What Is An E-Wallet And How Is It Different From A Credit Card?

What Is An E-Wallet And How Is It Different From A Credit Card?

Summary

We compare the most popular e-wallets available in Malaysia, covering what they offer over the competition and why they are special.

Having to dig through wallets for cash feels very primitive in the 21st century. Yet, not everyone has ready access to credit and debit cards. Others remain wary about credit cards and their potential pitfalls. This situation has led to the introduction of e-wallets; digital services that help people pay for things through smartphone apps.

Given the options available, it’s not easy to decide which of these to adopt. We take a look at the most popular e-wallets in Malaysia and try to figure out which gives you the best ROI.

What is an e-wallet?

On the surface, e-wallets are like payment cards that work out of an app. You load funds into a virtual wallet, and then use those funds to pay for goods and services. How this works varies across the types of e-wallets. Some use QR code scanning to establish connections between customers and merchants in the real world, while others are only confined to internet transactions.

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Transfers using Near Field Connection (NFC) technology also exist, but aren’t supported by a lot of smartphones.

Payments are not the only thing that these e-wallets are capable of handling. Each service adds their own sprinkling of features that they believe will bring the most benefit to their target audience. Most common would be the option to transfer funds between individuals; although there also exists features like buyer protections, loyalty card integration, and proprietary magnetic strip technology.

For this comparison, we use the most important metrics for an e-wallet. Firstly, payment technology is important for how easy it is for both customers and merchants to begin using the system. Next is a short list of stores that accept the particular e-wallet; this is not a complete directory since it would take too much space to fit everything into one place. Instead, it’s a collection of the most useful locations.

Finally, there is a summary of additional features that set that particular e-wallet apart from the competition.

Boost

Payment method: QR code, In-app payments

Notable merchant: 99 speedmart, Telekom Malaysia, SYABAS, DBKL Parking

Bonus: Boost’s main audience are smaller merchants that are only experimenting with the idea of cashless payments. The company has been targeting pasar malam vendors across the country, and has seen some success in that regard. More importantly, it’s been working with utilities like Telekom Malaysia and SYABAS to all in-app bill payments. It’s also expanding on a partnership to allow users to pay for parking in the greater KL area.

GrabPay

Payment method: QR code, In-app payments

Notable merchants: TeaLive, Inside Scoop, Manhattan Fish Market

Bonus: GrabPay has the benefit of being part of the Grab Platform ecosystem; essentially allowing it to be used for calling a Grab ride or using it to order from Grab Food. It also has a partnership with MayBank for cross platform use with merchants that accept MayBank Pay.

It should be noted that while GrabPay is available across Southeast Asia it does not convert credits to local currencies. Meaning that customers will have to manually top up their credit when traveling.

Lazada Wallet

Payment method: Online

Notable merchants: Lazada

Bonus: Lazada Wallet is one of the few e-wallets to offer cashback on all purchases. This comes at the massive price of only being able to use it on Lazada’s own online store, and having cashback credits that expire after a few months. This is perhaps the most limited of the e-wallets considering the scope. It’s meant to lock users into the Lazada ecosystem, so people should be aware of what they are getting themselves into.

Samsung Pay

Payment method: Magnetic Field Transfer, NFC

Notable merchants: Anywhere that supports credit card swiping

Bonus: Unlike the other e-wallets in this comparison, Samsung Pay doesn’t actually store any funds. Instead, it stores payment card information and acts as a sort of additional layer between the two. What is unique here is its proprietary MFT technology. This allows a smartphone or smartwatch to mimic the magnetic strip on a credit card, allowing it to work without any additional investment from merchants. MFT also allows Samsung Pay to support loyalty cards like those from Aeon; meaning that those can also be stored within the app.

The only drawback is that Samsung Pay is confined to selected Samsung branded smartphones and smartwatches. MFT support also only appears on the highest end Samsung smartphones, leaving the more affordable devices with only NFC support. Although, nothing says living in the future like paying for lunch with your watch.

PayPal

Payment method: Online payments. Offline payments exists in select countries

Notable merchants: Almost every online store

Bonus: PayPal is the grandfather of e-wallets. Existing from even before the term was coined. Being an international level organisation means that PayPal can be used across borders, and will even convert between currencies for payments. It also allows users to cash out by transferring their funds to a local bank account. Buyer protection for PayPal is also considered to be one of the best in the world; although this occasionally comes at the expense of the merchants.

PayPal’s main problem is the substantially higher fees it charges on money transfers. The company has a 7% cut on international remittance; which is higher than some people would like to deal with.

Touch n Go

Payment method: QR code

Notable merchants: Baskin Robbins, Dunkin Donuts, myNEWS.com, Tesco

Bonus: The Touch n Go mobile app is still in a sort of testing phase, having some – but not all- of the features that the company intends. In this case, the number of available merchants is still very short. More importantly, the company has just wrapped up a beta test of the TnG mobile app on the Kelana Jaya LRT line. A test that is said to have gone very successfully and will likely lead to the mobile app being adopted for a full deployment along the LRT and MRT lines.
This e-wallet can also be used to pay for tolls using the RFID reader. Although, the systems have been in testing for about a year and has not been officially launched yet.

vcash

Payment method: QR code

Notable merchants: Tony Roma’s, Mydin, Astro Go Shop, Kedai Mesra Petronas

Bonus: Digi’s vcash was one of the earliest homegrown e-wallets to appear in Malaysia, launched late last year. Since then, it has expanded to include a partnership with Petronas that makes it the only e-wallet that can be used to pay for petrol (excluding Samsung’s MFT technology).

WeChat Pay

Payment method: QR Code

Notable merchants: KK Mart

Bonus: WeChat Pay is perhaps one of the most anticipated e-wallet to reach Malaysia; being tied to one of the the most popular instant messaging services available. It provides the additional benefit of being able to also buy bus tickets. A convenient feature that’s likely to cater to WeChat’s main demographic.

Also available here is the option to use WeChat Pay in China. It’s something more useful for Chinese tourists visiting Malaysia, but also works in reverse. However, it should be noted that there is no currency conversion (like Grab Pay). Leaving users to instead top up the Chinese RMB and Malaysian Ringgit separately.

MaybankPay

Payment method: QR code

Notable merchants: Jaya Grocer, TGV cinemas, Mydin, Watson’s, McDonalds

Bonus: MaybankPay had a far quieter release than any of the other e-wallets on this list. Overall, it doesn’t quite have as many bonus features as the competition; focusing solely on being able to provide an e-wallet to support Maybank’s suite of products. However, the bank has an agreement with Grab to the interoperability between MaybankPay and Grab Pay. Allowing the two e-wallets to work with the same QR codes.

That said, MaybankPay is also one of the few e-wallets in Malaysia to allow users to store their Maybank credit card information. Using the mobile app in the place of having to keep a physical card. This puts it in direct competition with Samsung Pay. Although it has the advantage of being available on all Android and iOS phones (instead of being limited to a handful of Samsung branded ones).

Razer Pay

Payment method: QR Code

Notable merchants: Steam, 7 Eleven, Starbucks

Bonus: Aimed largely at gamers, Razer Pay is the result of a collaboration between gaming peripheral maker Razer, MOL, and Berjaya Group. For the most part, this e-wallet is intended to support Razer’s own eco-system and virtual currency.

Funds stored in Razer Pay can be used to buy Razer’s zGold-MOLpoints; which can later be used to buy games digitally. Alternatively, the virtual currency can also be used to buy gaming peripherals (like keyboards and mice) from the Razerzone online store. This is less attractive for the average consumer, but is perhaps more relevant to gamers.

BigPay

Payment method: QR Code, NFC, Prepaid Card

Notable merchants: Airasia

Bonus: Created by AirAsia, the BigPay service is split across a Mastercard-backed prepaid card and an e-wallet. The benefit of this is that it users are not confined to only using the mobile app to pay for things. Instead, being free to use the prepaid card like a credit card. Complete with the option to make online purchases and withdrawing funds from ATMs.

BigPay also allows users to earn Big Loyalty Programme points; which is also the loyalty programme for AirAsia flights. Unfortunately, this comes with the caveat that the points are not earned for domestic transactions.

AirAsia founder Tony Fernandes believes that this will eventually be worth more than his airline. Although there seems to be quite a lot of competition in this space.

This is not an exhaustive list of e-wallets in Malaysia. At present, there are 35 companies and 5 banks with e-money licenses from BNM, all of which are governed by the Financial Services Act 2013 and Islamic Financial Services Act 2013

Not all of these licenses are currently being used for e-wallet apps, but a fair number have more focused services. For example, gaming peripheral manufacturer Razer and gamer-focused Razer Pay e-wallet.
That said, BNM has issued a directive to create a unified QR code system for the various e-wallets. There has been little news on when this will be rolled out, but it shouldn’t take too long for all involved parties to sort out the matter.

Going forward, this move will make at least a few of these services interchangeable and widen the number of available merchants for the benefit of their customers.

*This article was originally published on 8 August 2018.

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