Deputy Governor Dato Muhammad bin Ibrahim of Bank Negara, Malaysia’s central bank, said on Monday that the country is at a critical point in its “imperative” migration to electronic payments.
“Research has suggested that a successful migration to electronic payments has the potential to drive further efficiency gains and cost savings of about 1 percent of GDP annually,” Muhammad said. “But to realize these benefits, we require more enhancements in payment infrastructure and a change of behavior from users of payment systems.”
The country’s 2014 budget allocates $561 million towards the implementation of the second phase of a high-speed broadband infrastructure system, which will provide additional internet access to 2.8 million households throughout the country–part of the country’s initiative to expand the use of electronic payment systems.
“With higher broadband and debit card penetration rate, coupled with increased payment innovation and strengthened security measures, businesses should consult their banks and take advantage of the various electronic payment solutions to reap the benefits of cost savings and productivity gains,” Muhammad said.
Since Malaysia introduced electronic check processing, household broadband penetration has increased from 32 percent in 2009 to 67 percent, as of September. Muhammad said the bank has set its targets to reduce the number of checks processed each year by half from 204 million in 2012 to 100 million by 2020.
He also pointed to the bank’s goal to increase the number of point-of-sale terminals to 25 per 1,000 residents and to increase electronic payment transactions per capita from 56 in 2012 to 200 by 2020.
“Only by migrating from checks and cash to electronic payments, can the country anticipate to achieve further cost savings and efficiency gains,” Muhammad said.