Banking on the e-wallet in Malaysia

October 2018
By Yennie Tan, Partner and Deals Strategy Leader, PwC Malaysia

Malaysia a hotbed for e-wallets

2018 has been a defining year for the digital payments landscape, with the emergence of over 40 e-wallet players in Malaysia. There were 28 in 2016.

This digital wave is in no small part due to the regulator’s initiatives and push towards a cashless society. Moving forward, the e-wallet market is poised for strong growth and could support more sophisticated functions such as remittances, e-payments and shared QR codes.

Furthermore, industry players regard Malaysia as a prime market given its favourable demographics and potential to drive e-wallet adoption.

Large market potential

Based on PwC Malaysia’s estimates, the e-wallet market is projected to grow to c.USD20bn by 2024, underpinned by favourable industry growth dynamics and market potential. While e-wallets can be used for a variety of payments, Retail, F&B, e-Commerce and Peer-to-Peer transfers are expected to be the most popular given the small ticket size per transaction.

A 2018 customer survey conducted by PwC Malaysia showed that only 22% of respondents have used an e-wallet before, indicating an underpenetrated market to date with strong headroom for potential growth. The survey also found that the top 3 reasons for adoption were promotions, convenience and digital receipts while concerns mainly revolved around low merchant adoption, security risks and poor user interface.

What does the future of the e-wallet industry look like in Malaysia?

Given the large market potential, it is not surprising that users are spoiled for choice with over 40 e-wallet players in the market today. While consolidation is inevitable, three questions arise:

In the longer term, how many e-wallet players are sustainable in the market?
What will e-wallet players do to grow their network of customers and merchants in this highly competitive market?
Can e-wallets convert avid cash users and compete against other forms of cashless payments?

For more insights, read our thought leadership publication “Banking on the e-wallet in Malaysia”