The debit card should be positioned as a cost-effective payment card to make it more affordable for small merchants to accept card payments. The expansion of the POS network would allow for wider acceptance of the debit card to be used more pervasively, to displace the use of cash, thus bringing about cost savings for the country in the long run. To correct the distortions and promote competition in the domestic payment card market, a Payment Card Reform is certainly timely to stem the indiscriminate increases in interchange fees and correct the price signals with the view to widen the POS network especially in non-traditional industries and rural areas. 2. Development and sharing of infrastructure investment  To be successful, e-payment solutions must not only be affordable, their expansion must also be sustainable in the long term. Sustainability entails the ability to leverage on an enlarged network which enables market players to build critical mass and achieve the desired economies of scale. In this regard, the importance of collective industry efforts to develop and share infrastructure cannot be emphasised enough. Infrastructure development is very expensive and the banking industry ought to share the required investments. Infrastructure should not be used as a competitive tool but rather as an enabler that would promote modernisation of the payment system. Besides minimising cost and lowering the entry barrier for new players, collective infrastructure development and sharing of infrastructure costs would allow market players to compete directly on product offerings and quality of services, thus providing better value to consumers.
Malaysia has a high mobile phone penetration of 144 per 100 inhabitants as at end-2013. In addition, the country’s broadband penetration at 67 per 100 households as at end-2013, is projected to increase with the implementation of the second phase High-Speed Broadband (HSBB) project. Malaysia also has a wide network of about 9,000 access points to banking services comprising bank branches and agent banking network accounting for approximately 4 access points per 10,000 adults.1 Under the agent banking network, basic banking services are provided to customers through third party agents such as post offices, petrol stations, retail outlets and telecommunication agents. The access points are also complemented by  1  2  As at end-May 2014, there are 2,953 bank branches and 5,802 agents under the agent banking network nationwide. BIS central bankers’ speeches  12,430 ATMs nationwide which represents about 6 ATMs per 10,000 adults. All districts and Parliamentary constituencies now have access to basic banking services.2 We believe that the payment instrument that has the highest potential to drive financial inclusion in Malaysia is the debit card. Malaysia has a high debit card penetration of 19.2 million “active”3 cards-in-circulation which is almost equal to the bankable population of approximately 20.4 million adults. The unbanked on the other hand can leverage on prepaid cards which function just like debit cards.