The transition to a cashless society in Malaysia is anticipated to result in a total spending of around RM387 billion this year, as outlined by data and analytics firm GlobalData. Debit card transactions are projected to make up RM156.4 billion of this amount, with credit cards accounting for the remaining RM230.5 billion.
According to GlobalData’s senior banking and payments analyst Poornima Chinta, Malaysia is progressively embracing the digitalisation of payment methods, thanks to a growing banking population and an expanding point-of-sale (POS) infrastructure. Despite the continued prevalence of cash, electronic payments are gaining ground, particularly with consumers turning to payment cards more frequently, a trend that has accelerated during the Covid-19 pandemic.
The study revealed that the value of card payments in Malaysia displayed a healthy compound annual growth rate of 14.3% between 2019 and 2023, reaching RM351.2 billion last year.
Projections indicate that spending through debit and credit cards among Malaysians is expected to increase to RM422.5 billion by next year, RM459.2 billion in 2026, RM496 billion in 2027, and a substantial RM533.1 billion by 2028.
This growth is attributed to advancements in the POS infrastructure in Malaysia and government efforts to promote cashless transactions. In 2022, a campaign was launched by Malaysia to encourage the use of cashless payment alternatives for all government transactions, thereby equipping government agencies with the necessary payment infrastructure to facilitate digital payment methods for various services.
Additionally, the reduction of interchange fees by Bank Negara from Jan 1 last year aimed to incentivize merchants to accept card payments, with interchange fees for domestic and international debit cards being capped at 0.10% and 0.27% respectively, and at 0.6% for credit cards.
Contactless payments are also on the rise in Malaysia, contributing to the growth in the number of payment cards. Bank Negara reported that 68.9% of card transactions at physical locations were contactless in 2022, up from 64.6% in 2021.
Credit and charge cards made up 60.7% of the overall card payment value last year, while debit cards accounted for the remaining 39.3%. The study also noted a shift in usage pattern for debit cards, which are now increasingly being utilized for payments, especially for low-to-medium value transactions due to heightened consumer awareness and the availability of contactless debit cards.
Chinta projected that Malaysia’s payment card market will sustain its growth trajectory, with a compound annual growth rate of 8.3% expected between this year and 2028.
