A cashless society is a behavioural change of people in replacing the usage of paper and coin currency by making financial transactions electronically. China and South Korea are both recognised as the cashless leaders of Asia, mainly contributed by their high smartphone adoption rate and booming e-commerce industry. In Southeast Asia, the trend of nations shifting towards a less-cash economy has been further accelerated by the pandemic, subsequently the digital economy of this region is projected to reach USD1 trillion by 2030.

The progress towards a cashless society comes with both benefits and potential drawbacks. BCG research stated that a shift to a cashless model would add 1% and 3% to the annual GDPs of mature and emerging economies respectively. A cashless model would improve financial tracking, allowing for better credit assessment and tax fraud prevention. It would also save on the costs of printing, handling, and safeguarding cash, along with eliminating ATM fees which affects lower-income groups the most. On the downside, a cashless society will be subjected to higher risks of cyber-attacks and technological glitches or outages. Going cashless also requires consumers to sacrifice privacy.

The Digital Payment Landscape

In a pandemic where “Dirty Money” is about microscopic infectious agents, most have opted for the wide acceptance of mobile banking and QR payments, as compared to the arduous task of sanitising bank notes. Visa’s Consumer Payment Attitudes Study 2022 stated that 74% of Malaysian consumers have succeeded in going cashless, and the average number of days successful is 12.9. The study also listed that the top three digital payment methods used are card online (70%), card contactless (56%), and mobile contactless (40%).

According to PayNet’s Digital Payments Insights Study 2022, payment behaviours are influenced by age, gender, ethnicity and geographic locations. The study stated that businesses in northern, central and east Malaysia prefer to use digital payments, whereas businesses in east coast and southern regions prefer cash. PayNet has also identified the main user groups among the digital payment methods, which are the 26-30 year olds for credit cards, 36-40 year olds for debit cards, and 31-35 year olds for e-wallets. The top three e-wallets downloaded by Malaysians are Touch ‘n go, ShopeePay and Boost.

Despite the decreasing usage of cash, PayNet has noted that cash is still the dominant payment method, as 78% of Malaysians still prefer to use cash. Cash remains popular as it is user-friendly and trusted; it does not require investment and knowledge on technology. Moreover, cash purchases do not create data points which could be exploited for cross-selling.

Adoption of Cashless Payment Solutions

A 2021 Kaspersky survey has shown that 72% of Malaysian consumers want SMEs to adopt digital payment systems, and 59% of the total survey participants are willing to spend more at stores that accept digital payments. Digital payment systems add value to a business by improving operational efficiency and lower operating cost; the ease of transaction through multiple payment modes will also help increase revenue. These benefits are why businesses should implement payment processor and gateways to enable digital payments for both physical stores and e-commerce websites. Here are some top digital payment solutions that SMEs can consider to grow their business:

1. iPay88

iPay88 is a pioneer as an online payment services provider in Malaysia, and has well-designed solutions for e-commerce and retail payment needs. Their system accepts payments from major credit and debit cards, online banking and the common e-wallets available in the market. They offer various plan 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 a 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 payment method, with e-wallets enjoying the lowest rate from 1.4%.

3. Billplz

Billplz has become popular today thanks to their 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 more consistent volume, they offer a Standard Plan that charges RM5,300 per year with a commission of RM0.50 per transaction and a special rate of 3.2% for PayPal transactions (subject to partner’s approval).

4. eGHL

GHL Systems Berhad is an established service provider in Southeast Asia and accepts payment modes from over 100 channels. Their technology enables easy payment system integration through user-friendly plugins and API, and their systems are PCI DSS Level 1 certified.

5. OCBC Merchant Terminal and OCBC OneCollect

For SMEs that prefer simplicity and convenience can look towards supporting their businesses with OCBC eBiz Account and its add-on solutions. The OCBC Merchant Terminal covers the common payment needs by providing Point-of-Sales terminal, contactless card payment, mobile payments, as well as zero-interest instalment plans for customers paying with OCBC credit cards. In addition, the OCBC OneCollect is an application that allows SMEs to receive payments through QR codes for both local and cross border transactions. The application also provides real time notifications on transactions and keep track of both on-going and past transactions.

The progress towards a cashless society is derived by consumer behaviour, in which values speed, convenience and accessibility. As Malaysia has a relatively young population with a median age of 29.6 years, the nation has a sizeable population that is more likely to embrace a digital lifestyle. Visa’s study has stated that Malaysian consumers believe that a cashless society could be a possibility by 2025. Innovations in financial technology have led to greater financial inclusion, attaining higher productivity and higher competitiveness for the economy. With the implementation of effective economic and policy framework, everyone can and should engage in the digital transformation to achieve a Malaysia fit for the digital age.