By Yennie Tan, Partner and Deals Strategy Leader, PwC Malaysia
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.
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.
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”