KUALA LUMPUR: As the usage of cash and cheques remains prevalent in Malaysia, efforts should be intensified to migrate to e-payment since the potential cost savings and efficiency gains are quite substantial, says Bank Negara director of payment system policy department Tan Nyat Chuan.

He said the usage of cheques per capita was 6.9 in 2012 compared with an average of 0.2 in advanced countries while the cash currency in circulation over gross domestic product (GDP) was about 6.1%, higher from an average of 3.8% in advanced countries.

A study in 2012 showed that countries with a higher proportion of cash and cheques and lower e-payment incurred a higher social cost of retail payment instruments of up to 1.43% of the GDP, he told a media briefing on the Reform Measure to Transform Malaysia’s Payment Landscape.

Tan said on the contrary, countries with a higher proportion of e-payment and lower proportion of cash and cheques had a lower social cost of as low as 0.42%. Social cost is the cost to society reflecting the use of resources in production of payment services made to other participants in the payment chain.

It measures the sum of the pure costs of producing payment instruments incurred by different stakeholders in the payments markets.

“Malaysia is at the turning point in the migration to e-payments and in the past few years Bank Negara had been garnering industry support to make a very significant investment to address, among others, accessibility, confident, awareness, the value proposition, pricing and industry incentive structure,” he said.

He said to transform the payment card landscape, the banking industry was expected to invest about RM1.1bil over the next six years in infrastructure upgrades and deployment of terminals.

Tan said the central bank had initiated a review on payment cards and would be issuing reform measures soon, and among others, he hinted it would set a ceiling for the interchange fee to stop cost pressure from moving up.

To complement the payment card reform framework, the banking industry would deploy an additional 570,000 new point of sales terminals and to grow debit card transactions to one billion by 2020, he said.

He said Bank Negara was also targeting to reduce the number of cheque transactions to 100 million a year from about 200 million a year currently. — Bernama