Introduction to Various Types of Retail Payment Systems in Malaysia
In this article, Krystle Lui Shu Lin introduces the various types of retail payment systems available in Malaysia.
Introduction
The main regulator of payment systems and currency in Malaysia is the Central Bank of Malaysia, or in Malay, Bank Negara Malaysia (“BNM”). BNM must foster safe, efficient and reliable payment systems and payment instruments in Malaysia1.
The main statutes regulating payment systems in Malaysia are the Financial Services Act 2013 (“FSA”) and, where applicable, the Islamic Financial Services Act 2013. A payment system means “any system or arrangement for the transfer, clearing or settlement of funds or securities”2.
Payment Network Malaysia Sdn Bhd (“PayNet”) is an approved payment system operator under the FSA and owns several payment networks in Malaysia. BNM is the largest shareholder of PayNet, along with 11 other Malaysian banks as joint shareholders.
The types of retail payment systems managed by PayNet include, without limitation:
- Interbank GIRO (“IBG”);
- MyDebit;
- Financial Process Exchange (“FPX”);
- Real-Time Retail Payments Platform (“RPP”); and
- National Electronic Bill Payment Scheme (“JomPAY”).
IBG
IBG is a fund transfer system which has been implemented since 2000 and allows account-to-account credit transfers. IBG transactions can be performed via ATM machines, internet banking or even over-the-counter. It is the conventional method consumers use to transfer monies from one bank account to another. However, settlement only occurs during specified windows in a working day.
MyDebit
MyDebit is a local payment system which utilises the MyDebit card, or more commonly known as an ATM card, to make payments at the point-of-sale (“POS”) terminal.
A consumer will be required to present their ATM card and:
- key in the personal identification number (“PIN”); or
- where the transaction is less than RM250, tap the card on the POS terminal without entering a PIN,
in order to complete the purchase transaction. The amount will be deducted from that consumer’s savings or current account and deposited directly into the retailer or merchant’s bank account. Where the transaction is successful, a receipt will be issued for the purchase.
With MyDebit, a consumer will have immediate access to funds in his account without having to carry any cash or queue at the ATM to withdraw cash. More importantly, no fee is charged for the usage of this system3.
FPX
FPX is a payment system which facilitates internet payments and e-commerce purchases using a consumer’s bank account. It allows for real-time debiting of a consumer’s internet banking account at multiple banks while allowing immediate and direct crediting into the merchant’s bank account4.
One of the benefits is that a consumer does not need to be registered to use FPX but he will be required to have a bank account with any of the participating banks.
As FPX leverages on the participating banks’ internet banking system, its availability will depend on each participating bank’s internet banking service availability.
For consumers, there are minimum and maximum limits for each transaction5:
- for individuals, the minimum limit is RM1 and maximum amount is up to RM30,000; and
- for companies, the minimum limit is RM2 and maximum amount is up to RM1 million,
subject to the internet banking withdrawal limit, whichever is lower.
Merchants are required to pay a flat fee for each transaction depending on the transaction fee charged by the applicable participating bank. Having said that, the fee to be paid by a merchant for usage of the FPX service is cheaper than for a credit card (which is approximately 1.8% to 2 % of the transacted value).
RPP
RPP was developed in 2018 pursuant to the Interoperable Credit Transfer Framework (“ICTF”) issued by BNM. ICTF requires all interbank credit transfer transactions and inter-scheme credit transfer transactions to be processed in Malaysia through an operator of a shared payment infrastructure6.
RPP comprises DuitNow, which uses a national addressing database. DuitNow is a payment system which enables payments to be made using common identifiers (the “ID”) such as a recipient’s mobile number, National Registration Identity Card (“NRIC”) number or business registration number.
Payments can also be made under the RPP using a common quick response (“QR”) code standard, which results in the establishment of an interoperable QR scheme and common QR code. Through DuitNow QR, consumers may make payments from any participating banks or electronic wallets and merchants would only need to display one QR Code, the DuitNow QR, to accept payments. Presently, only GrabPay and Public Bank are adopting DuitNow QR.
Whilst no registration is required to send money using DuitNow, a one-off registration is required for receipt of money via DuitNow. A one-time registration is needed to link each consumer’s ID with his bank account or e-money account. Only one ID can only be registered to one bank account.
Consumers may transfer up to RM50,000 per transaction whilst businesses are subject to a limit of up to RM10 million per transaction7. Presently, there is no fee chargeable for a transaction up to RM5,0008. The transfer of monies via DuitNow occurs immediately and recipients will usually receive money in their bank account or e-money account instantaneously9.
JomPAY
JomPAY was launched in 2015 as a national bill payment scheme. It was developed as a national initiative involving billers, banks, BNM, PayNet and the Government to speed up e-payments and provide greater efficiency, convenience and accessibility for the public to make bill payments10.
It allows for payment from a bank account to a utility company/supplier (“Biller”) using the Biller’s Code. JomPAY is available on both internet and mobile banking. A Biller needs to maintain only one bank account in order to receive payment from customers of other banks.
The process of using JomPAY is relatively simple. A consumer will be required to spot the JomPAY logo and Biller Code on his utility bills or invoices. Thereafter he can log into his bank account on the internet or through mobile banking and select JomPay. Then he has to enter the JomPAY Biller Code and reference number along with other specified payment details and payment will be made from his current, savings or credit card account to the relevant JomPAY Biller11. No fee is chargeable to a consumer for using JomPAY.
Conclusion
The above retail payment systems are all part of BNM’s goal towards accelerating Malaysia’s migration towards e-payments and to increase the efficiency of the nation’s payment system, which is in line with BNM’s Financial Sector Blueprint 2011-2020.
KRYSTLE LUI SHU LIN
FINANCIAL SERVICES PRACTICE GROUP
[1] Paragraphs 6(a)(iii) of the Financial Services Act 2013 and Islamic Financial Services Act 2013, respectively.
[2] Sections 2 of the Financial Services Act 2013 and Islamic Financial Services Act 2013.
[3] https://paynet.my/personal-mydebit.html.
[4] https://paynet.my/business-fpx.html.
[5] https://paynet.my/fpx/charges-transaction.html.
[6] Paragraph 7.3 of the ICTF.
[7] Paynet’s responses to Frequently Asked Questions on is there a limit for DuitNow transfers?
[8] Paynet’s responses to Frequently Asked Questions on are there any fees or charges to use DuitNow?
[9] Paynet’s responses to Frequently Asked Questions on how quickly do DuitNow transfer occurs?
[10] BNM’s 2015 Annual Report, available at www.bnm.gov.my/files/publication/fsps/en/2015/cp05.pdf.
[11] www.jompay.com.my/making-a-payment.html.