Navigating Malaysia’s e-commerce boom and cashless future

At the start of 2025, Malaysia announced a bold plan to become a digital leader in the ASEAN region. The nation is speeding up its adoption of digital payment methods, although traditional payment methods such as cards and offline payments remain common.

From 2022 to 2023, the total transaction value of digital wallets in Malaysia almost doubled (from 71.18 million MYR ($16.6 million) to 106.66 million MYR ($25.2 million)), and the number of Malaysians using e-wallets rose from 63% to 88%. In 2024, 48% of merchants received payments from digital wallets and 27% received payments via QR code, signalling a wide adoption of digital payments.

The Malaysian government is targeting 90% cashless transactions by 2025. To support this, Malaysia’s central bank granted five digital banking licences in 2022, three of which launched in 2024. These new digital banking platforms offer more specific and tailored services, including Malaysia's first Islamic digital bank. The government’s efforts to combat fraud also help strengthen trust and security — two factors that have historically been barriers to digital payment adoption in the country.

Digital payment providers have played a large part in reshaping consumers’ payment behaviours. Malaysia's most popular e-wallet, Touch 'n Go, introduced hundreds of new features from 2022 to 2023 to improve user experience. Some features enable sending money to others instantly, linking the e-wallet balance to a physical or virtual Visa card, and paying swiftly at toll booths, public transport, and retail outlets using near field communication (NFC). Boost, a popular mobile payment app, also introduced its “savings jars” feature to encourage users to make small, regular deposits.

As Malaysia works toward becoming ASEAN's next fintech hub, these advancements present a wealth of opportunities. In this report, we’ll explore the evolving landscape of digital payments in Malaysia and what businesses should know when entering this vibrant market.

Market overview of Malaysia: Digital evolution is driving e-commerce expansion

GDP and demographics

Malaysia is the fourth-largest Southeast Asian economy. It recorded a growth in domestic product (GDP) of over USD $415.6 billion in 2023, with a 3.68% year-over-year increase. Its GDP per capita is comparable to China's.

Malaysia has a large population with a growing domestic demand driving investment activity, exports and household spending. Malaysia has a population of 34.56 million, with a balanced gender ratio.

About 69.8% of the Malaysian population is 15 to 64 years old – the working age, driving the economy. In 2023, nearly 70% of this demographic constituted the nation’s core consumer base.

According to Statista, Malaysia had 34 million internet users in 2024, achieving a 98% penetration rate.

As of the third quarter of 2023, Malaysians spend about eight hours and 17 minutes online daily. Young users aged 16 to 24 spend even more time, mainly watching TV, using social media, and streaming music.

Economic drivers

The e-commerce market is rapidly expanding, projected to grow at a compound annual growth rate (CAGR) of 8.5% from 2024 to 2028, reaching MYR (Malaysian Ringgit) 67.1 billion ($14.7 billion) by 2028.

Additionally, Malaysia is a major importer, with the import value of goods reaching $265.8 billion in 2023. The primary import category is electrical and electronic equipment. For 13 years, China has been Malaysia’s largest trading partner and primary source of imports. The government’s push for digitalisation may give rise to an opportunity for more cross-border business and e-commerce with other countries.

Consumer payment trends

Once heavily reliant on cash, Malaysia is shifting towards more cashless payment options, with credit cards being the most preferred method. Bank transfers are also a popular method, especially for e-commerce payments. Meanwhile, e-wallets are gaining speed, with Touch ‘n Go and MAE by Maybank2 being two of the most popular.

The popularity of e-wallets can be attributed to payment service providers building up extensive ecosystems with promotions and loyalty rewards. For instance, partnerships like Fave/FavePay enhance the convenience of online shopping, simplifying digital payments, and making transactions faster and easier.

As a key emerging market with high internet usage among its citizens, Malaysia has long been poised for a digital transformation. The Malaysian government aims to transform the country into a digital-driven economy by 2030. This ambition is reflected in key national development policies and laws that focus on building infrastructure and Industry 4.0 technologies, promoting e-commerce and digital finance, and fostering digital skills and financial inclusion.

Consumer trends: Malaysian spending and online shopping trends

Malaysia’s economy showed impressive resilience in Q2 2024, with GDP growing 5.9% year-over-year in Q2 2024, exceeding market expectations and earlier forecasts. Strong household spending, a resilient labour market, and a rebound in exports and investments helped boost this growth.

In 2022, Malaysia's average household income was approximately $23,244, mainly from wages and salaries. Consumers spent 22% of their budgets on housing and utilities.

Physical retail

Physical retail and e-commerce are key contributors to Malaysia’s GDP. In 2024, the country’s retail market was valued at $89.66 billion, projected to reach $119.64 billion by 2029, growing at a CAGR of 5.94%. Malaysia’s e-commerce sector is also one of Southeast Asia’s fastest-growing markets. In 2023, the average spending per user was $704, with continued growth estimated in the next two years. E-commerce is expected to reach a total transaction value of $16 billion by 2025.

The rapid shift toward online shopping is driven by increasing internet and smartphone adoption, a rising number of online shoppers, and secure online payment systems.

E-commerce

Statista found that about 66.6% of Malaysians’ online activities were for purchasing products or services in the third quarter of 2023. The most frequently purchased items online are clothing, cosmetics, body care products, and shoes.

In deciding online purchases, 69% of shoppers find reviews helpful, 63% conduct online searches before significant purchases, and 41% prefer express delivery.

In 2023, Malaysia had 9.76 million online shoppers – this figure is expected to double by 2029, reaching 18.81 million e-commerce users.

About 87.8% of online consumers in Malaysia are middle-aged and young adults under 50 years old, with females slightly outnumbering males at 50.7%. Over 80% of people access e-commerce through smartphones, with only a small group utilising personal computers.

A 2023 survey found that 24.77% shop online monthly, and 11.39% make multiple weekly purchases.

Malaysian online shoppers prioritise convenience, with free shipping being the top factor influencing their decision to shop online. To further cater to this demand, e-commerce businesses may focus on improving delivery options and ensuring a smoother, more efficient shopping experience. Half of Malaysian consumers prefer express delivery options, while 41% want improved self-service checkout, and 33% want a click-and-collect option.

Digital behaviour

The rise of Gen Z is a major driver of e-commerce in Malaysia. As these young adults enter the workforce and earn income, they extend their digital-first preferences to their spending habits. They contribute to embedding digital payment systems into everyday activities, from shopping to bill payments and money transfers. In 2024, Malaysia's digital payment penetration rate reached 67.4%, with a 10.5% year-on-year growth.

The number of digital payment users in Malaysia has been rising steadily. Statista estimates that from 2024 to 2028, this figure will grow by 35.45%, exceeding 31 million users by 2028, a new record high.

While digital payments are rising, consumer concerns persist. The primary barrier for Malaysian consumers shopping online is the concern about product quality. Additionally, 18% of consumers are deterred by payment security issues.

To combat these issues, the Malaysian government has launched targeted fraud prevention campaigns, aiming to educate consumers and improve digital transaction security.

Payment preferences in Malaysia: Convenience as a driver of digital payments

Malaysian consumers prefer digital payments for convenience, allowing them to pay without cash or physical credit cards.

IDC's survey shows that 81% of merchants accept card payments, with cash on delivery, bank transfers, and digital wallets also commonly used. As digital payment adoption grows, merchants can enhance profitability by supporting digital wallets.

Cards

Cards remain the most preferred cashless payment method. The usage/ownership rate of bank accounts in Malaysia is 73%, and the rate of credit cards is 43%.

The use of credit and debit cards in Malaysia continues to rise, with over 10 million credit cardholders in 2023. The IDC report predicts that by 2026, card usage will remain stable, accounting for around 36% to 42% of the country's total e-commerce Gross Transaction Value (GTV).

The leading card brands are Visa and Mastercard.

In 2022, the transaction value of credit card payments in Malaysia was approximately MYR 315.7 billion, while the value of debit card payments reached MYR 7.92 billion:

Bank transfer

In 2023, bank transfers were the most popular e-commerce payment method, followed by digital wallets and cards.

The popularity of bank transfers in Malaysia is largely due to the secure Financial Process Exchange (FPX) system operated by Payments Network Malaysia Sdn Bhd (PayNet) of Bank Negara Malaysia. FPX offers consumers a safe and convenient way to complete transactions.

In 2018, PayNet launched DuitNow in partnership with major banks to improve bank transfers in Malaysia. This real-time payment platform allows users to transfer funds instantly and safely using their mobile or national ID numbers.

In 2019, DuitNow introduced the national QR code standard, DuitNow QR. By the end of 2021, merchant registrations for DuitNow QR increased by 59.4%, reaching 1.1 million.

In 2023, Malaysia's mobile banking transactions reached MYR 1.4 trillion, a 26.7% increase from the previous year. The largest banks (by total assets) are Maybank, CIMB, and Public Bank.

Digital wallet

Bank transfers and card payments are Malaysia's most popular payment methods, but digital wallets are gaining popularity.

A Statista survey showed that the use of digital wallets rose from 15% in Q1 2019 to 68% in Q1 2022. By 2022, there were 17.8 million digital wallet users in Malaysia, which is 51.5% of the population. In 2023, 50% of consumers used digital wallets weekly, with transaction value reaching MYR 106.7 billion, as shown below:

Malaysian consumers have preferences across different digital wallets. A 2023 Statista survey found that 88% of respondents used Touch 'n Go in the past three months, making it the most popular digital wallet. MAE by Maybank2 also enjoyed high usage:

IDC's 2024 research on the Southeast Asian payment market found that bank transfers and card payments have dominated the payment landscape over the past 12 months in Malaysia but are expected to decrease by 6% in the share of total e-commerce transaction value by 2028. Let's look at other popular methods, as Malaysia’s payment method landscape continues to evolve. 

Buy Now Pay Later (BNPL)

BNPL is a new and popular payment method in Malaysia, particularly among younger consumers. It is convenient and flexible, with low interest rates or service fees. According to IDC, in 2023, over six million Malaysians used BNPL payment methods, totalling $390 million in transactions. This figure is estimated to reach $900 million by 2026.

BNPL players in Malaysia include Atome, FavePay Later, ShopBack Pay Later (formerly hoolah), and Mr Pay Later.

Cash on Delivery (COD)

Cash usage in Malaysia, while decreasing, remains significant. 48.4% of Malaysians use it for daily purchases, according to PayNet's 2022 study. It is especially common in non-urban areas, with 63.5% relying on cash, compared to 36.2% in urban areas.

Conclusion: A future outlook for merchants in Malaysia

Malaysia’s rapid adoption of digital payments presents a wealth of opportunities for global and local merchants. With digital wallet usage surging to 68% and the government's ambitious target of 90% cashless transactions by 2025, Malaysia may become a digital economy leader with an expansive E-commerce market and robust digital payment ecosystem.

Merchants have a unique chance to capitalise on this growth by offering diverse payment methods like digital wallets, BNPL, and card payments. Adopting these digital solutions may help brands attract and retain customers, as Malaysia demands more seamless and secure shopping experiences.

With the Malaysian government focused on financial inclusion and digital infrastructure, the market is primed for innovation. Merchants who adapt to this digital shift now can secure a strong foothold in one of Southeast Asia’s most promising economies, reaping the benefits of an expanding, cashless economy.

How Antom can help you with payments in Malaysia

What does Antom do in Malaysia?

1. Antom services cover 99% of the most popular payment methods in the Malaysian market.
2. We offer customised overseas payment strategies and services with deep expertise in Malaysia.
3. Antom collaborates closely with Touch'n Go, Malaysia's top digital wallet, to offer mini programs, customised marketing, and traffic-driving services.
4. We have a simple and fast integration process with multiple integration options to choose from.

Payment methods supported by Antom in Malaysia

Products and services supported by Antom in Malaysia

Partner with Antom

In today's highly competitive market, choosing the right partner is key to business success. Partnering with Antom brings numerous advantages to your company and provides comprehensive support for your business operations.

Here are some of the key benefits of working with Antom:

1. Quick market coverage
   • Antom has powerful market resources and an extensive network, enabling businesses to quickly cover the mainstream markets. Through in-depth market analysis and flexible strategic planning, we ensure merchants can reach a broader target audience in a short amount of time, increasing brand visibility and market share. Whether you're an emerging business or an established brand, Antom can help accelerate your market penetration.
2. Industry-specific customised solutions
   • Each industry has its unique needs and challenges. Antom provides tailored solutions for specific industries through a professional team, improving operational efficiency and market competitiveness and supporting businesses in achieving sustainable growth. This personalised service not only meets current customer needs but also anticipates future trends, ensuring your business remains ahead of the curve.
3. Safe and reliable technology and risk control
   • In business activities, financial security and risk control are among the top concerns for companies. Antom boasts advanced technological capabilities, offering safe and reliable financial services. Our risk control system is rigorously tested, ensuring transparency and reliability in all transactions. Additionally, our fund management strategies are carefully designed to minimise risks and safeguard clients' financial security, allowing them to focus on their business with peace of mind.
4. High-quality, personalised concierge service
   • In partnership with Antom, clients will experience unparalleled service. Our team not only provides expert consulting support but also offers comprehensive follow-up services. Our goal is to be the most trusted partner for our clients, providing home-like care and support throughout the partnership.
5. Rich local market experience
   • Antom has extensive market experience in various regions. Our team understands the local market operations and cultural habits, enabling us to provide practical market strategies. This deep local expertise allows us to help clients quickly adapt and integrate into new markets, minimising entry barriers and ensuring successful development in different market environments. 

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