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Top 5 Cashless Payment Methods for SMEs to Embrace a Cashless Society

Top 5 Cashless Payment Methods for SMEs to Embrace a Cashless Society

  • 1 June 2023
  • By OCBC Business Banking
  • 10 mins read

What is cashless society?

A cashless society is characterised by people replacing physical currency with digital payments. China and South Korea lead Asia in this respect with their high smartphone use and booming e-commerce industry. The pandemic sped up the shift to a cashless economy in Southeast Asia. Now, the region’s digital economy is expected to read USD 1 trillion by 2030.

Pros and Cons of A Cashless Society

Yet, the progress towards a cashless society comes with both benefits and drawbacks. Research by Boston Consulting Group found that a cashless model would boost GDP by 1% in mature economies and 3% in emerging ones. 

A cashless economy would improve the tracking of finances and stop tax fraud. It would also cut costs for cash management and remove ATM fees. This change would especially benefit lower-income groups.

On the downside, one of the disadvantages of a cashless society is its vulnerability to cyber-attack and technological issues. Going cashless also requires consumers to sacrifice privacy.

Overall, the question of why using digital payment is better than cash or why going cashless is better than using cash is answered by the advantages of speed, security, and convenience offered by electronic payment systems.

The Digital Payment Landscape

In a post-pandemic era, most have opted for cashless payment methods such as mobile banking and QR code payments instead of bank notes. This trend reflects a growing awareness of what digital payment is and its benefits. Visa’s Consumer Payment Attitudes Study 2024 found that 70 of Malaysian consumers are cashless. The top three types of digital payment methods used are QR payment (68%), contactless card payment (64%), and e-wallet app payment (63%).

PayNet’s 2022 study reveals that age, gender, ethnicity, and location affect payment habits. It also found that people aged 26-30 prefer credit cards, those aged 36-40 favour debit cards, and those 31-35 opt for e-wallets. The top three e-wallets downloaded by Malaysians are Touch ‘n Go, ShopeePay and Boost.

Despite the decline in cash usage, PayNet reports that 78% of Malaysians still prefer cash. This preference is due to cash being easy to use, trusted, and requiring no investment or tech knowledge whatsoever. Moreover, cash purchases do not create data points which could be exploited for cross-selling.

Adoption of Cashless Payment Solutions

A 2021 Kaspersky survey found that 72% of Malaysian consumers want SMEs to adopt digital payment systems, and 59% were willing to spend more at stores that accept them.

Digital payment systems make businesses more efficient and reduce costs while boosting sales. These benefits are why businesses should enable digital payments for both physical stores and e-commerce websites. To learn more about how digital transformation can help SMEs grow, take a look at our article about the digitalisation journey of SMEs.

Types of Cashless Payments in Malaysia

Here are some top digital payment solutions that SMEs can consider to grow their business:

1. iPay88

iPay88 is a pioneer among Malaysia’s online payment providers. It offers well-designed solutions for e-commerce and retail payments. Their system accepts payments from major credit and debit cards, online banking and e-wallets. They offer various plans depending on your business needs.

2. Razer Merchant Services (RMS)

RMS has risen to be one of the biggest players in Southeast Asia, serving established brands like Starbucks, Grab, Lazada and Uniqlo. They have complete payment acceptance like iPay88 with the addition of their Razer Cash @7-Eleven and Buy Now Pay Later. Their commission per transaction varies based on the payment method, with e-wallets enjoying the lowest rate of 1.4%.

3. Billplz

Billplz has become popular today thanks to low fees and fast settlement, while offering a wide variety of payment methods. Their Basic Plan is free with a commission of RM1 per transaction, which highly favours start-ups. For businesses with steady volume, they offer a Standard Plan that charges RM5,300 per year. It has a commission of RM0.50 per transaction and a special rate of 3.2% for PayPal transactions (subject to approval).

4. eGHL

GHL Systems Berhad is an established service provider in Southeast Asia and accepts over 100 types of electronic payment modes. Their technology allows easy integration of payment systems, with user-friendly plugins and an API.  Their systems meet the highest security standards for protecting cardholder data. This ensures that all transactions are processed in a secure environment that minimises the risk of data breaches.

5. OCBC Merchant Terminal and OCBC OneCollect

SMEs that want simplicity can use the OCBC eBiz Account and its add-ons to help their businesses. The OCBC Merchant Terminal accepts contactless and mobile payments. It also provides zero-interest instalment plans for OCBC credit card users.

In addition, the OCBC OneCollect application allows SMEs to receive payments through QR codes for both local and overseas transactions. It also keeps track of both ongoing and past transactions and sends real-time notifications.

The move to a cashless society comes from consumers who value speed and convenience. Malaysia has a relatively young population that is more likely to embrace a digital lifestyle. Visa’s study states that Malaysian consumers believe that a fully cashless society could be possible by 2025.

Fintech innovations have led to a more productive and competitive economy. With the implementation of effective economic and policy frameworks, everyone should engage in the digital transformation and do what we can to help make Malaysia ready for the digital age.

Disclaimer

The information provided herein is intended for general circulation and/or discussion purposes only. Before making any decision, please seek independent advice from professional advisors. No representation or warranty whatsoever in respect of any information provided herein is given by OCBC Bank and it should not be relied upon as such. OCBC Bank does not undertake any obligation to update the information or to correct any inaccuracy that may become apparent at a later time. All information presented is subject to change without notice. OCBC Bank shall not be responsible or liable for any loss or damage whatsoever arising directly or indirectly howsoever in connection with or as a result of any person acting on any information provided herein. Any reference to any specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.


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