In launching JomPAY, Bank Negara deputy governor Dato’ Muhammad bin Ibrahim says the benefits in terms of cost savings and efficiency gains from a successful migration to e-payments are substantial. “JomPAY provides greater efficiency, convenience and accessibility for the public to make bill payments,” he says. “It also represents a conscious strategy that will contribute towards making the way we conduct financial transactions more efficient.”

 

In migrating to e-payments, Ibrahim notes the use of cash and cheques remain prevalent in Malaysia. The country’s cash usage as measured by currency-in-circulation over GDP was about 6% in 2013 – which was 100% higher than the average in advanced economies. Likewise, Malaysia’s cheque usage per capita was 33 times higher at 6.6.

 

To reduce the country’s reliance on cash usage, Bank Negara has issued the Payment Card Reform Framework, which took effect in stages beginning January 2 this year. The framework aims to ensure that the cost of accepting payment cards is fair and reasonable, while creating an enabling environment for the wider acceptance of payment cards, especially by smaller merchants.

 

Ibrahim announces that over the next six years till 2020, Bank Negara together with the banking industry plans to expand the payment card acceptance network from about 240,000 terminals to 800,000 terminals and further accelerate the use of debit cards. “These measures, if implemented successfully, will lessen the need for cash payments,” he points out. “While this target seems ambitious, we can achieve this milestone with collective efforts by all.”

 

Businesses, Ibrahim stresses, should leverage on JomPAY to accept online bill payments from their customers. Handling cash and cheques is costly, he notes, as they can incur an estimated 2.7 billion ringgit (US$730 million) annually for cash handling, in addition to bearing the risk of pilferage and theft. They can likewise incur an estimated 113 million ringgit annually for cheque handling.

 

“Migrating to electronic bill payments would lower the cost of transactions and provide businesses with a faster, more secure and more efficient means of collecting payments,” Ibrahim says. “Businesses should leverage on JomPAY not only for bill payments, but also for invoice payments to facilitate a more efficient management of their receivables.”

 

Ibrahim has called on Malaysian Electronic Clearing Corporation (MyClear) and the Malaysian Electronic Payment System (MEPS) to jointly embark on payment infrastructure projects and initiatives that would benefit both the industry and the country. A wholly-owned subsidiary of Bank Negara, MyClear offers a full suite of e-payment solutions catering to different financial needs and different sets of customers that include corporates, financial institutions, retailers and consumers. MEPS is the only interbank network service provider in Malaysia that supports domestic, development, Islamic and foreign banks.

 

“Achieving the critical mass in terms of usage and acceptance remains a key priority,” says Ibrahim. “In this regard, banks in collaboration with MyClear should take concerted efforts to expand the number of businesses accepting JomPAY, especially among the underpenetrated sectors of SMEs, and the federal and state government agencies. MyClear and the participating banks should target to register 5,000 merchants onto JomPAY by 2020.”

 

To provide the public with an alternative channel to access JomPAY services, the banks are urged to accelerate the offering of JomPAY via the network of about 12,000 ATMs and 2,700 self-service internet kiosks nationwide. To drive the reduction of paper-based bill payments over-the-counter, the banking industry should also deploy more payment card terminals at merchant outlets, government counters and at the premises of collecting agents such as bank branches and post offices.