Published by EMIR Research, image from Malaysiakini.
Malaysia is just one step away from being a cashless society, as Finance Minister Lim Guan Eng has introduced the e-wallet program which started last week.
E-wallet is one of the government’s initiatives to encourage digital payment among Malaysians, which will not only benefit the customer, but also the small business owner.
Malaysians who earn less than RM100,000 yearly and aged 18 years old and above are qualified to obtain this one-off RM30 digital incentive via any of the participating e-wallets.
What is e-wallet?
E-wallet is like our physical wallet, but it is digitized where you can fund money into it via credit card, debit card or online bank transfer. E-wallet can be used as a payment tool to pay at the merchants by a variety of ways like scanning a QR code, ‘tap and pay’ or by transferring money directly to another e-wallet user within the app.
Countries like Sweden has rolled out an array of policies that encourage their citizens to fully switch into cashless payment, to the extent where the government had eliminated almost all the ATM in that country.
Swish, a popular payment app that is used by nearly 10 million population of that country has enabled the cashless payment to be carried out efficiently. So, if you are planning to visit Sweden, be sure to take your credit card or mobile phone with you as it is common to see the “No Cash” noticeboard at almost every merchant, including a small souvenir shop.
How does cashless payment benefit us?
Cashless payment can benefit us in many ways. For instance, it can save your time from the long queue to withdraw money at the ATM and of course eliminate the hassle to carry a bunch of cash along with you.
Not only it can prevent you from becoming a victim of robbery or theft but also make your payment more efficient. Just swipe your card or tap your phone to the machine and you are done!
Have you ever wanted to track your spending but find it difficult as some receipts are lost or thrown away?
This is where cashless payment benefits you most as you can track your spending easily via online banking or apps that you can use at anytime and anywhere you desire.
Keeping your spending on track is very crucial to prevent you from overspending. Overspending may seem benign, but it is often to blame for problems like snowballing credit-card debt, family fights, daily stress and anxiety about the future.
In fact, according to a recent poll in the United States (US), 93% of people agree that they have better insight into their spending habits by tracking their spending regularly.
How can cashless payment help the economy to grow?
Experts estimate that with the cashless payment adaptation, it would add more than 3% percentage points to the annual Gross Domestic Products (GDPs) of the economy. This is due to the increasing velocity of value transfers and growing level of spending as making expenses is now less tangible.
Besides, since the cash payments are untraceable, it plays a larger role in crime such as bribery. According to the Malaysian Anti-Corruption Commission, in 2018 itself, crime related to bribery had the highest number of arrests which is 518 cases altogether (out of 894 cases).
As the cashless payment process steps in, all transactions leave behind traceable records. Thus, this may spell the demise of cash-based criminal activity or at least, the numbers can be reduced. This is in line with government’s vision to combat such crime especially among the politicians and big businesses.
Apart from that, going cashless can also be advantageous to the retailers. Any inaccuracies or accounting issues created by human error can be eliminated. Also, it allows the retailers to remove inefficiencies associated with managing cash which will result in a speedy transaction process.
Last but not least, cashless payment allows its customers purchasing history to be tracked which can be utilised to build better behavioural profiles. This approach provides a win-win situation for the customers and businesses, as businesses can utilise those customers insights to make the most of sales and enhance customers loyalty by tailoring offers and services that directly address customers spending habits and preferences.
However, as much as the cashless payment process benefits us in many ways, there are, of course, some issues that need to be addressed.
To make the payment process goes smoothly, the government has to provide consistent and reliable access to the internet. With high-speed internet connectivity, processes like money transferring and balance checking can be done effortlessly.
Also, for this digital-payment system to take root, providing good infrastructures like stable app or online banking system are vital as its absence can be a hindrance to the cashless payment process. With the necessary standards to support these infrastructures, an on-time interbank transfer process can be done.
As the payments landscape continues to evolve, so does the flow of personal data generated by electronic and digital payments. Thus, it’s critical for government to come out with rules and policies to make this new payment method secure from any malicious act pertaining to cybercrimes like data breach.
As for society, they need to be educated over the potential risks in using online transactions so they will always be on guard about the safety and security aspects of the online transaction. The loss of cash might seem sad to some and scary to others but with proper education and exposure, society would eventually embrace this digital change.
After all, although our economy is still largely based on cash, the government is committed to progressively reform our traditional payment system. Turning into a cashless society does not need to be done in a rush, as the matter must be planned properly and executed in stages – to deliver an optimum cashless society.
Nurafifah Mohammad Suhaimi is Research Assistant at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.
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