20 years for Malaysia to become cashless society, says PayNet

AFP pic.

KUALA LUMPUR: Malaysia is still a long away from transforming into a cashless society in the near term, mainly due to the spending habits of Malaysians who prefer to use cash for payments.

Payments Network Malaysia Sdn Bhd (PayNet) Group CEO Peter Schiesser, however, believed the country would only become a cashless society in 20 years.

“In the digital era, it is very expensive for a country to print cash or for retailers to handle cash,” he said on the sidelines of a media briefing on Malaysia’s payments ecosystem here today.

Schiesser said currently, a cashless society may not work in the rural areas as most country folks are still heavily reliant on cash and have a lower degree of financial literacy compared with urban citizens.

“The country should play a role in educating these people to increase their awareness.”

He noted that the number of electronic payment transactions in Malaysia had shown a sharp increase since two years ago, thanks to the booming e-commerce market in the country.

According to Bank Negara Malaysia statistics, 833.9 million transactions were made via internet banking from January to November 2018, compared with 741.9 million for the whole of 2017 and 588.2 million in 2016.

Statistics show use of mobile banking also increased in the first 11 months of 2018, recording 1.92 billion transactions, compared with 1.05 billion in 2017 and 526.6 million in 2016.

The number of cash withdrawals from the automated teller machine dropped to 718.3 million from January to November 2018 versus 763.9 million for the full year 2017 and 761.2 million in 2016.

Danger in over-reliance on digital payments

Asked whether it was necessary to fully transform Malaysia into a caseless society, Schiesser cautioned that over-reliance on digital payment would put the country at risk, particularly when the world is facing security threats and geopolitical concerns.

“For instance, the mostly cashless society Sweden is facing a potential risk, which is what happens if the digital infrastructure goes down. The country would just have no other way of working,” he added.

Hence, he said regulators were playing a vital role in ensuring the smooth functioning of the payment systems in the country. - FMT