, continuing to use and see new iterations of digital payments as we work towards our goal of becoming a cashless society.
Unequivocally, there will be continued development for a wider range of self-checkout options. As consumers feel more comfortable linking their payment cards with their e-Wallets, this will create a no touch and more efficient payment ecosystem. There will be a rise in self-service ordering kiosks, mobile ordering from your own device and if you are on premise, scanning a QR code to order maybe common place in quick-service restaurants, coffee shops and supermarkets.
As we will see a continued surge in online shopping (e-commerce), with online banking (FPX) being the preferred payment method for many of us. From Kiple’s own customers, we see FPX having a preference of 60 percent vs 40 percent for credit cards. But who’s to say, new payment methods incorporating A.I. will slowly gain an increase in popularity for payments at home, especially with the younger generation. Voice assistants such as Google Assistant, Amazon’s Alexa and Apple’s Siri, are able to help manage our daily routine. Imagine making your weekly grocery purchases on Tesco or even ordering dinner with Domino’s Pizza, all while having a casual conversation with Alexa. 48 percent of Malaysians said that they are excited to try it out but we will have to wait till they become more accessible in the near future.
The shift in digital payments trends are the result of fulfilling the needs and expectation of the ever-changing consumer behaviour by technological innovation. In this turbulent time, going digital with your payments is now more critical than ever, especially when Malaysians are going to spend more time on their screens and at home.
Businesses need to adapt to not only comply to consumer’s needs; they also need to ensure that they do not lose out to their peers and get left behind. One thing the pandemic has thought us is that we can only predict what might happen in the future, but when, is something we cannot foresee so we have to be constantly ready to change.
As Malaysians, let us help one another in these trying times, to help us rebuild and restart the economy of our nation. We are ready, how about you? Embrace the new normal.
Kay Tan is Chief Executive Officer of KiplePay Sdn Bhd.