PETALING JAYA: People in rural areas stand to enjoy wider access to financial services with e-wallet players now extending their reach beyond urban limits.
“More people are taking to e-wallets these days, with its popularity quickly growing even in rural areas,” said Federation of Malaysian Consumers Associations (Fomca) CEO Saravanan Thambirajah.
He said that until recently, rural folk had been more accustomed to using debit cards. These days, however, debit card users predominantly come from the more mature age groups.
“The younger demographics seem to show a stronger appetite for e-wallets instead,” he said.
Saravanan also noted that those who live in rural areas are becoming increasingly attracted to e-wallets rather than holding on to cash, as it makes them less susceptible to theft.
“E-wallets offer better security, in that only the account holder has access to its contents,” he said.
More importantly however, Saravanan said, the adoption of e-wallets and digital payment systems will benefit rural communities economically by making business transactions easier.
The government will also be in a better position to track rural businesses, he said, not only for taxation purposes but also to better gauge their contribution to the overall gross domestic product.
E-wallets and digital payment systems will also help to curb the prevalence of underground economies.
Saravanan noted, however, that a lack of internet access in rural areas presented a big hurdle to the growth of digital payment systems.
“These places often lack basic telecommunications infrastructure and without it, adoption will not take off,” he said.
Small and Medium Enterprises Association Malaysia (Samenta) chairman William Ng said e-wallets will also address the issue of under-banking among rural communities.
“With the convenience of e-banking, the number of bank branches has steadily dropped over the years, from 14 per 100,000 Malaysians in 2004 to 10 per 100,000 in 2019,” he said.
He said e-wallets are not only convenient but also safer for both small businesses and consumers.
“It bypasses the need for small businesses to maintain cash floats while also storing a record of transactions which can be referred to whenever disputes arise,” he said.
Ng, however, acknowledged that low margins were a stumbling block to the adoption of digital payments among small businesses.
He encourages all small and medium enterprises (SMEs) to take advantage of the added benefits that e-wallets provide.
One major benefit is the generation of sales data which allows businesses to identify their better-selling items, which in turn enables owners to make better business decisions.
“Such data can also be provided to financial institutions to enable them to decide whether to extend credit lines to support the expansion efforts of growing businesses,” he said.
He said more needs to be done to encourage major e-wallet players such as Boost, Grab Pay, Touch ‘n Go and WeChat Pay to venture deeper into rural areas to secure more widespread adoption.