Credit cards in the global race for a cashless society

        I believe it is safe to doubt that cash is still a king in this era of modernization. According to Standard Chartered’s latest global survey, 79% of Malaysian consumers expect our country to go fully cashless by 2030. Are you part of the cashless society we see today? Or are you an old-fashioned buyer who still prefers using cash? What cashless payment method should you use to maximize the benefit for your own personal finance? Worry not if you have these questions in mind, as this article will be discussing these topics, particularly the credit card. 

        Before we talk about the payment landscape in Malaysia, let’s take a step forward and look at the cashless society from an international perspective. Many other countries have shown us the progression of their cashless revolution by replacing physical cash with various kinds of non-cash payment methods, e.g., credit card, debit card, digital e-wallet, mobile payments and etc. A research carried out by Forex Bonuses with a few metrics, namely Amount of Credit Cards and Debit Cards per Person, Growth of Cashless Payments over 5 Years, Number of Non-Cash Transactions, were made to rank the world’s top cashless countries. 

Image 1: The World’s Most Cashless Countries
Source: Forex Bonuses     

        The results reveal that Canada is the number one country that embraces cashless technology, with every person owning more than 2 credit cards on average. On the other hand, the Asian superpower, China, experienced the highest growth in cashless payments with its success of mobile payments such as WeChat Wallet and Alipay that are owned by the local top companies, Tencent and Alibaba respectively. However, it is only ranked 6th due to lack of credit card usage (Smith, 2017).

      Back to our own country, Mastercard Malaysia and Brunei country manager, Perry Ong, said that Malaysia was certainly moving towards a cashless society prior to Covid-19. Now, the pandemic had even accelerated the cashless payments, where the number of Malaysian consumers using cashless payment methods increased by 18%, while the cash usage declined significantly by 64% because of the safeness of contactless payment (BernamaRadio, 2020). Mastercard Impact studies also pointed out that out of all the cashless payment methods, credit and debit cards were the main beneficiaries of Malaysia’s cashless trend. The number of people using credit and debit cards increased by 22% and 26% respectively since Covid-19 happened.    

     The history of e-wallet began in our country approximately four years ago. The influx of different types of e-wallets in our country hit the payment scene strongly. Big names including GrabPay, Boost, and TouchN’Go E-Wallet coupled with the government’s initiatives, such as eTunai Rakyat and the recent distribution of Rm100 of e-wallet money to university students, became the main factors that helped push Malaysia’s cashless payments. According to RinggitPlus (2020), there are 44 non-bank and 6 bank e-wallet issuers, while the number of credit card issuers are only 27.

    Surprisingly, credit cards are still seeing positive growth despite the rise of other cashless payment methods, specifically digital e-wallets. Maybank Banking Berhad head of cards, B Ravintharan, believes that credit cards will continue to be relevant in the digital age and complement e-wallets in the market because it is still mainly used for the purchase of high-priced items. This shows us that the main limitation of an e-wallet is their limited size compared to a credit card. The following infographic further illustrates the pros and cons of the two payment methods. 

Image 2: Credit Card vs E-Wallet

Source: SyncWealth

     Despite the rise of other payment methods, one should definitely still consider the traditional cashless payment method of using a credit card instead of purely relying on an e-wallet or a debit card. The main reason to own a credit card is that it helps them build their credit score through their financial activity history, which is essential if they plan to take a loan in the future, provided they use it responsibly. Other numerous benefits that you might have heard of is that many credit cards also offer different sign-up bonuses, cashback that is sizable over time and reward programs that can be used in different categories such as dining, petrol or groceries. 

    Since there certainly isn’t a single “one-size-fits-all” type of credit card, one is encouraged to research on the credit card that suits them the most. If you are overwhelmed by the wide variety of credit cards available in the market issued by different banks and are indecisive on which one to choose, you can click here to get a rough idea on the credit card that personally suits you the most. This SmartSearch from iMoney serves as a filter for you to simplify your choices by answering only 7 multiple choice questions within 5 minutes without physically going to the bank itself just to know more details. You will only need to provide some basic details such as the aim of your credit card, categories that you spend the most on, your estimated monthly income, etc.

    The search results itself already come with selected details of the credit card such as its annual fee, interest rate and balance transfer per annum. However, do remember to click into the credit card that you are interested in to learn more about its extra card information. As an example, its feature highlights, finance charges, Sales and Services Tax (SST), late payment charge, cash advance interest charge, minimum age for principal holder, and etc., are just a few details you can access with just one click. (Refer to image 5). As a disclaimer, while iMoney is a good website to help simplify your choices, you should still seek professionals’ opinions for your choice of credit card. 

Image 3 : Example on Credit Card Search Result

Source : iMoney

Image 4&5 : Example on RHB Visa Infinite

Source : iMoney

      In conclusion, consumers in Malaysia are lucky enough to have been part of this cashless payment competition because of all the offers that we get to enjoy. You should definitely utilize the benefits provided either from the cashback or promotion by e-wallet, debit card, credit card, or even other kinds of cashless payment in your own way as a wise consumer instead of just sticking to one conservative payment method. With that said, let’s embrace cashless payment methods as we keep moving forward into the new era of digitalization.

Researcher: Ken Yoong 

Reviewer: Millen Lau 

Editor: Adam Jantan

Download the article here: Credit-cards-in-the-global-race-for-a-cashless-society.pdf