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The Problem with Malaysia’s E-Wallet Scene
December 9, 2019 Blog

By Syed Ahmad Hafez
(Disclaimer: This is an opinion piece, representing the writer’s personal views.)

Malaysian Finance Minister Lim Guan Eng recently announced that the government is in the midst of testing a new e-wallet system and software for citizens, called the e-Tunai Rakyat (literally translated as the “People’s e-Cash”).

The system is in line with the government’s plan to distribute a one-off RM30 e-credit to eligible Malaysians (those aged 18 and above and earning less than RM100k a year) starting January 2020. To carry out this scheme, the government is planning to collaborate with e-wallet providers and government agencies to boost the usage of e-wallets among the public as well as to encourage more businesses and retail stores to accept and use digital payments.

According to the Malay Mail, Lim said that the initiative was part of a RM50.3 billion allocation to transform Malaysia into an entrepreneurial nation, which includes the transition to a digital economy.

Out of the RM50.3 billion, RM21.6 billion has been allocated for the National Fiberisation and Connectivity Plan (NFCP) to upgrade and expand the Digital Malaysia infrastructure, while RM28.7 billion will be used “for various digitalisation incentives such as the e-Tunai Rakyat as well as guarantees and financing aid, including for entrepreneurs, small and medium businesses and Malaysian companies,” said Lim.

Will this initiative encourage more users to use e-wallets more regularly? At the current state of affairs, we honestly don’t think so.

Malaysia currently has almost 50 e-wallets to cater for a population of fewer than 33 million people. Let’s compare that to China, where the e-wallet scene is thriving. China only has two main e-wallet services, WeChat Pay and Alipay, for its 1.4 billion population.

The problem in Malaysia is that you can go to a row of shops and it’s common to see each accepting different e-wallet(s). Thankfully, we rarely see a permutation of all the existing e-wallets, but mostly a combination of 8 to 10 of the biggest or most popular local e-wallets.

Nevertheless, this still becomes a hassle for users as they have no way of knowing which would be accepted and unless they have deep pockets, they can’t leave digital funds lying around in different wallets waiting to be spent when the time comes. Worst of all, most of the funds in these e-wallets are not refundable, transferrable or withdrawable.

One positive aspect of having so many companies competing against each other is that they have had to come up with different incentives, promotions, cashbacks, rebates and reward programs to entice more users.

Many are saying that the consolidation of e-wallets is imminent – either through mergers, acquisitions or elimination – and we agree. This oversaturation of e-wallets has got to go and the only way that could happen is for them to have a fight to the death and leave the strongest ones standing as the dust settles.