Understanding the Dynamics of Online Payments in the Malaysian E-Commerce Market with a Spotlight on Credit Card Processing

In Southeast Asia, Malaysia is one of the fastest-growing e-commerce markets. According to GlobalData’s E-Commerce Analytics report, between 2022 and 2026, Malaysia's e-commerce sales are projected to expand at a compound annual growth rate (CAGR) of 16.1%, reaching MYR69.3 billion ($16.6 billion) in 2026. As a result, Malaysia has been witnessing towering numbers of online payments in recent years.

The reason is pretty simple; usage of online payment methods for the majority of the payments for e-commerce purchases in the country. According to a research report by PPRO on the Malaysian e-commerce market, cash is used for only 6% of the e-commerce purchases in Malaysia, and online payment methods like cards, bank transfers, and e-wallets were used for 28%, 37%, and 24%, respectively, for e-commerce purchases in Malaysia.

According to Forbes statistics on the e-commerce market, online sales are predicted to account for 20.8% of retail transactions in 2023 and 24% of retail transactions by 2026. As a result of it, the e-commerce sector in Malysia may see a tsunami of online payments.

Most Popular Online Payment Methods in Malaysia

According to the PPRO research report, bank transfers were the most popular online payment option in Malaysia for e-commerce payments. The most popular payment methods in Malaysia for e-commerce purchases are:

Bank Transfers

37%

Cards

28%

E-Wallets

24%

Cash

6%

Others

5%

Source PPRO Report

According to the FIS Global Payments Report 2023, account-to-account transfers or bank transfers were the no.1 online payment method in Malaysia. Have a look:

A-2-A (Account to Account) Transfers

37%

Digital Wallets

24%

Credit Cards

17%

Debit Cards

11%

Cash on Delivery (COD)

6%

Buy Now Pay Later (BNPL)

4%

Prepaid Cards

1%

FIS Global Payments Report 2023

Significance of Credit Card Processing Malaysia in E-Commerce Landscape

In Malaysia, the average Malaysian online shopper spends US$326 a year with e-commerce merchants, and it is set to rise to US$685 by 2027. 28% of that spending comes through cards, according to the mentioned reports on e-commerce payment methods in Malysia. Therefore, credit card processing Malaysia automatically gained importance in the Malayan e-commerce landscape.

Malaysia's card payments industry is predicted to expand by 20.8% to reach MYR 371.8 billion ($84.5 billion) in 2023, mostly due to a rebound in consumer spending and a notable change in consumer preferences toward non-cash payment methods, according to GlobalData. The report suggests that 2020 saw a 5.4% decrease in the value of card payments in Malaysia as the country's economy entered a recession and both individuals and companies reduced their expenditure.

But when the nation's economy recovered from the COVID-19 epidemic, the card market saw strong growth in 2021 and 2022, rising to 36.6% and 15.9%, respectively. The reason why card processing has become so important in Malaysia is because credit and charge card transactions have grown as a result of consumers' increased need for credit, particularly from the expanding middle class.

Speed breakers for increasing numbers of online payments in Malaysia

According to the Digital Payments Report by Kaspersky, the majority of digital payments are performed using a mobile device, and the reason for using them most is eCommerce payments (72%). After this comes the transfer of money to family and friends and for official payments like paying bills, respectively.

However, it is also an unhidden fact that mobile devices are the most vulnerable online payment devices to cyberattacks. This is why online fraud is considered the biggest obstacle to the flourishing of a safe online payment environment. According to a survey conducted by Kaspersky, 41% of respondents said they would never buy from an eCommerce merchant if there had been a cyberattack on the site in the past. This is the reason why online fraud is considered the biggest obstacle in the path of online payments and e-commerce.

Cyberattacks or online fraud are one of the biggest factors responsible for business losses in the e-commerce sector. According to a recent study by Juniper Research, merchant losses from online payment fraud are expected to surpass $362 billion globally between 2023 and 2028, with losses of $91 billion in 2028 alone.

According to Mastercard, the amount of money lost to international e-commerce fraud increased to $41 million in 2022 and is expected to surpass $48 billion in 2023. Given that APAC currently accounts for 64% of global online retail expenditure and that the size of the SEA e-commerce sector has grown by 570% since 2016, it is not surprising that fraud is a big problem in the area.

The problem of e-commerce fraud is so bad in APAC alone that it costs merchants $4 for every fraudulent transaction, which equates to almost 5% of lost revenue annually. And the biggest among them is the problem of friendly fraud or fake chargebacks. According to recent statistics, chargebacks are estimated to cost merchants over $100 billion this year alone, with friendly fraud predicted to account for 61% of all chargebacks.

How can we help you with this?

We (PayCly), being one of the biggest and most reputed online payment service providers in the Southeast Asia region, can help you with this by enabling your e-commerce venture with the safest online payment services, especially credit card processing Malaysia, with our years of experience in high-risk payment processing. Online fraud is considered the biggest threat to the thriving of a safer online payment environment, whose consequences could be the collapse of the e-commerce market. Hence, as an e-commerce merchant, you have to choose payment processors like PayCly that have enough experience handling e-commerce transactions and are capable enough to tackle any cyber security threat.

At PayCly, we provide top-notch online payment processing services with fraud detection, consisting of AI and machine learning-enabled fraud detection tools, to detect any online payment fraud, like fake chargebacks, by analyzing the nature of payback requests with the help of machine learning experiences. Apart from that, we have encryption technology, 3D security for transactions, and a real-time chargeback update system. At PayCly, we are committed to creating a safer bubble for online payments so that e-commerce merchants in Malaysia have to face fewer cybersecurity threats, and the e-commerce market in Malaysia will continue to grow at the same pace.

You can check our website to get the details of what we are doing in the direction of safer online payments in Malaysia.

Visit us at: Credit Card Payment Processing for forex Trading

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