Card Payments in Malaysia to Increase by Over 15% in 2022: Report

The Malaysian card payments market is “set to record a robust growth of 15.2% in 2022, supported by the gradual rise in consumer spending, government’s financial inclusion measures, and increasing preference for contactless payments,” forecasts GlobalData, a data and analytics company.

According to GlobalData’s Payment Cards Analytics, the value of card payments in Malaysia “recorded a strong growth of 15.9% in 2021, after observing a 5.4% decline in 2020 due to the reduced consumer spending amid the COVID-19 uncertainty.” The value of card payments is “forecasted to register a compound annual growth rate (CAGR) of 11.5% over 2022-26 to reach MYR401.9bn ($96.5 billion) in 2026.”

Nikhil Reddy, Senior Banking and Payments Analyst at GlobalData, comments:

“Although a cash-reliant society, Malaysia has made a significant progress in the adoption of electronic payments during the last few years, supported by the government initiatives including the cap on interchange fee, migration of payment cards to EMV standards, and the expansion of POS infrastructure. 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.”

The Malaysian economy “contracted in 2020, with the country’s GDP declining by 5.6%.”

However, the country’s GDP “recorded 3.1% in 2021 and 5.0% growth in Q1 2022.”

Improving economic activities are “expected to spur consumer spending, which will support the payment cards growth.”

As considerable portion of the Malaysia population is still outside the purview of banking and payments, Malaysia is “emphasizing on digital banks to further promote the financial inclusion in the country.”

In this regard, in April 2022, the government “awarded five digital banking licenses, which are anticipated to commence their operations within next two years.”

These digital-only banks will “complement traditional banks to increase financial inclusion in the country, which will in turn push the card penetration and payment card usage.”

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 reduction of the interchange fee on debit cards to 0.10% from the previous 0.15%, and on credit cards from 1.10% to 0.60%. This is in consultation phase and yet to be implemented.”

Amid the COVID-19 pandemic, “an increasing number of consumers are now looking for ‘touch-free’ payments, thereby pushing the usage of contactless cards.”

According to the Bank Negara Malaysia, two out of every three card payments at physical stores in 2021 “were contactless, compared to one out of two in 2020.”

Reddy concludes:

“The Malaysian payments card market registered sustained growth in the last few years. Although, the COVID-19 pandemic hampered its growth, the government push for digital payments, improving payments infrastructure and rising demand for new payment technologies will aid the payment market growth over the next few years.”



Sponsored Links by DQ Promote

 

 

Send this to a friend