Mobile Payment Systems In Malaysia: Its Potentials And Consumers’ Adoption Strategies.

ELECTRONIC PAYMENT

As the inflation has became more and more serious, there is a need to explore and adopt new business processes that will help in reducing costs. One of the most effective way to increase the level of efficiency and thus reduce costs, is through the adoption of a more expedient and efficient means of payment. This task also involves taking advantage of the technology and innovation wave and to move towards more efficient payment modes. Studies have shown that shifting from paper based to a more electronic based payment system can generate an annual savings up to 1% of GDP.

Electronic payment channels are more easily accessible, user-friendly and offered at a low cost, if compared to traditional payment method. Electronic payment increases operational efficiency and improves productivity levels through expedient payments and receipts of funds. Electronic payments would also provide the speed and convenience of making payments from any place or time.

REQUIREMENT FOR GREATER USE OF ELECTRONIC PAYMENT

Firstly, the infrastructure for making payments would need to be widened and enhanced to provide the convenient access to electronic payments.

Secondly, the product range, the range of services would need to be expanded to cater for the different payment needs of consumers and business sectors.

Thirdly, the pricing framework, the formulation of a transparent and cost-effective pricing framework is important to provide the incentive structure that would spur the adoption of electronic means of payments.

Fourth is the consumer awareness. Program need to be implemented to inculcate the behavioral change among consumers. There needs to be trust and confidence in the electronic payment systems.

Fifth relates to the standards, the setting of common standards to address the interoperability of systems including standardizing the payment messaging format is vital to the wider acceptance of electronic payment.

Finally, is the need to ensure the security and integrity of the payment system which requires the supporting regulatory and legal framework.

Given the significant pay-offs from the low cost technologies in accelerating the adoption of electronic payment, the mobile phone is identified as one of the delivery channels that should be leveraged on.

POTENTIAL OF MOBILE PAYMENT SYSTEM

Payments via text messaging have the potential to grow in importance. With 25 million mobile phone subscribers in Malaysia, there are immense opportunities to leverage on mobile phones to accelerate the migration to electronic payments, to widen the reach and appeal of electronic payment services, to deliver innovative mobile payment products that offer speed, simplicity and convenience at minimal cost for the public, as well as to provide an efficient and cost-effective method of delivering financial services even in the remote areas. Therefore, there is a significant untapped and potentially lucrative market for mobile payment and banking services.

To achieve the full potential of mobile technology, it is important to identify the gaps in the service offerings, and plan the way ahead for Malaysia to make the quantum leap in e-payment adoption. To promote the significant use of the mobile phone, the industry has to respond rapidly to address the need for interoperability and collaborate in areas such as developing a common infrastructure, common payment messaging format, as well as common security and authentication standards.

Common standards and infrastructure will create an accessible, open and vibrant payment ecosystem that will attract a wider consumer base allowing all market participants to reap the benefits of a larger customer base. A shared integrated network with common security standards and common messaging standards will make it easier, more cost-effective, and more convenient for consumers, merchants and service providers to execute and receive payments, thereby increasing the attractiveness of the mobile network as a payment channel. Such collaboration will also lead to greater innovation and increased productivity that will contribute to the overall effectiveness and performance of the mobile payment system.

Finally, for mobile payment products to succeed and achieve widespread acceptance, it is a need to strengthen consumer confidence in the safety, security and reliability of mobile networks as a means for consumers to access financial services. Indeed, mobile digital signature, which ensures the confidentiality, authenticity and integrity of payments initiated from mobile phones, is one of the ways forward towards building a secure mobile infrastructure.

Useful links:

http://www.skmm.gov.my/what_we_do/Research/pdf/mdss_zeti.pdf

http://www.bnm.gov.my/index?ch=9&pg=15&ac=276&print=1

http://chowkamleeng.blogspot.com/2008/06/moblie-payment-systems-in-malaysiaits.html

http://wirelessfederation.com/news/category/mobile-payments/

http://www.bis.org/review/r030516e.pdf

http://www.emeraldinsight.com/Insight/viewContentItem.do?contentType=Article&hdAction=lnkhtml&contentId=1641838&dType=SUB&history=false

http://portal.acm.org/citation.cfm?id=1360013&dl=ACM&coll=ACM

http://myconvergence.com.my/main/images/stories/PDF_Folder/july2008/MYC03_p14_21_MobSignature.pdf