Malaysia achieved remarkable speed in the nationwide implementation of real-time payments (RTP), and its rapid adoption by banks.
"Real-time payments improve overall market efficiencies and boost economic growth by allowing for the transfer of money between parties within seconds rather than days," says Odilon Almeida President and CEO - ACI Worldwide.
According to ACI Worldwide in the Prime-Time for Real Time 2022 report, driving this evolution is a concerted effort from the government, central bank, national switch, and industry to modernise and innovate the country’s payment infrastructure and harmonise the nation’s payment structure.
This report leverages GlobalData’s Instant Payments market sizing data as well as insights on adoption of mobile wallets, use of online payment tools and consumer experiences of fraud from GlobalData’s Financial Services Consumer Survey.
Malaysia and Singapore are also participating in Project Nexus’ experiments around real-time cross-border between those markets and the euro area. In Malaysia’s case, this complements the country’s existing efforts around linking RPP/DuitNow with other real-time payment systems in the ASEAN region.
Real-Time Payments Forecasted to Help Generate 0.2% of GDP by 2026.
In 2021, the country recorded 1.1 billion real-time transactions, which resulted in an estimated cost savings of $484 million for businesses and consumers.
This in turn helped to unlock $394 million of additional economic output, which represents 0.1% of the country’s GDP.
With real-time payment transaction numbers expected to rise to 3.6 billion in 2026, net savings for consumers and businesses are forecasted to climb to $637 million.
That would help to generate an additional $989 million of economic output, equivalent to 0.2% of the country’s forecasted GDP.
Real-time payments in Malaysia have been available for many years through the Interbank Funds Transfer system.
However, due to the limitations in the system, a new real-time payments system dubbed DuitNow was introduced by the national payments network and central infrastructure provider PayNet, in collaboration with ACI Worldwide, in December 2018.
Unlike the previous system, which only supported transfers using account numbers, the new system also enables transfers using a recipient’s mobile phone number or identification numbers.
In addition to fund transfers, the system also supports online payments, QR code-based in-store payments, and future-dated and recurring payments.
Despite these developments, real-time payments account for just a 4.8% share of the total payments transaction volume in 2021 due to the traditional preference for paper-based payment instruments, which accounted for a 77.4%. share.
However, the real-time payments volume will gradually increase at a CAGR of 26.9% from 2021-2026, supported by increasing consumer awareness, growing preference for mobile payments and multiple use cases of DuitNow.
The COVID-19 pandemic also accelerated the shift towards electronic payments, which will further drive the adoption and use of real-time payments in the nation.
Real-time payments are at the heart of the new global payments landscape, set to account for a quarter of electronic payments globally by 2026.
With paper on its way out, this dramatic rise in digital payments will impact everything from fraud management to cross-border expansion.
While real-time payments are growing around the world, markets including Pakistan, Croatia and Peru are expected to lead the way in the next five years.