Imagine having a good cup of coffee and when you are done, you walk to the counter to pay. But instead of flashing your cards or rummaging for cash and coins, you flash your mobile phone. A few tap on your mobile device, ta-da! Transaction completed!
Mobile wallet or e-wallet is exactly what it sounds like – your wallet in electronic form. It is an app on your mobile device which stores payment information from a credit card or debit card, allowing you to use your device to make purchases.
How Do Mobile Wallets Work?
E-wallets work through an app on your mobile devices by scanning a barcode, tapping or waving at the point-of-sale. The phone transmits your payment information and then asks for verification by entering a code or pattern or taking your fingerprint.
Certain e-wallet apps may integrate with loyalty and rewards programs, and merchant wallets may let you buy and store gift cards, order and pay in advance, and use coupons.
Advantages of e-Wallet
So, you might want one, too? E-wallets provide a convenient way to pay for goods and services with your mobile devices. It can be an all-in-one app to manage your credit cards, loyalty club memberships and reward cards.
Easy and simple ways to load and transfer money – It is easy to add money to your e-wallet via net banking, credit card or debit card. Saving these details in your e-wallet saves you time and the hassle of entering these details every time you make a transaction.
Easy to transfer money – E-wallets made sending and receiving money so easy and quick. On the top of that, many e-wallets take no transaction charges for transferring money anywhere, anytime.
Easily accessible – To get started, it is as simple as downloading the app, creating a user ID and password. Credit or debit card information can be stored in the app and you can also set preference to your favourite card to use.
Wide range of usage – More and more merchants are utilising e-wallets in Malaysia. Boost, one of the major e-wallets in Malaysia, recently partners 11street, the leading online marketplace to revolutionise the way Malaysian consumers transact.
Timely payments – Certain e-wallet app also allow autopay facility for automatic bill payments from your e-wallet balance, ensuring timely payments for your bills.
Rewards and Incentives – Each e-wallet has its own reward program, incentives, loyalty program and referral cashback. In the competition among the many e-wallets now, many apps provide money saving avenues through discounts, cashbacks, offers and free gifts.
Reduce frauds – Mobile wallets put up a guard against fraudulent activity because credit card details will be much harder to access than a physical credit card. Financial information stored on e-wallets are encrypted keys which essentially makes the information indecipherable to a fraudster.
E-wallet trend in Malaysia – too many wallets, too few merchants
It was reported in The Star in March this year that mobile payments in China reached US$9 trillion as of 2016, compared with US$112 billion in the United States. Last year, for the first 10 months, mobile payments totaled some US$12.8 trillion. In Malaysia, however, eighty percent of all transactions are still in cash, with 10% on credit cards and 10% online.
Bank Negara Malaysia early this year issued the Interoperable Credit Transfer Framework (ICTF), to bring together onto the same network, 48 wallet companies in the market, with the ones offered by five Malaysian banks.
The ICTF seeks to foster an efficient, competitive and innovative payment landscape in Malaysia by enabling the interoperability of credit transfer services and promoting collaborative competition (co-opetition) between banks and non-bank electronic money (e-money) issuers through fair and open access to shared payment infrastructure.
CIMB Bank in October 2018, brought QR (Quick Response) acceptance from six mobile wallets (Alipay, Touch & Go Digital, Boost, KiplePay, Mcash, and Vcash) on one payment terminal, paving the way for more merchants to opt for e-wallets as payment method.
Our neighbouring country Singapore recently launched a universal QR code (dubbed SGQR code – Singapore QR code) which allows consumers to scan and transfer funds from as many as 27 e-payment apps, in their drive to build a national cashless system. It was described as the world’s first unified payment QR code.
Back in our country, there are easily more than 15 e-wallets competing each other and consumers find it a hassle to maintain multiple accounts at the same time. Nevertheless, smart consumers are switching among available e-wallets to suit their purchasing patterns and enjoy benefits from different e-wallet apps.
Advantages of e-wallet for merchants
In a year-long survey done by the Malaysian Communications and Multimedia Commission, it revealed that the percentage of smartphone users continue to rise from 68.7% in 2016 to 75.9% in 2017, with the age group between 20-34 topping the chart. 68.3% of smartphone users have been using smartphones for more than 2 years.
The finding also revealed that nearly 3 out of 10 smartphone users (28.4%) made online
purchases with majority of them (69.5%) making purchases via mobile apps. This trend is higher particularly amongst young adults aged between 20 – 34 years old.
These statistics also show that merchants accepting e-wallets could tap into the market share of the young millennials. There is no doubt that e-wallets will be here to stay and merchants should be tapping into the huge advantages offered via mobile wallets.
Judging from mobile transactions worldwide, Malaysia still has much to catch up. Until there are more merchants tapping into omni-channel acceptance: credit cards, debit cards and e-wallets, Malaysia will still lack behind our neighbouring countries.