E-wallets: Boon or bane?

By Xavier Kong

WITH the e-Tunai Rakyat programme in full swing, the interest in e-wallets has reached a new high in Malaysia, especially with the promise of a free RM30 in credit for registered users. Still, there are those who remain wary of e-wallets, or believe it remains a fad that will pass.

This article aims to answer that, by providing a general overview of what e-wallets are, their perks, their drawbacks, and a collected view of the major players in the country, along with some of their individual perks, and drawbacks.

So, brass tacks. What is an e-wallet? Simply by dissecting the word, it tells you what it is, an electronic wallet, which more or less functions just like the wallet in your pocket (or bag, or drawer, or table, you get the idea). It can hold your cards and your cash, in a digital format, which can then be used to make transactions as needed.

What’s the good word?

First of all, the perks of using e-wallets. Coming out on top is, believe it or not, the issue of safety and security. A particular scenario was shared to FocusM by Ignatius Ong, chief executive officer of TNG Digital, the company behind the Touch N Go e-wallet.

A roadside stall operator who works alone, for example, has to worry about depositing the cash he has on hand when he closes up, and it is not exactly the safest way to handle the cash. Any unfortunate occurrence, be it a robbery, or even a case of the money being lost accidentally, would result in the loss of the entire day’s revenue and then some.

On the other hand, through the use of an e-wallet, the operator would already have the money in his bank account, and have no need to worry about making it to a cash deposit machine or a bank to deposit his earnings for the day.

Should the unfortunate occur, what the stall operator would lose would be his cell phone, but his money would already be safely ensconced digitally in his account, leaving only the need to get a replacement phone.

From a user perspective, it is not just the safety of the money, but also the data. One perk of using an e-wallet is that there will never be a transaction that includes your account or card numbers, which means a lower chance of compromised data.

In this day and age of coronavirus fears, an e-wallet can actually help to improve personal hygiene by removing the need to physically handle cash. This is due to the e-wallet handling transactions through either scanning a QR/barcode on your phone screen, or you scanning a QR code displayed at the shop.

Since an auto-reload feature is commonly available in e-wallets, they can be used in tandem with credit and debit cards as a bridge, technically allowing the use of the cards in places that don’t accept card payment. This conveniently bypasses any surcharge that may be imposed for using a card to pay, as well.

Here come the drawbacks

However, e-wallets are not without their drawbacks at the moment. Right now, it has been acknowledged that the sector is still in the customer acquisition stage, with each player trying to build his customer base. This means that each player is still working to draw users to his brand, leading to users having to use multiple e-wallets to be able to make transactions at every touchpoint.

At the same time, e-wallet players are still working to bring merchants on board, and this remains a work in progress, as merchants would be looking at the user numbers and amount of traffic signing up with an e-wallet would bring, while users would look to see how many merchants are partnered with a particular e-wallet, leading very much to a chicken-and-egg scenario.

“Switching from cash to e-wallet or cashless payment is a mindset shift. It takes a little bit of time and education before merchants are comfortable to switch over. But we believe this will happen sooner rather than later,” said Boost chief executive officer Mohd Khairil Abdullah.

At the same time, there remain a number of proponents of the idea that e-wallets are unnecessary, considering the fact Malaysia has a large number of providers for credit and debit card services.

A common question is “why should I go to e-wallets, when I already have my debit/credit card?” Right now, with e-wallets still focused on user acquisition, it can be said that they can provide more immediate rewards or cashbacks as compared to using a banking card, and there is also something to be said about being able to laugh at the surcharges imposed on transactions with banking cards.

The verdict?

So are e-wallets a boon or bane? Ultimately, it comes back to your decision, and it remains to be seen whether it is just a fad or if it is here to stay.

Personally, the use of e-wallets has really been a relief, as it is actually quite possible to forget your wallet and still be able to go about your day normally through the use of an e-wallet. Yes, this is speaking from personal experience.

With more and more merchants joining up with e-wallet vendors, the convenience factor is constantly increasing, and it is not just the big-name brands either. Smaller vendors and businesses are taking to it as well, up to and including roadside operators.

Still, with e-wallets all chugging along in the user acquisition stage, one can only wonder how many will survive the consolidation phase in the sector, not if, but when the sector reaches that point.

In any case, users might as well take advantage of the bevy of rewards, deals, cashbacks, and other rewards using an e-wallet brings, and enjoy it for as long as they can. – March 10, 2020

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