The Malaysian Electronic Payment System (MEPS) is pushing for an integrated network, shares its CEO Michael Kumar
What is MEPS’ role in the overall Malaysian financial services sector?
MEPS is a payment consortium owned equally by 11 Malaysian banks. We function mainly as the electronic payment infrastructure arm and technology partner for the Malaysian financial services industry, where we’ve been an important player since 1996, especially in facilitating interbank transactions. We started out with cash withdrawals, and gradually introduced more e-payment services such as interbank fund transfers, mobile prepaid top-ups and stored value smart card reload – all of which can be done at an ATM. It’s a cheap and fast alternative for users who don’t want to or are unable to do their transactions online. Our role encompasses the development and implementation of payment services, provision and management of shared infrastructure for participating financial institutions, the governance of adherence to relevant standards, as well as the development and certification of technical standards and specifications for domestic ATM and debit chip cards.
You were appointed to the role of CEO on 1 October 2016. Tell us more of what you do.
Everything at MEPS comes under my purview. I ensure that the business direction as confirmed by the board of directors is met. That means aligning the various teams in the organisation to achieve profitability, and ensure efficiency for the good of the industry as a whole. My goal is to build on Malaysia’s Vision 2020 profile and to ensure the organisation is sustainable well into the future.
What is MEPS’ mission?
At MEPS, our aim is to help the nation complete its payment activities through convenient, reliable and secure services, as well as to support the central bank’s e-payment agenda for the country. By 2020, the central bank targets to increase the number of e-payment transactions per capita to 200 transactions from 44, and to reduce the number of cheques from 207 million to 100 million per year. Measures to achieve this will include providing the right price signals to encourage the switch from paper-based payments to e-payments, and facilitating wider outreach of e-payments infrastructure, such as point-of-sale terminals and mobile phone banking.
What do you think are the key technology trends driving the global payment services market now?
Mobile banking is expected to grow exponentially in the future, thanks to continuous research and development, as well as lowering security concerns. We’ve seen widespread smartphone adoption in developed markets and its increasing penetration levels in developing markets, Malaysia included. There’s positive growth in the mobile wallet market as more retailers and consumers adopt contactless technology. There are a lot of investments being put in by telecommunications companies and phone manufacturers to ensure that their products are able to support contactless features for easy payment.
What projects are currently under development in MEPS?
MEPS is currently upgrading the previously applied Payment Multi Purpose Card (PMPC) standard to become Europay, Mastercard and Visa (EMV) compliant. It is renamed as the Malaysian Chip Card Specification (MCCS) and the replacement of existing cards is expected to be completed by the end of 2017. The PMPC was a proprietary standard, used since 2003. It was developed back when there was still uncertainty on an international standard and there was a lot of fraud involving ATM cards. Since introducing it, there was zero fraud committed using cloned ATM cards. In 2013, we decided that it was time to move on to EMV, which is the international standard used around the world. In addition to the typical functions of an ATM card, the new MCCS cards will have a dual interface whereby customers can perform contactless transactions at merchant outlets such as at petrol kiosks, supermarkets and tolls. Regionally, we also perform cross – border transaction services with several countries, namely Indonesia, Singapore, Thailand, Vietnam, China and South Korea. This offers participating banks’ customers the convenience of withdrawing cash via ATM in said countries.
Where does Malaysia stand in terms of mobile payments and real-time payment platforms?
I think that for many people today, their mobile phone is an essential part of their lives. They can leave their wallets at home and survive as long as they have their ‘digital’ wallet with them. Digital wallets not only provide transaction facilities at affordable prices but also help consumers manage their accounts easily. For digital wallets to fully replace their physical counterparts, they will need to hold everything a leather wallet can: cash, receipts, membership cards and payment cards. Consumers’ concerns related to security and technology infancy as well as investment and deployment issues are expected to impede the growth of the mobile wallet market still.
Is Malaysia ready for biometrics in payment transactions?
While we have yet to fully integrate a cashless ecosystem, payment trends are definitely evolving in line with new developments in technology. We haven’t seen widespread implementation of biometrics, certainly not in this part of Asia. Looking at trends in Singapore, Thailand, Philippines and of course Malaysia, we’re still very much towards mobile payments. However, at the end of the day, if consumers are assured that the payment method is well-integrated, secure, reliable and convenient to use, a cashless society will be imminent.
How can MEPS help push Malaysia towards becoming a cashless society?
Our participation will be in tandem with the industry as a whole. With instant transfer services, the financial services and payment industry is greatly enhanced, reducing cash transactions over the counter significantly, and correspondingly, reducing transaction costs and risks. We are also looking at a strategic merger to enhance the country’s payment infrastructure into a highly efficient, secure and competitive e-payment agenda. E-payment, which is more expedient, will provide opportunities to improve productivity and move towards a world-class payment ecosystem. MEPS will continue to be aligned to what the central bank expects of us, and participate with other industry players to do what is necessary to further develop a cashless society in future and drive Malaysia’s growth towards the high income nation goal by 2020.