Cheque usage declined by 35% from over 200 million cheques in 2011 to 133 million in 2016. Over the same period, Interbank GIRO (IBG) and Instant Transfers (IBFT) grew almost four fold from 66 million transactions in 2011 to 257 million transactions in 2016. Encouraging progress has also been achieved in efforts to displace cash. Reform measures implemented since 2015 have made the acceptance of payment cards more affordable to merchants. We estimate the annual cost savings to merchants to be about RM168 million in 2016. This in turn has encouraged an increase in the number of payment card acceptance devices (or POS terminals) which expanded by 40% to 323k terminals in 2016. We expect these developments to further expand the usage of debit cards to displace cash together with the enhancements to the payment card infrastructure to support PIN and contactless technology. A new era in payments For many years, Bank Negara Malaysia has taken the leading role in shaping the development of the country’s payment systems, in line with its statutory mandate to promote safe, efficient and reliable payment systems. We have taken important steps to correct price signals associated with the use of different payment instruments, and created market mechanisms to better align incentives at the institution level. Along the way there was resistance, but we had experienced that left to its own devices, the market is not capable of making strategic changes necessary to drive payment efficiency, financial inclusion and competitiveness. But, cooperation is key.
Importantly, the merger will further strengthen the alignment of strategies and priorities for the development of Malaysia’s payment systems. It is also expected to significantly reduce the time to market for delivering improvements. As a shared utility, PayNet will operate with a public interest objective to support and develop safe, reliable and efficient payment systems in Malaysia. PayNet will provide the necessary common infrastructure, and the banks will compete on providing financial products and services. In the long run, we should expect that the merged entity should venture abroad and strike foreign alliances to further expand network and reach. Over the next 12 months, PayNet will move forward with plans to develop and implement a Realtime Retail Payments Platform (RPP) that will facilitate interoperable mobile payments. A central feature of the RPP is the national addressing database that will allow payments to be made conveniently through the use of mobile phone numbers and National Registration Identity Card (NRIC) numbers, instead of referencing bank account numbers. In line with principles of fair and open access, the RPP will be open to both banks and eligible non-bank payment service providers. Besides making the technology roadmap for the RPP publicly available, PayNet will actively engage with the banking industry, FinTech community and other relevant stakeholders in the development of the RPP. PayNet will also direct its focus to promoting MyDebit, which is the domestic debit card network, as a low-cost alternative to displace the use of cash.