With a rapidly growing digital economy, Malaysia is emerging as a key e-commerce market in Southeast Asia. Consumer confidence is bouncing back from post-pandemic lows, setting the country's digital economy on a track to reach a gross merchandise value (GMV) of US$ 30 billion by 2025.
The rise of digital payments in Malaysia reflects a broader shift in consumer behaviour, with customers favouring electronic transactions over traditional payment methods. Understanding these local payment preferences is crucial for companies looking to capture market share.
Let's take a look at the top payment methods in Malaysia, and how businesses can use them to grow.
Malaysia's current payment ecosystem uses a combination of traditional and digital payment methods. The most popular options are credit and debit cards, e-wallet apps, bank transfers, and contactless payments.
As Malaysia's digital economy grows, digital payments are becoming the norm. This shift is driven by widespread smartphone and internet use and strong government support for digital transformation. As a result, consumers and businesses alike are embracing digital payment solutions like QR codes and other forms of contactless payments over cash transactions.
The country aims to be cashless by 2030 — and it seems to be on track to achieve this goal. Seven out of 10 Malaysians are already using contactless payment systems, with customers switching between various platforms instead of relying on a single system.
The Malaysian market offers various payment methods that combine global trends and local preferences, making it a prime market for digital transactions. Besides cash and card payments, Malaysian consumers are also adopting e-wallets and bank transfers for both online shopping and in-store purchases.
Here are some of the top payment methods in Malaysia:
Credit and debit cards are a popular payment option in Malaysia due to their ease of use and global acceptance. Malaysia's credit and charge card payment market is expected to be worth $50.5 billion in 2024, representing an 8.2% increase from the previous year.
In 2023, credit card and debit card transactions made up 27% of all e-commerce transactions. However, their popularity might be waning, due to the rise of alternative payment methods like e-wallets, bank transfers and even Buy Now Pay Later (BNPL).
For instance, one survey revealed a 9% decline in credit card usage among BNPL users on an e -commerce platform.
E-wallets are among the most popular options for online payments. Their convenience, security, and growing acceptance by merchants make them a popular choice for daily purchases and e-commerce payments.
In 2022, e-wallets captured 17% of e-commerce transaction value. This value is expected to increase to 21% in 2024 and 23% in 2027.
Leading e-wallet providers in Malaysia include Boost, Touch 'n Go, Shopee Pay, and GrabPay (from the Grab super app).
Known locally as A2A (account-to-account), bank transfers are the most preferred method to pay for online purchases in Malaysia.
In 2022, A2A accounted for 39% of e-commerce transaction value. This is expected to decrease to 36% in 2024 and 35% in 2027.
The ease of online bank transfers makes them a popular payment option in Malaysia. Popular providers facilitating these transfers include Financial Process Exchange (FPX) and DuitNow. FPX allows users to make real-time payments directly from their bank accounts, while DuitNow offers quick transfers using a phone number, offering convenience for E-commerce and everyday transactions.
Despite Malaysia's push to be predominantly cashless by 2030, cash still matters in online transactions. Cash on delivery (COD) transactions made up 3% of e-commerce transaction value in 2023.
Cash remains common in smaller, traditional businesses, but its usage is expected to decline as digital payment options grow.
Malaysia is becoming a key market in Southeast Asia. Its growth is fuelled by widespread smartphone and internet use, along with government support for digital projects. The country's digital economy is set to hit $30 billion by 2025, thanks to a rise in online shopping, travel, and delivery app usage post-pandemic.
Sectors like e-commerce, travel, online media, and digital financial services such as lending and insurance are also driving digital payment growth.
E-commerce is expected to grow from $13 billion in 2023 to $16 billion in 2025. Meanwhile, online travel is projected to jump from $4 billion to $7 billion, a 28% increase. Online media is expected to grow from $3 billion in 2024 to $4 billion in 2025, a 14% increase.
In terms of finances, loan book balances for digital lending are projected to jump from $10 billion in 2023 to $16 billion in 2025, a 27% increase. Malaysia's government is also backing digital payments by using e-wallets to distribute benefits to lower-income communities, further speeding up adoption of digital payment methods.
Malaysia's digital economy is thriving, thanks to widespread smartphone use, a tech-savvy population, and strong government support for cashless initiatives. Popular payment options include credit cards, debit cards, e-wallets, bank transfers, and contactless payments, with no single method leading the market. Therefore, businesses should offer various options to cater to different consumer preferences.
Antom simplifies market entry by providing secure and efficient payment solutions. We offer access to both global and local payment methods.
Contact us to learn more about how our solutions can help you to enhance operations, increase conversions, and ensure a smooth entry into the Malaysian market.