Welcome to the Cashless Society (Malaysia Edition)

The place was crowded. You were standing quietly, hands tugged into your straight cut jeans eyes locked on the wide boards over the top of the shelf. There are 2 persons standing in front of you - both larger than you. The first man at the front has been staring at that same wide board for some time now before he started speaking. Your hands began to sweat as you never done this before. You convinced yourself that you are not some hipsters that just got to have overpriced coffee and the only thing stands between you and that green maiden logo was the aroma of the coffee that draw you into the queue. Soon, it is your turn to order, you successfully blurt out a bunch of gibberish words that hipster made cool before giving your name to the cashier in front of you (which most of the time they are going to misspelled it). As you wait for the cashier to key in the last few details of your order, you noticed a small shelf in the place of cardholders at the front left of the cashier's table. The cards has beautiful design which has some sort of transparent design at the edge of the card. As a youth you feel curious and ask about the membership card. After a few minutes of explaining the card's benefit (and maybe a few cute smile from the cashier), you got yourself a card and thought to yourself that benefits you get from the card is actually worth your money. You have taken your first step into going cashless.

Enter year 2018, living off the age of smartphone, it is hard to deny that everything can be done straight off that little computer in your pocket - including paying for your purchases. The smartphone is fast replacing your physical wallet with a virtual one. For the past couple of years, this has become a reality in China. Everyone in China is going cashless (or e-Wallet if you prefer), even the beggars has their own QR code to collect their alms. Over here at Bolehland, it is a different story - but it is a story that is steadily building to become a good one if everyone plays their part. This post is to explain to you what are the benefits of going cashless for you, how secure is e-Wallet, how many cashless merchants are out there in Malaysia, what are the benefits for the merchants, who are the main key players currently in Malaysia, how is Malaysia going to turn the cashless society to a success story.

Benefits of e-Wallet

As a consumer, we must get every right to secure the best deal in the best price we could get. So how is e-Wallet is going to benefit us? Firstly and obviously your physical wallet is going to get much thinner. Do not give me those bullshit that you carry only debit and credit card. Imagine all merchants you go to accepts e-Wallet, the only thing you will be needing in your wallet will be your Identity Card and Car License only. You do not even need a physical wallet for that. Secondly there are various cashback and discounts you could get from using e-Wallet. For example Samsung Pay in Malaysia is using a point system that rewards you points every time you its services. These points can be used to redeem cool stuffs like a smartwatch. Others will be explained later on when we go through the key players in e-Wallet.

The merchants are charging us the same price as we use cash or cards, so how in the world does this benefits the e-Wallet companies? When Apple Pay was launched on year 2013, some analysts did state that for every $100 in Apple Pay transactions, Apple earn 15 cents from that transaction. So it is safe to say that other brands are doing the same thing as well. Other brands like WeChat Pay or AliPay are more towards a prepaid approach where they will ask you to top up a certain amount of money to the app before you are able to use it. This way, before you start using you already give your money to the service provider which adds up to their already huge amount of profits.

So we mention how e-Wallet will benefits consumers and the companies that provide the services. So what about benefits on the merchants end? The answer is data. When one uses e-Wallet function, our particulars will be collected anonymously for the companies and the merchants. Things like your gender, age group, marital status etc. are vital to companies and merchants alike. They can use these set of data to provide you better services in the future. For example like if you own a cafe and from the data gathered most of your customers are female, maybe in the future when you plan to add more to your menu you might want to add more sweet deserts in it? 

Key Players

As of March 2018, there are more than 30 e-money licenses (5 banks and 28 non-bank entities) was issued by Bank Negara Malaysia which enable them to issue e-wallets or e-payments system. However many are not focused in e-Wallet and mainly for loyalty cards or petrol cards. That being said, there are a few who stands out in the crowd and gaining popularity. In this section, I will writing 3 main players with different strategies and also some noteworthy contender in the field.

FavePay

Previously known as Groupon Malaysia, it was acquired by K-Fit aka Fave (owned by Joel Neoh who happens to be Groupon Malaysia founder who quits due to lack of support from Groupon USA - talk about Asian Steve Jobs) on early year 2017. Towards the Q4 2017, they introduced FavePay into the Fave app. FavePay mantra was simple, if you visit a shop and pay with FavePay, you will get the cashback up to 5%. That cashback was not given to you in the form of cash but as a form of discount on your next visit. You can even integrate it with your AirAsia BIG membership to collect points or pay with your points. That is not all, you can even get great deals in the app as well. Once you installed the app, tap on the FavePay tab and scan the QR code located at the cashier counter of the cafe and enter the amount you need to pay. You might need to enter your credit card details the first time you use it. If you are a first time FavePay user there is a promo code you can use for discount, just ask the counter for the promo code as it changes every month. Personally I like FavePay as some merchants that offer this service has a FavePay employee standing by to help you and they know a few promo codes that you can get from them for instant discount.

(Get FavePay in Fave on App Store or Google Play Store)

GrabPay

This is a bit confusing. Grab introduces GrabPay earlier of 2018 although before this they already have GrabPay but its only for you to pay for Grab services using your credit or debit card. Now they introduce 'credits', it is like a virtual prepaid card where you top up your credits and pay with them. With GrabPay Credits, you enjoy cheaper Grab fare and also some merchants now support GrabPay will have additional discount when you pay with its credits. Once the app is installed, simply tap the 'G' button on the top right to key in your debit/credit card details and how much credit you plan to top up. Honestly I think this concept is not that good as one day you might run out of credits and you have to face the embarrassment of not enough money to pay the cashier or your Grab driver. The reason why they introduce this system (I think) is to have more cash in hand to expand their business. Since they now (sort of) monopolize the ride-sharing system in South East Asia, they can do anything now. 

(Get GrabPay in Grab App on the App Store or Google Play Store)

Samsung Pay

This payment method is only available for certain Samsung phones that support Near Field Communications (NFC) payment. The payment system is simple and works like your credit card. In fact it is safer than your credit card, it involves a system called tokenization where each time you pay for a transaction, the sensitive data element will be substitute by non-sensitive element which we call a token. A token has no exploitable meaning or value hence it is not worth hacking. The token is a reference that maps back to the sensitive data through a tokenization system. In short words, it is safe. Moreover, Samsung Pay rewards you with points system every time you transact with Samsung Pay. Those points can be redeem for great products and services. To activate it, simply from your Samsung phone lock screen swipe up to insert your credit or debit card details. There is no app to install for this.

Other noteworthy mention

Touch N' Go e-Wallet

One of the pioneers for cashless payment, I believe all Malaysian adults should own one of those Touch N' Go card for the convenience of us travelling the highway. Before this you need to carry a card for it, however they are fast catching up with their introduction of mobile app for payment. You can use the app to transit trains or to pay for certain convenient store. It functions similarly with GrabPay where you need to top up credits. However, one disadvantage of the system is that you still need to visit the nearest Touch N' Go office to reload your card/account which is a total waste of time since you still need to queue up to reload making paying by cash a much more convenient way sometimes. What they need to do to get it right is to employ an efficient online transaction service provider for this. If done right, I believe this system will be the most successful among all since it already have the market penetration.

(Get Touch N' Go e-Wallet on App Store or Google Play Store)

AliPay/WeChatPay/RazerPay

These are the major China mobile payments key players. They are the giant in China when it comes to e-Wallet. The effect greatly ripples in Malaysia as we begin to see merchants slowly start to accept these payments. It functions like GrabPay for now where you can store credits in it. Some of it promise the support of credit/debit card system in the future and some can even be used to reload your mobile prepaid credits. However if it is one thing that I still have doubt is that how China stores our personal data. If you look carefully at their terms and conditions you will see they use your personal data for collection and analyze it to give you special rewards that are 'cater' only to you. So the more you spend on certain category, the better the rewards are. In the end, you will be stuck in this vicious cycle of continuous buying and reward.

(Get AliPay on App Store or Google Play Store)

(Get WeChatPay in WeChat on App Store or Google Play Store)

(Get RazerPay on App Store or Google Play Store)

O2O/M-coin/M-phase

Call it whatever you want, this system has be steadily growing in Malaysia. Founded by MBI International, it uses a system that has its complexity which is hard to explain in a simple paragraph. To put it in a simple way, it uses a system similar to WeChatPay/GrabPay/AliPay, however the amount of money you put in will not be the amount of monetary value you get to use as credits. Certain percentage will be used by MBI for investment purposes where after a few months of growth certain percentage of those investment will be transferred to O2O account. This O2O accounts you can only use it on merchants that support its payment. There is even a special mall dedicated only for these O2O payments and not anything else, however items for sale are priced slightly higher than average. As far as I know there is no app for this system, you just have to simply state your membership number and they can cut your credits from there.

Moving Forward

There are many choices for e-Wallet being offered in Malaysia. In fact, there are already too many, since it is only the start of the 'going-cashless-race, we might still need to wait a few more years where a better company to acquire the ones that are not doing so well for a more streamline e-Wallet system. I believe Malaysia is on its way on becoming a cashless society. As a consumer, I believe we can play our part by just participating in any of those mentioned in the above. If you do not like it, try another one. I believe the key to make it successful here is there must be consumers that are willing to use mobile to pay, the wide availability of merchants supporting the system and a good network effect that can consumers can enjoy a seamless customer experience.