Malaysia

ACI’s Take

Malaysia is remarkable for the speed with which it has implemented nationwide real-time payments, and its rapid adoption by banks. Key to the achievement has been the concerted effort of government and the central bank to mandate that the whole banking community comply with ISO 20022 on a unified connector/gateway; this has served to harmonize the nation’s payments structure.

Malaysia has followed an innovative route to real-time payments, stimulating high volumes of low-value payment transactions from the beginning. Identifying overall financial inclusion as a key driver, banks incentivized take-up with offers such as no fees for consumers on transfer of RM5000 and below. The second phase saw the incorporation of Request to Pay and real-time debit, to add further use cases alongside existing QR code payments, and improved interoperability between banks and different mobile wallet solutions.

The next phase will be the move into high-value payments for domestic and cross-border payments, where margins are higher for financial institutions. To avoid adding cost, however, the focus should be on consolidating low-value and high-value payments on a single platform/hub. By leveraging the ISO 20022-compliant transaction infrastructure already in place, the transition to a single process for both low and high-value payments will be fast and cost-effective. The chosen infrastructure for banks is currently on-premise payment hubs because of relatively low cloud maturity and the current lack of regulations governing cloud-based solutions.

The pace of development shows no signs of slowing. As noted last year, coming down the track are services such as consent management platforms for debits, KYC digital ID compatibility and cross-border payment with ASEAN real-time payment schemes such as Thailand’s PromptPay. These prove that real-time payments support continuous innovation, and to remain competitive it is essential that participants invest in modernized, ISO 20022-compliant payment solutions capable of handling the convergence of consumer and corporate transactions. The central bank is also exploring the viability of central bank digital currencies, particularly as a way to reduce the cost of cross-border payments (a use case it has trialed with its counterparts in Singapore, Australia and South Africa).