Image credit: SoyaCincau
Cross-border payments have emerged as the fastest-growing segment for Touch ‘n Go eWallet (TNG eWallet) in the past 12 to 24 months, surpassing all projections, according to Alan Ni, CEO of TNG Digital Sdn Bhd (TNGD).
This comes as a surprise given the inherent challenges of cross-border transactions, such as varying regulations, exchange rate complexities and infrastructure disparities. Ni highlights how TNG eWallet has positioned itself at the forefront of this trend with innovative travel payment solutions that cater specifically to the needs of Malaysian users travelling abroad.
Launched last year, the e-wallet’s overseas QR payment feature has experienced remarkable growth, with total payment value (TPV) surging over 170 times between March 2023 and March 2024. This underscores the rising demand for seamless and convenient payment solutions while travelling abroad, he adds.
With over 60% market share of the local e-wallet market, TNG eWallet has solidified its position as the market leader. The platform continues to enhance its features, enabling users to make cross-border transactions with the same ease as they do local ones.
“This is through three channels that we have established. We issued our Touch ‘n Go eWallet Visa Card early last year. We integrated Alipay+’s cross-border solutions in 2022. And we also have enabled cross-border national DuitNow QR payments with Singapore’s NETS QR, Thailand’s PromptPay and Indonesia’s QRIS. These countries have certain interoperable integration,” Ni explains.
Instant payments are driving innovation across both retail and corporate segments. At the same time, cross-border payments present unique opportunities for payment providers to introduce advanced capabilities, he says.
These include mobile-first cross-border remittance solutions for retail customers and trade platforms tailored for small and medium enterprises (SMEs), paving the way for enhanced efficiency and accessibility in global transactions.
“Interestingly enough, remittance and cross-border payments are the two fastest growing businesses for us [TNGD]. Both of these services were launched less than two years ago, and both have seen tremendous growth,” Ni adds.
“For the remittance business, we grew from zero to now covering up to 50 countries. One thing we noticed, interestingly enough, is people using our service are not just individuals. We do see small SMEs using our remittance [service] because sometimes they need to make cross-border payments, and some micro SMEs, [for instance] mom and pop shops, use our services to do such transactions.”
TNG Digital introduced GOremit in May 2023. Initially covering 10 countries, it has expanded its reach to 50 countries this year. According to Ni, GOremit offers a secure and convenient solution for sending money overseas at any time, catering to the growing demand for efficient cross-border remittance services.
What sets GOremit apart is its flexibility. Users can transfer funds directly to recipients’ bank accounts, arrange for cash pick-ups or — more conveniently — send money to the recipient’s preferred e-wallet in the destination country.
Beyond its practicality, the service offers added value through competitive exchange rates, lower fees and a rewards programme called GOrewards. With every transaction, users can earn points redeemable for cashback vouchers, physical products and even entries for lucky draws, enhancing the overall user experience.
Navigating roadblocks
Historically, the cross-border payments market has been dominated by banks, particularly a few major global correspondent banks, operating with minimal competition. This lack of diversity, Ni points out, has led to significant pain points for both private consumers and businesses. These include a lack of transparency, lengthy settlement periods, high transaction costs and limited accessibility.
A common cause of frustration, he adds, is the unpredictability of currency conversion and foreign exchange (FX) rates, which often only become apparent after receiving a credit card statement or exchanging cash.
Addressing these challenges became a key focus for TNG Digital, inspiring the development of its cross-border payment feature.
“[With TNG eWallet] we tell you all the FX rates upfront. You do not need to guess every single transaction. We show you the FX rate on the spot. [If] you are happy, you can proceed; if you are not happy, you can stop. It’s okay. It’s very much more transparent; we let you know upfront. This solves the pain points international travellers face,” says Ni.
Additionally, he points out a challenge unique to Malaysia: the low merchant discount rate (MDR). z This becomes particularly problematic when foreign visitors use the national QR payment system, as the reduced MDR leads to lower revenue for payment processors.
This, in turn, can hinder their ability to invest in critical infrastructure upgrades and security enhancements, potentially affecting the long-term sustainability and scalability of the payment ecosystem.
“When it comes to inbound tourism, Malaysian merchants have the lowest MDR at 0% in the whole region. Let’s take the national QR. for example. Merchants in other countries are charged a higher MDR than in Malaysia,” says Ni.
According to TNG’s website, SME merchants accepting payment via the TNG eWallet static QR code will be charged an MDR of 0.5%.
For DuitNow QR, the MDR plays a vital role in offsetting the costs and investments needed by the financial industry to sustain its payment infrastructure. This includes funding essential cybersecurity measures and fraud prevention controls, which are crucial for maintaining high standards of service and security across the payment ecosystem.
In late 2023, news reports indicated that merchants receiving payments via DuitNow QR would be charged a 0.25% fee for transfers from bank accounts and a 0.5% fee for credit card transfers to POS terminals.
However, most DuitNow QR merchant acquirers have since announced that they will continue waiving the MDR for micro and small businesses that accept DuitNow QR payments.
Generally, microenterprises are defined as businesses with a sales turnover of below RM300,000, or fewer than five full-time employees. Small businesses, meanwhile, are classified as those with a sales turnover of between RM300,000 and RM3 million, or between five and 30 full-time employees.
According to news reports, these measures will enable micro and small businesses to keep utilising DuitNow QR payment services at zero cost, while ensuring that the QR payment services remain efficient and reliable for all consumers.
Ni says, however, that zero or low MDR might not be sustainable for merchants or payment providers in the long run.
“Collaboration with the regulator is important. In the end, it has to be either merchants or users sharing these costs. You cannot expect a business to provide a service free of charge forever. That’s not a long-term positive.
“That’s something we need to discuss with not only the regulator but also the scheme provider to see how to address this problem. But I do think if this is not addressed in the long run, it is not going to be healthy for the industry.”
Source: https://theedgemalaysia.com/node/736712