Malaysia Going Cashless: Hitting Two Birds With One Initiative
Malaysia’s plan to becoming a cashless society is more than just offering the benefits of e-payment as this policy could also mean shutting down corruption in the country.
A Huge Convenience
Depending on how you define convenience, adopting digital payments certainly brings a lot of advantages. For one, this could help a nation save up huge amount of resources that it needs to expend in printing monetary notes and minting coins. In the US, for example, the almighty dollar would cost 5.5 cents to make. One could only imagine the huge overhead expense the Federal Reserve has to spend to print those Washingtons and Benjamins.
Going cashless also helps increase efficiency and at the same time, speed up a country’s payment processing systems.
A Viable Solution
Malaysian Finance Minister Lim Guan Eng emphasized the important role that the cashless system can do for Malaysia. According to Eng, it “could help cut down corruption” in the government and Malaysia doesn’t have to look elsewhere for proof that this apparently works.
In a keynote speech he made during the WeChat Pay technology exhibition last month, the minister pointed out how the system greatly “reduced” corruption in China.
Suffice to say, there’s gravity to Eng’s statement. The World Economic Forum cited in its report governments such as India, Tanzania, Rwanda, and even France reaping the benefits of going digital.
According to WEF, e-payment transactions ensure transparency as opposed to conventional, non-digital channels. The money, as WEF pointed out, “either reaches the intended recipient in full, or goes back in state coffers.”
A Doable Plan
In Malaysia, the Bank Negara Malaysia (BNM) has been pushing this transition for quite some time already and it looks like its gaining steam.
Local finance journal FinTechNews reports BNM’s long-term goal in improving Malaysia’s cashless system, which it expects to achieve by the year 2020.
One of the immediate steps BNM is taking since launching the initiative includes increasing the country’s number of e-payment transactions made per person in Malaysia. From the initial 44 transactions, it has now grown to 200 transactions.
The central bank is also working on cutting down the use of cheques from more than 200 million to 100 million per year.
Measures being taken by the Malaysian government to reach these include creating more e-payment infrastructures that could facilitate businesses and individuals in making the transition. This is done by providing point-of-sale terminals in almost every establishment around the country, as well as promoting the use of mobile phone banking.
A Foreseeable Cashless Future?
The intentions behind the policy are agreeably good. However, the question remains: are Malaysians ready for the shift?
The answer, as indicated in the Nielsen statistics, suggests that a majority of Malaysians still prefer paying in cash, especially when making their everyday expenses. One of the reasons why people are still apprehensive on this scheme has something to do with issues of security and fraud.
According to the Nielsen report, awareness on the use of mobile wallets is quite widespread but people are also quite hesitant for the possibility of overspending.
With the continuous encouragement from the government plus the support of local vendors who are now accepting digital transactions, changing the payment landscape of Malaysia is extremely doable, if not possible in the nearest future.