Game changer in Malaysia's instant payments sector

DuitNow enables bank customers to transfer money instantly and securely using the recipient's mobile phone number

The introduction of instant credit clearing system, DuitNow, has brought a lot of excitement to the instant payments sector in Malaysia. “It changes the landscape in terms of how we do business and the efficiency it facilitates,” says Jacqueline William, managing director and head of global transaction banking for Malaysia, as well as head of securities services sub-Asean at Deutsche Bank. “There is attention to speed – which is what everybody wants – and more importantly, it reduces risk.”

Apart from speed, there is also the emphasis on accuracy. “Even before DuitNow came on board, what has always been important for us at Deutsche Bank was to move away from any kind of manual intervention, whether it is to do with a cash instruction or a securities-related instruction,” adds William.

DuitNow is a service that allows bank customers to transfer money instantly and securely using the recipient's mobile phone number. By sharing their mobile phone number, registered DuitNow users can instantly receive funds instead of having to provide their bank account numbers to payers.

According to Payments Network Malaysia (PayNet), the country’s premier payments network and central infrastructure for financial markets, DuitNow promises to transform Malaysia’s payments landscape, bringing unparalleled convenience, efficiency and immediate funds availability on a 24/7 basis. This quantum leap in electronic payments, PayNet says, will act as a catalyst for growth in Malaysia’s digital economy by reducing friction in payments and commerce.

But as William points out, the instant payments scheme did not gain immediate traction among corporate clients in Malaysia when it was launched in December 2018. To promote DuitNow, Deutsche Bank held several events and invited PayNet to talk to clients about the benefits of DuitNow.

They also conducted workshops and panel discussions to explain the merits of DuitNow. “As with any new change, time is required to educate clients about the features and benefits, and DuitNow was no exception. It takes time for the market to embrace and be comfortable with any new payments scheme,” says William.

So far, though, the number of payments that are going through DuitNow is on an increasing trend, well above PayNet’s expectations. However, the number of DuitNow registrants is still lagging a little behind expectations, and banks are working hard on improving these numbers.

In the case of Deutsche Bank, an increasing amount of payments from its corporate clients is being channeled through DuitNow. Under phase one of its plan to promote the scheme, Deutsche Bank will focus on shifting existing transactions processed through cheques and Giro to DuitNow where appropriate. 

For phase two, Deutsche Bank is targeting new client segments which will benefit from the features of DuitNow.

According to William, the client segments that will make a big difference and hasten the wider acceptance of DuitNow include government agencies, such as the Inland Revenue Board in refunding overpaid taxes. So are the fund managers, who handle huge amounts of subscriptions and redemptions. “They will be the real game changers in terms of the shift to instant payments,” says William.

The other sectors that will benefit are insurance companies for their premium payments, as well as traders, who want to get their money on time from the moment the goods are released.

An important innovation of the instant payments scheme is payment through QR codes, or QR DuitNow, where merchants would be able to make their payments through their mobile phones. William explains, “This is where DuitNow moves to the next level. When QR DuitNow goes live, we expect a lot more people would be using DuitNow as a means of paying their utility bills or phone bills through an e-wallet – thus making the payments instantaneous.”

DuitNow is also aligned with the ambitions of Asean 2025, which include creating a regional real-time payment ecosystem.

“To achieve this, every jurisdiction in the region must have the will to achieve connectivity,” says William. “There may be concerns that not all countries will benefit from such connectivity, with a handful emerging as winners at the expense of others. Everybody has to realize that with the connectivity, each country will ultimately reap the benefits as their markets become more accessible.” 

For William, the motivation for pushing the instant payments scheme in Malaysia goes beyond the benefits the country will derive.

“The motivation is really to equip Malaysia as it takes its place in this region amongst other Asean countries. Asean as a region has great potential, and the only way to move forward as an attractive investment destination is to ensure that the gap between the countries in relation to infrastructure, efficiency and regulation is minimized as much as possible. The ultimate objective is for investors to view this as a region and not just a few countries faring far better than its neighbours,” William adds.

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