AS we move into a new year, the world continues its shift towards a cashless society, a trend that is not new. However, today’s technological advancements offer a fresh perspective on the global and national implications of this change.
The latest innovation in cashless technology, such as palm scanning developed by companies like Tencent in China and Amazon in the United States, demonstrates how seamless transactions can be completed through biometric palm scans.
With the rapid growth of this technology, Malaysia is not far behind in exploring how its implementation could transform the landscape of financial digitalisation. Given the growing number of digital transactions across the country, Malaysia is no stranger to adopting new technologies, thanks to the adaptable lifestyle of its people.
According to Statista, the transaction value in Malaysia’s digital payment segment is projected to reach US$42.02 billion (RM188 billion) by 2028, reflecting a growth rate of 10.92% between 2024 and 2028.
However, the question is whether Malaysia is ready to apply such innovations in terms of technological and social development or is simply pursuing a status of progress.
Examining Malaysia’s current cashless payment landscape, digital payments have shown an increase in popularity with the existence of various mobile wallet payment mediums, such as Touch ‘n Go eWallet, MAE, Boost and many more.
According to the Adyen Index report in October 2024, 63% of Malaysians actively use digital payment facilities. Mobile e-wallets are being developed not only by banking and financial institutions but also by state governments, such as Sarawak, which has taken the initiative to develop mobile wallets through S Pay Global to encourage the use of digital payments among its people.
Despite the initiatives carried out by various parties, there are still constraints and obstacles in adopting digital payments, especially for rural communities and small business owners.
According to the National Scam Response Centre data report, victims of fraud in Malaysia suffered losses of RM371 million from October 2022 to August 2024. Some businesses still prefer cash payments because they are often unfamiliar with cashless transactions and lack awareness of the benefits these transactions offer.
Similarly, some urban businesses remain hesitant to adopt digital payments due to concerns about fraud, limited internet connectivity and a lack of awareness regarding the benefits of digital payment methods.
Ongoing concerns about digital fraud are also widening the social and economic gap between urban and rural communities. As a result, promoting digital literacy is essential to educating and empowering the community.
The introduction of new technology, such as palm detection, has the potential to benefit Malaysia. From a security and privacy perspective, this method can help reduce theft and fraud while increasing trust and confidence among users, particularly in rural areas.
It is important to emphasise that digital literacy requires greater attention. The implementation of such technology naturally raises concerns about the privacy of individuals’ biometric data.
Relevant stakeholders must be aware of several factors that could pose obstacles to the development of these technologies, such as privacy risks, infrastructure costs and social inequality.
In the current social context, rural residents and the elderly are at risk of being left
behind due to limited access to knowledge and infrastructure, which can deepen the digital divide.
Public trust plays a crucial role in shaping the generation that adopts digital finance. It
is important to recognise the role of the government and financial institutions in addressing this issue.
Bank Negara Malaysia and local banks must drive parallel policies to ensure data protection and equitable access to the community.
Collaboration with technology companies to conduct phased pilot programmes can enhance transparency.
The Madani government, through Budget 2025, has demonstrated its commitment to digitalisation by allocating RM85 million to combat cybercrime, especially fraud and deception.
In addition, the government has also allocated a budget of RM10.5 million as one of the digitalisation and automation initiatives to bridge the digital gap for rural communities.
In conclusion, Malaysia’s journey towards cashless development holds great promise, fuelled by community adaptation and trust in financial institutions, locally and globally.
Digital literacy should begin in schools while the adoption of new technologies like palm scanning will depend on addressing concerns around privacy, accessibility and building user trust.
A holistic approach involving the government, businesses and society can bridge the gap, ensuring technology benefits all sectors. With collective effort, Malaysia has the potential to lead the Asean region in biometric payments. It is hoped that the initiatives introduced through Budget 2025 will be implemented effectively and sustainably.
Muiz Zulkifli, Izzul Islam and Dr Velan Kunjumaran are from the Faculty of Social Sciences and Humanities at
Universiti Kebangsaan Malaysia.
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