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BNM Thinks That Malaysia’s Future Is QR Codes, Despite Many Challenges

In a talk yesterday at the Malaysia Fintech Expo held in Plenary Hall KLCC, Tan Nyat Chuan of Bank Negara Malaysia (BNM) directed a question to the crowd: “Who is the biggest disruptor in the room?”

His answer to that question is Bank Negara itself, said to have challenged the status quo time and time again over the years.

“Banks have had to adjust to all our reform measures. No one can sit still. When we did the price signal reforms (implementing contactless card payments like PayWave), they had to readjust,” said Tan during his keynote speech.

“This is one of our signature toolkits. We rewire the structure. If we allow for status quo, the change will not be sustained.”

And one of the changes that BNM will be pushing hard for is the implementation of QR code-based payments in Malaysia.

This is all thanks to a framework that BNM is developing—probably the first of its kind in this region.

BNM is gunning hard for Malaysia to turn into a cashless society, and one of their measures towards this lofty goal is the Interoperable Credit Transfer Framework (ICTF).

The framework hopes to level the playing field, where banks and non-banks will have open access to a system that settles payments or facilitates transactions.

“Our ambition is that if I’m GrabPay or Alipay or Touch ‘n Go, I can basically pay to someone who has got a Maybank, CIMB, any bank wallet. And from wallet to wallet transfer. It should be reachable, that is our endgame.”

The framework could help blow the walls between banks and non-banks wide open, and create a more robust ecosystem in Malaysia that would hopefully let cashless payments flourish for everyone.

It’s currently still being fine-tuned by the central bank for implementation later this year, but one of the potential impacts highlighted by Tan is the rise of QR codes in Malaysia.

A little bit about QR codes.

Image Credit: Dongxl Marketing

One of the reasons that China is a cashless payment powerhouse—where even hawker stalls and wet markets use mobile payments—is thanks to QR codes.

Many believe that the booming mobile payment industry in the country is partly due to how simple it is. Many other payment services require businesses to install expensive equipment in their stores, while in China, all it takes is a QR code and a smartphone.

And this is partly why BNM has been developing the ICTF—to encourage the use of QR codes in this region and disrupt the status quo.

“We should see some of the more prominent players introducing their solutions. And I think it’s likely to be in a significant way,” said Tan.

“We will work with the industry, the e-money issuers, and the banks, to look at the cohesive communication strategy.”

BNM is looking at how to smoothen the transition from using card payments to QR payments, as well as the possibility for Malaysia to upgrade to a more adaptable version of QR (from static QR payments to the more robust and easily editable dynamic QRs).

There’s also the issue of awareness, and to figure out the dos and don’ts.

“We’ll work with the industry on that. And obviously, we’ll continue to enhance our payment systems and payment services infrastructure so that it remains relevant for the future state of our country.”

But how is that going to happen?

Image Credit: ZingGadget

BNM is now working together with Payments Network Malaysia Sdn Bhd (PayNet), who holds familiar names such as MEPS and MCM.

PayNet is currently in the advanced stage of putting together an infrastructure called the retail payments platform, which they hope to launch by the third quarter of this year.

“Under our ICTF framework, which will be issued as a standard, it will compel PayNet to be transparent with its access rules. It will compel PayNet to be objective with its determination of which non-banks will become eligible to be a part of this clearing system.”

“Our requirement in the standard is to compel the operator, PayNet, to basically enforce at the minimum, a common QR,” said Tan.

“So say if you’re Alipay, WeChat, GrabPay, and you’re part of this ecosystem, then you’re bound by the PayNet rules. So when you acquire a merchant, you must first offer the merchant this common QR code.”

But this will not preclude the merchant from offering their own QR, meaning that the merchant could choose to display 2 QR codes—one universal one that can reach everyone, and perhaps a specialised one by themselves that can offer rebates or deals.

Tan hopes that BNM’s efforts towards this common QR will be accepted widely.

In the past, there were other attempts in the region to have unified QR code initiatives.

However, if we take Singapore as a case study, due to the crowded scene in Singapore, with WeChat, Alipay, Apple, Samsung among others, the government pushed for a unified QR code that would be able to accept any of the payment services. Merchants didn’t need to print out different QR codes for different wallets anymore, and instead only display the one.

E-wallets were compelled by the central banks to issue this static unified QR code, but some of these codes may not work because not all the wallets are on the same network.

BNM wants to take a different approach.

“We want to have a universal network. And this universal network will make all accounts reachable. If [payment services] wish to put forth a unified QR, they can do so. If they want to put unified QR and an Alipay, and a WeChat and a GrabPay, and 10 other QR, it’s their call.”

Reaching out to 10 million Malaysians not ready to make the internet banking jump.

Bank Negara always had public interest as front and center of their policy-making, and one of those concerns is their strong push towards moving Malaysia to a cashless society.

They want to include the 10 million users who aren’t quite ready to make that jump from card to internet banking, and the 2 million adults without any banking accounts.

Some “may not be ready for internet banking, but [they] can surely download an app through iTunes or Google Play, put in a 16-digit pin number from my card, put my expiry date on it, you put in your details and you make purchases from all sorts of app providers, right? It’s the same thing”.


Since the framework is somewhat proprietary, we do worry if Malaysia’s framework will face other issues in the first parts of its implementation. However, the prospect of a QR code-controlled cashless nation is an interesting one.

Considering that the smartphone penetration in Malaysia is expected to exceed 100% in 2018, we can see the thought process behind moving Malaysia towards cashless by championing QR.

It’s perhaps the most user-friendly way to get even the senior generation of Malaysia on board with the system, but we also foresee a lot of growing pains for Malaysia’s biggest fintech disruptor before they can achieve their goals.

Editor’s Note: The text has been edited since publishing to more accurately reflect BNM’s stances on certain policies. 

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