KUALA LUMPUR: Bank Negara Malaysia (BNM) is fully committed to ensuring a safe, reliable, and efficient payment system, which includes promoting the widespread adoption of digital payments in Malaysia.

In a statement to The Star, BNM said the increased adoption of digital payments by the wider society can provide meaningful cost-savings and greater efficiencies to the entire economy.

This shift, the central bank said, can save costs and boost efficiency for individuals and businesses, eliminating the need for ATM trips and reducing overhead and security costs.

Digital payment services are provided by both banks and non-banks in Malaysia. Transaction fees, known as the Merchant Discount Rate (MDR), support the upkeep of digital payment systems. Non-bank players have become increasingly vital in the Malaysian payment ecosystem, offering innovative services.

“In Malaysia, the MDR is determined by the market in line with the objective of encouraging a competitive market that will enable businesses to choose from a variety of service providers that best suit their business needs, including those that can provide businesses with access to a wider customer base. A market driven MDR will also incentivise players to offer more attractive solutions, ultimately benefitting businesses,” BNM said.

During the Covid-19 pandemic, QR payment fees were waived, and major banks continue to waive the MDR for micro and small businesses accepting DuitNow QR payments.

“In anticipation of the reinstatement of the fee and to minimise any impact on micro and small businesses, PayNet has allocated resources to help defray the costs incurred by banks, and non-bank financial service providers who continue to offer full waivers to micro and small businesses accepting DuitNow QR payments.

“Major banks and selected non-bank financial service providers who are managing more than 80% of businesses accepting DuitNow QR payments combined, have already announced that the MDR will be waived for micro and small businesses accepting DuitNow QR payments,” BNM said.

DuitNow QR therefore remains an affordable and cost-effective payment method. The MDR on DuitNow QR remains as low as or lower than the MDR imposed on payments using debit cards. Businesses using DuitNow QR as a payment method also do not need to incur recurring cost for POS terminal rental for card-based payment channel.

“BNM does not profit from the operation of PayNet. As the operator of DuitNow, PayNet plays an important role in building an inclusive, resilient, and efficient payment and financial ecosystem as envisioned under the Financial Sector Blueprint to progress Malaysia’s economic development.

“In line with this developmental objective, all dividends and surplus profits generated by PayNet are reinvested to ensure the domestic payment infrastructure remains resilient, competitive and accessible to all,” BNM said.

The full statement is given below:

BNM response to The Star on DuitNow QR

Bank Negara Malaysia (BNM) remains fully committed to its mandates of ensuring a safe, reliable and efficient payment system. In doing so, this includes supporting the widespread adoption of digital payments in Malaysia.

Increased adoption of digital payments by the wider society can provide meaningful cost-savings and greater efficiencies to the entire economy. Individuals can conveniently make payments securely at any time and anywhere, without having to make a trip to the ATM machine. Businesses also save on additional overheads and administrative costs associated with handling cash payments. For businesses, the cost of accepting cash includes, among others, time-based costs (e.g. time taken to visit the ATM machine to withdraw cash), labour-based costs (e.g. manual paperwork and reconciliation), travel costs (e.g. despatch of cash to and from the banks), and security costs (e.g. costs relating to loss, robbery, fraud, theft and pilferage). Banks also derive potential savings from lower cash handling costs. Such savings enable banks to reinvest into their payment infrastructures and therefore keep e-payment costs low to users. Similarly, savings from lower currency production costs with a reduction in cash usage would also be channelled back to the economy.

Digital payment services in Malaysia are provided by both banks and non-banks. In the e-payment space, transaction fees are an important source of income, especially to the non-bank players, to help them cover the costs to upkeep their digital payment systems and maintain high service and security standards for users of e-payment. Non-bank players have played an increasingly important role in the Malaysian payment ecosystem in recent years. These players are more agile and nimble, and this has helped create a vibrant and competitive payment ecosystem as they continue to offer innovative and improved value-added services for the benefit of customers, including the underserved and unserved segments. Their support has also been key in the implementation of Government transfer programmes in the aftermath of the pandemic.

These transaction fees mentioned above, that translate into the Merchant Discount Rate (MDR), is a common fee imposed on businesses by the acquirers (which can be banks or non-bank financial service providers) for the provision of e-payment services, including card-based payments. In Malaysia, the MDR is determined by the market in line with the objective of encouraging a competitive market that will enable businesses to choose from a variety of service providers that best suit their business needs, including those that can provide businesses with access to a wider customer base. A market driven MDR will also incentivise players to offer more attractive solutions, ultimately benefitting businesses.

The temporary waiver of the transaction fee was provided by the industry when QR payments were first introduced to familiarise customers and businesses with QR payments and to encourage take-up. The waiver was further extended during the COVID-19 pandemic. In anticipation of the reinstatement of the fee and to minimise any impact on micro and small businesses, PayNet has allocated resources to help defray the costs incurred by banks, and non-bank financial service providers who continue to offer full waivers to micro and small businesses accepting DuitNow QR payments. Major banks and selected non-bank financial service providers who are managing more than 80% of businesses accepting DuitNow QR payments combined, have already announced that the MDR will be waived for micro and small businesses accepting DuitNow QR payments.

DuitNow QR therefore remains an affordable and cost-effective payment method. The MDR on DuitNow QR remains as low as or lower than the MDR imposed on payments using debit cards. Businesses using DuitNow QR as a payment method also do not need to incur recurring cost for POS terminal rental for card-based payment channel. The MDR for DuitNow QR is also expected to remain lower compared to similar charges in other regional countries. Micro and small businesses are also free to choose among financial service providers that offer the best payment solutions for their needs, including those offering zero or lower MDR.

BNM does not profit from the operation of PayNet. As the operator of DuitNow, PayNet plays an important role in building an inclusive, resilient, and efficient payment and financial ecosystem as envisioned under the Financial Sector Blueprint to progress Malaysia’s economic development. In line with this developmental objective, all dividends and surplus profits generated by PayNet are reinvested to ensure the domestic payment infrastructure remains resilient, competitive and accessible to all.