Malaysia Payments: A Guide to Local Payment Methods


Anta Pattabiraman


April 19, 2022

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Much like its surrounding Asian countries, the recent technological expansion and subsequent shifts in consumer behavior throughout Malaysia have impacted how merchants collect payment. Preferred payment methods in Malaysia have increasingly turned digital, as more residents prioritized online shopping during the COVID-19 pandemic and utilized mobile devices in lieu of cash to complete payments in person.

With such a wide variety of preferred payment methods across Asia, it’s helpful to understand the payment specifics of Malaysia and how they impact both the consumer and the end business. Read on to learn more about Malaysia’s consumer demographics and accompanying preferred payment methods, as well as the most popular electronic payment system in Malaysia.

An Introduction to Malaysia

In 2021, Malaysia boasted a total population of approximately 33.36 million people, with steady growth projected over the coming years. Along with its neighboring country of Singapore, the population of Malaysia features one of the highest rates of internet connectivity in the Asian Pacific area, with an estimated 27.5 million residents belonging to the online population.

With increasing internet and mobile connectivity and wide acceptance of cross-border shopping throughout the country, Malaysia also has some of the highest e-commerce retail rates in the Asian Pacific region. Malaysia’s e-commerce market size is forecasted to reach USD 8.5 billion in 2022, and some projections reach upwards of  USD 13.8 billion by 2025. Some of the popular shopping categories in Malaysia include fashion and electronics.

From bank transfers to e-wallets, preferred payment in Malaysia has evolved as the retail market continues to expand. However, it’s important to note that the country of Malaysia has come under quite strong financial regulatory controls. Under current law, Malaysia’s currency, the Malaysian Ringgit, is a non-tradable currency that cannot be settled outside the country.

Shoppers do not face any international issuing fees if an international acquire is used to process cross-border payments. An acquirer is a financial institution that processes credit and debit card payments on behalf of a merchant. If a local acquirer is used, the customer will be required to complete a 3D Secure authentication to prevent online fraud.

Popular Payment Methods in Malaysia

From in-person retail shopping to e-commerce purchases, there are numerous preferred payment methods in Asia. In Malaysia specifically, certain cashless payment options have risen to the forefront in recent months. Take a look at preferred payment in Malaysia for both consumers and merchants to discover which options would work best for you.

What are the top payment methods in Malaysia?

Top payment methods in Malaysia include bank transfer, credit or debit cards, e-wallets, and cash.

Bank Transfers

Bank transfer is the leading source of payment in Malaysia, accounting for nearly 44% of all transactions. The Malaysian-based secure payment system, Financial Process Exchange (FPX), is preferred throughout the country as it allows users to conduct online transactions via their banking credentials. This payment platform has been integrated with most local banking institutions, including Bank Negara Malaysia (BNM) and the Central Bank of Malaysia.

While FPX is the leading electronic payment system in Malaysia, some local banks are also beginning to launch their own bank transfer payment options. CIMB Bank and Maybank are some of the few that have launched online payment gateways in Malaysia to provide users with quick and secure transactions. However, for users looking to make an online money transfer to Malaysia, bank transfer solutions may charge a fee and can take a few days to process and receive funds.

Bank transfers are commonly described as a type of Electronic Funds Transfer (EFT) in Malaysia.

  • Electronic Funds Transfer (Debit EFT): Funds are electronically requested and automatically debited from the user’s bank account.
  • Electronic Funds Transfer (Credit EFT): Funds are electronically requested and automatically withdrawn from the user’s bank account.

Debit and Credit Cards

Second, only to bank transfers in the country, card payments continue to be a leading payment method in Malaysia. Research shows that card payments are the second-most used payment option online and account for roughly 36% of the Malaysian market. When dealing with such cashless payments in Malaysia, residents turn to either credit cards or debit cards.

For those wondering which credit card is best in Malaysia, it’s important to always read the terms and conditions. High-interest rates and late payment fees often result in paying more than expected, which is why debit cards have grown in local popularity. Currently, there are 1.33 debit cards per capita compared to 0.32 credit cards per capita, with debit usage projected to increase in 2023.

Cash Payments/Cash On Delivery (COD)

As the third-most-popular payment method in Malaysia, Cash on Delivery (COD) solutions accounts for roughly 11% of all transactions. Surprisingly, COD solutions were one of the leading payment methods in Malaysia at one time but began to drop in popularity as online payment gateway systems implemented new security and authentication processes.

Leading Malaysian couriers GDex and Pos Laju offer COD capabilities that allow consumers to make purchases online but pay for their goods once delivered in person. This solution is popular amongst older generations and first-time online shoppers who wish to see the product before making a final decision. For those who choose COD services, bear in mind that consumers may face extra delivery charges as well as a lack of payment options from their preferred merchant.

E-wallets and Digital Wallets

Although the e-wallet trend in Malaysia hasn’t grown enough to slow the business of the above payment leaders, Malaysia does currently boast the most digital wallet usage in all of Southeast Asia. With roughly 40% of the local population possessing an e-wallet, cashless payments in Malaysia have slowly become more popular across the region.

Global brands such as PayPal, Visa Checkout, and Masterpass have all introduced their services throughout the country. Likewise, the Malaysian government has been advocating for broad digital wallet adoption, as local banks such as Bank Negara Malaysia have introduced their own solutions for cashless payment in Malaysia.

Buy Now, Pay Later (BNPL)

Though not in heavy use across Malaysia, Buy Now, Pay Later (BNPL) solutions are beginning to become a preferred global payment method for online purchases. BNPL solutions allow consumers to make and receive purchases but make payment(s) for the goods or services at a later date.

Current research projects that approximately four million Malaysian residents will become BNPL users by 2028. As with credit card solutions, consumers need to remember that this may encourage users to purchase items they cannot afford. This risk of judgment may potentially cause high-interest charges and negative impacts on credit scores.

What is the best online payment gateway in Malaysia?

If you operate an online business that caters to Malaysian consumers, you’ll need a strong payment gateway on your site for customers to make purchases and your business to receive a sale. When deciding which payment gateway works best for you, you must select a reliable and secure gateway to ensure both merchant and consumer protection.

Here are the top choices for the best online payment gateways in Malaysia:

  1. 7-Eleven
  2. CIMB Clicks
  3. Maybank
  4. PBeBank
  5. RHB
  6. Now
  7. Speedmart
  8. UnionPay
  9. ApplePay
  10. Google Pay
  11. GrabPay
  12. Alipay
  13. Microsoft Pay
  14. PayPal

When determining which electronic payment system in Malaysia works best for you, be sure to consider factors such as your target market, type of common local currency, and the sort of merchant protection each payment gateways supplies.

Expand into Malaysia with inai

As you expand your business into Malaysia, remember that inai is here to help. With more than 300 payment gateways to choose from, your customers can purchase goods and services via cards, e-wallets, bank transfers, and even cash. And with our zero-code payment integration, you can update your site with new payment gateways in under 60 minutes.

Once payments get rolling, inai compiles all of your transaction data in one simple dashboard to help better generate insights and continue to grow your business. If you’re a digital business expanding into new corners of the globe, book a demo today to learn how inai can streamline your payment gateways in Malaysia.

About the author
Anta Pattabiraman is the co-founder and CEO of Inai, a global payment stack simplifying native payments within a single integration. Over the last 5 years, he has worked with 200+ businesses ranging from SMEs to Bigtechs.
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