What Is An E-Wallet And How Is It Different From A Credit Card?
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.
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 are also 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.
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.
Boost also has a partnership with Shell stations, allowing users to pay for petrol at over 800 stations around the country. However, this still requires the user to scan the QR code at the counter.
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.
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.
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.
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 eWallet
Payment method: QR code
Notable merchants: Baskin Robbins, Dunkin Donuts, myNEWS.com, Tesco, Plus highways
Bonus: The TnG e-Wallet still has a variety of features in the testing phase. 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.
The Pay Direct feature allows users to link their TNG cards with the TnG e-Wallet. Doing this will cause toll plazas to deduct funds from the e-wallet first and will only charge the TNG card if there is insufficient credit.
Touch ‘n Go’s RFID payment option is also tied to the TnG eWallet. It deducts funds automatically when the gantry scans the RFID tag on your car. This payment system is gradually rolling out to the public in 2020 after two years of testing.
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).
Vcash ceased operations on December 1 2019, becoming the first e-wallet to throw in the towel in an extremely saturated market.
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 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. This means users need to top up their Chinese RMB and Malaysian Ringgit separately.
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).
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.
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.
Payment method: GPS location tracking
Notable merchants: Petronas
Bonus: Petronas’ homegrown e-wallet brings an interesting twist to the technology. It uses GPS location tracking in order to facilitate payments. Basically, the app will detect that you are at a participating Petronas station and allow you to begin making payments.
This is a completely unique payment system, and one that is unfortunately a closed ecosystem. The system is limited to only a small selection of Petronas stations at the moment. On the other hand, it is extremely useful for those who would rather not swipe their credit cards at petrol stations.
Payment method: Barcode
Notable merchants: myNEWS
Bonus: The myNEWS Malaysia app is not strictly an e-wallet. It is largely for managing the myNEWS loyalty point programme. The app can only be used to pay for purchases in myNEWS outlets, and then it still uses an older barcode system for managing transactions.
Furthermore, funds can only be added to the e-wallet at myNEWS stores.
Payment method: QR code, Visa-back prepaid card
Notable merchants: AEON affiliated stores
Bonus: This is not necessarily a traditional e-wallet, being mainly designed to work with the AEON Members Plus Visa card. The idea is that the AEON Wallet complements the prepaid card by allowing users to access its funds and loyalty programme without having to carry the card around.
However, this also means that it benefits from being an e-wallet with a Visa-backed prepaid card. Including the ability to use the funds in non-AEON affiliated stores and for online shopping.
Payment method: QR Code
Notable merchants: 7-Eleven, Family Mart
Bonus: AliPay is technically not available for Malaysians, despite being accepted by local merchants. It is meant to be used by Chinese nationals who are visiting the country and would like to continue their cashless experience.
That said, the main benefit of being able to use AliPay is that it also works in China. Visitors to the country are able to purchase a Tour Pass that gives them the option of adding funds without first owning a Chinese bank account. This is valuable to tourists as China has largely phased out the use of physical cash and many merchants only accept payments through e-wallets.
*This article was originally published on 8 August 2018.