emerging opportunities in malaysia’s cards and debit card category size and forecast ... 8.2.2...

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Emerging Opportunities in

Malaysia’s Cards and

Payments Industry

Market Size, Trends and Drivers,

Strategies, Products and Competitive

Landscape

Product Code: VR0888MR

Published Date: January 2013

TABLE OF CONTENTS

Emerging Opportunities in Malaysia’s Cards and Payments Industry

© Timetric. This product is licensed and is not to be photocopied Published: January 2013

TABLE OF CONTENTS

1 Executive Summary ..................................................................................................................... 8 2 Market Attractiveness and Future Prospects of Cards and Payment Industry ........................... 10 3 Analysis of Cards and Payment Industry Drivers ...................................................................... 13

3.1 Macroeconomic Fundamentals ..................................................................................................... 13

3.1.1 Stable GDP growth rate ............................................................................................................... 13

3.1.2 Overnight Policy Rate (OPR) ........................................................................................................ 14

3.1.3 Stable unemployment rate............................................................................................................ 15

3.1.4 Malaysian Institute of Economic Research (MIER) consumer sentiments index ................................ 16

3.2 Infrastructure Drivers ................................................................................................................... 17

3.2.1 Launch of secure online shopping platforms .................................................................................. 17

3.2.2 Emergence of contactless payments ............................................................................................. 17

3.2.3 Migration to EMV cards ................................................................................................................ 17

3.2.4 MOLPoints .................................................................................................................................. 18

3.2.5 Launch of mobile money .............................................................................................................. 18

3.3 Business Drivers .......................................................................................................................... 19

3.3.1 Retail industry ............................................................................................................................. 19

3.3.2 Growing mobile commerce ........................................................................................................... 20

3.3.3 Online shopping dynamics............................................................................................................ 21

3.3.4 Outbound travel segment ............................................................................................................. 22

3.4 Card Fraud Statistics ................................................................................................................... 23

3.4.1 By channel .................................................................................................................................. 23

3.5 Regulatory Framework ................................................................................................................. 24

3.5.1 Revised eligibility requirements for credit card issuance ................................................................. 24

3.5.2 Business practice defined by Bank Negara Malaysia for credit cards issuers ................................... 24

3.5.3 Regulations pertaining to credit card infrastructure security ............................................................ 25

3.5.4 E-money regulations .................................................................................................................... 25

4 Emerging Consumer Atti tudes and Trends................................................................................ 27

4.1 Market Segmentation and Targeting ............................................................................................. 27

4.1.1 Retail segment ............................................................................................................................ 28

4.1.2 Corporate segment ...................................................................................................................... 33

4.2 Consumer Preference .................................................................................................................. 34

4.2.1 Price ........................................................................................................................................... 34

4.2.2 Convenience ............................................................................................................................... 35

4.2.3 Services ...................................................................................................................................... 35

4.3 Online Buying Behavior ................................................................................................................ 36

4.4 Preferred Payment Methods ......................................................................................................... 36

5 Competitive Landscape and Industry Dynamics........................................................................ 37

5.1 Market Share Analysis by Payment Channels ................................................................................ 37

5.1.1 Overview of payment channels ..................................................................................................... 37

5.1.2 Credit transfer ............................................................................................................................. 39

5.1.3 Checks........................................................................................................................................ 40

5.1.4 Cards .......................................................................................................................................... 41

TABLE OF CONTENTS



5.1.5 Direct debit .................................................................................................................................. 42

5.2 Debit Cards Market Share ............................................................................................................ 43

5.2.1 By bank....................................................................................................................................... 43

5.2.2 By scheme .................................................................................................................................. 44

5.3 Credit Cards Market Share ........................................................................................................... 45

5.3.1 By bank....................................................................................................................................... 45

5.3.2 By Scheme.................................................................................................................................. 46

5.4 Charge Cards Market Share ......................................................................................................... 47

6 Strategies Adopted by Key Competitors.................................................................................... 48

6.1 Market Entry Strategies ................................................................................................................ 48

6.2 Marketing / Product Strategy ........................................................................................................ 49

6.2.1 Debit cards .................................................................................................................................. 50

6.2.2 Credit cards ................................................................................................................................. 51

6.2.3 Prepaid cards .............................................................................................................................. 53

6.2.4 Charge cards ............................................................................................................................... 54

6.3 Pricing Strategies ........................................................................................................................ 55

7 Market Size and Growth Potential of Payment Card Industry .................................................... 57

7.1 Market Share Analysis by Type of Card......................................................................................... 57

7.2 Total and Forecast of Card Industry Size ....................................................................................... 59

7.2.1 Analysis by number of cards ......................................................................................................... 59

7.2.2 Analysis by transaction value........................................................................................................ 60

7.2.3 Analysis by transaction volume ..................................................................................................... 61

7.3 Debit Card Category Size and Forecast ........................................................................................ 62




7.3.4 Other key performance indicators ................................................................................................. 65

7.4 Prepaid Card Category Size and Forecast ..................................................................................... 66


7.4.2 Analysis by segment – open and closed-loop cards ....................................................................... 67


7.5 Charge Card Category Size and Forecast ..................................................................................... 70




7.6 Credit Card Category Size and Forecast ....................................................................................... 73




8 Company Profiles, Product, and Marketing Strategies .............................................................. 77

8.1 Maybank ..................................................................................................................................... 77

8.1.1 Strategies .................................................................................................................................... 77

8.1.2 Maybank key financial .................................................................................................................. 78

TABLE OF CONTENTS



8.2 CIMB .......................................................................................................................................... 79

8.2.1 Strategies .................................................................................................................................... 79

8.2.2 CIMB Bank key financial .............................................................................................................. 80

8.3 RHB Bank ................................................................................................................................... 81

8.3.1 Strategies .................................................................................................................................... 81

8.3.2 RHB Bank key financial ................................................................................................................ 82

8.4 Public Bank (PB) ......................................................................................................................... 83

8.4.1 Strategies .................................................................................................................................... 83

8.4.2 Public Bank key financial .............................................................................................................. 84

9 Appendix ................................................................................................................................... 85

9.1 Methodology................................................................................................................................ 85

9.2 Definitions ................................................................................................................................... 87

9.3 Contact Us .................................................................................................................................. 87

9.4 About Timetric ............................................................................................................................. 87

9.4.1 Our approach .............................................................................................................................. 88

9.5 Services ...................................................................................................................................... 88

9.6 Disclaimer ................................................................................................................................... 89

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LIST OF FIGURES

Figure 1: Current and Future Prospects of Various Cards in Malaysia........................................................................................................ 10 Figure 2: Grow th Potential of Prepaid and Debit Card Transaction Value (%), 2012 and 2017 ................................................................... 11 Figure 3: Grow th Potential of the Malaysian Cards and Payments Industry by Area of Usage .................................................................... 12 Figure 4: Malaysian GDP Grow th Rate (%), Q3-2010–Q3-2012.................................................................................................................. 13 Figure 5: Malaysian Overnight Policy Rate (%), January 2010–November 2012 ......................................................................................... 14 Figure 6: Malaysian Unemployment Rate (%), December 2011–September 2012 ...................................................................................... 15 Figure 7: MIER Consumer Sentiments Index, Q1-2011–Q3-2012 ............................................................................................................... 16 Figure 8: Malaysian Retail Industry (MYR Billion), 2008–2012 .................................................................................................................... 19 Figure 9: Malaysian Smart Phone Penetration (%), 2010–2012 .................................................................................................................. 20 Figure 10: Malaysia Mobile Commerce Sales Dynamics (MYR Billion), 2008–2017.................................................................................... 20 Figure 11: Malaysia Value of Online Shopping (MYR Billion), 2008–2012................................................................................................... 21 Figure 12: Malaysia Outbound Travel Segment Volume (Thousands), 2008–2012 ..................................................................................... 22 Figure 13: Malaysia Card Fraud Statistics (MYR Million), 2008–2012 ......................................................................................................... 23 Figure 14: Malaysian E-Money Regulation Key Points ............................................................................................................................... 25 Figure 15: Malaysian Cards and Payments Industry Segmentation ............................................................................................................. 27 Figure 16: Malaysian Young Population (Million), 2008–2012 ..................................................................................................................... 28 Figure 17: Malaysian Female Population (Million), 2008–2012.................................................................................................................... 29 Figure 18: Cards Targeted at Women in Malaysia ....................................................................................................................................... 29 Figure 19: Malaysian Volume of Outbound Leisure Tourists (Million), 2008–2012...................................................................................... 30 Figure 20: Malaysian Volume of High-Net-Worth Individual (HNWI) Population, 2010–2015....................................................................... 31 Figure 21: Cards Offered to HNWIs ............................................................................................................................................................. 32 Figure 22: Malaysian Volume of Domestic and Outbound Business Tourists (Million), 2008–2012 ............................................................ 33 Figure 23: Consumer Preferences by Card Type......................................................................................................................................... 34 Figure 24: Number of POS Terminals in Malaysia (Thousands), 2008–2017 .............................................................................................. 35 Figure 25: Malaysia Volume of Domestic and Outbound Business Tourists (Million), 2008–2012 ............................................................... 36 Figure 26: Share of Malaysian Payment Channels, (%), 2008 and 2012 ..................................................................................................... 38 Figure 27: Malaysia Value and Growth of Credit Transfer (MYR Million), 2008–2012 ................................................................................. 39 Figure 28: Malaysian Value and Growth of Check Payments (MYR Million), 2008–2012 ............................................................................ 40 Figure 29: Malaysian Value and Growth of Cards Payments (MYR Million), 2008–2012............................................................................. 41 Figure 30: Malaysian Value and Growth of Direct Debits (MYR Million), 2008–2012................................................................................... 42 Figure 31: Malaysian Debit Card Category Share by Bank, (%), 2011......................................................................................................... 43 Figure 32: Malaysian Debit Card Category Share by Scheme, (%), 2011.................................................................................................... 44 Figure 33: Malaysian Credit Card Category Share by Bank, (%), 2011 ....................................................................................................... 45 Figure 34: Malaysian Credit Card Category Share by Scheme, (%), 2011 .................................................................................................. 46 Figure 35: Malaysian Charge Card Category Share by Scheme, (%), 2011 ................................................................................................ 47 Figure 36: List of Foreign Banks Operating in Malaysia ............................................................................................................................... 48 Figure 37: Marketing Strategies Based on Card Type ................................................................................................................................. 49 Figure 38: Co-Branded Credit Cards............................................................................................................................................................ 51 Figure 39: Promotional Credit Card Offers by Public Bank Malaysia ........................................................................................................... 52 Figure 40: Credit Card Pricing Strategy ....................................................................................................................................................... 55 Figure 41: Debit Card Pricing Strategies...................................................................................................................................................... 56 Figure 42: Malaysian Cards Industry by Type of Card, (%), 2008–2017 ...................................................................................................... 58 Figure 43: Malaysia Cards Industry Size by Volume (Thousands), 2008–2017 ........................................................................................... 59 Figure 44: Malaysian Cards Industry Size by Transaction Value (MYR Million), 2008–2017 ....................................................................... 60 Figure 45: Malaysian Cards Industry Size by Transaction Volume (Million), 2008–2017 ............................................................................. 61 Figure 46: Malaysian Debit Card Category Market Size (Thousands), 2008–2017...................................................................................... 62 Figure 47: Malaysian Debit Card Category Market Size (MYR Million), 2008–2017 .................................................................................... 63 Figure 48: Malaysian Debit Card Category Market Size by Transaction Volume (Million), 2008–2017 ........................................................ 64 Figure 49: Debit Card Usage ATMs and POS Terminals (Thousands), 2008–2017 .................................................................................... 65 Figure 50: Malaysian Prepaid Card Category Market Size (Thousands), 2008–2017.................................................................................. 66 Figure 51: Malaysian Open-Loop Prepaid Cards Category Market Size (Thousands), 2008–2017 ............................................................. 67 Figure 52: Malaysian Closed-Loop Prepaid Cards Category Market Size (Thousands), 2008–2017........................................................... 68 Figure 53: Malaysian Prepaid Cards Category Market Size (MYR Million), 2008–2017............................................................................... 69 Figure 54: Malaysian Charge Card Category Market Size (Thousands), 2008–2017 .................................................................................. 70 Figure 55: Malaysian Charge Card Category Market Size (MYR Million), 2008–2017 ................................................................................. 71 Figure 56: Malaysian Charge Card Category Market Size by Transaction Volume (Million), 2008–2017..................................................... 72 Figure 57: Malaysian Credit Card Category Market Size by Volume (Thousands), 2008–2017................................................................... 73 Figure 58: Malaysian Credit Card Category Market Size by Transaction Value (MYR Million), 2008–2017................................................. 74 Figure 59: Malaysian Credit Card Category Market Size by Transaction Volume (Million), 2008–2017....................................................... 75 Figure 60: Malaysian Credit Card Category Market Size by Frequency of Use, 2008–2017........................................................................ 76 Figure 61: Cards Offered by Maybank ......................................................................................................................................................... 77 Figure 62: Cards Offered by CIMB Group With Special Features ................................................................................................................ 79 Figure 63: Cards Offered by RHB Bank With Special Features ................................................................................................................... 81

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Figure 64: Cards Offered by Public Bank With Special Features ................................................................................................................. 83

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LIST OF TABLES

Table 1: Malaysia Payment Channels (MYR Million), 2008–2012................................................................................................................ 37 Table 2: Malaysian Card Industry by Type of Card, (Thousand), 2008–2017 .............................................................................................. 57 Table 3: Malaysian Cards Industry Size by Volume (Thousands), 2008–2017 ............................................................................................ 59 Table 4: Malaysian Cards Industry Size by Transaction Value (MYR Million), 2008–2017 .......................................................................... 60 Table 5: Malaysian Cards Industry Size by Transaction Value (US$ Million), 2008–2017 ........................................................................... 60 Table 6: Malaysian Cards Industry Size by Transaction Volume (Million), 2008–2017 ................................................................................ 61 Table 7: Malaysian Debit Card Category Market Size (Thousands), 2008–2017 ......................................................................................... 62 Table 8: Malaysian Debit Card Category Market Size (MYR Million), 2008–2017........................................................................................ 63 Table 9: Malaysian Debit Card Category Market Size (US$ Million), 2008–2017 ........................................................................................ 63 Table 10: Malaysian Debit Card Category Market Size by Transaction Volume (Million), 2008–2017 ......................................................... 64 Table 11: Malaysian Prepaid Card Category Market Size (Thousands), 2008–2017 ................................................................................... 66 Table 12:Malaysian Open-Loop Prepaid Cards Category Market Size (Thousands), 2008–2017 ............................................................... 67 Table 13: Malaysian Closed-Loop Prepaid Cards Category Market Size (Thousands), 2008–2017 ............................................................ 68 Table 14: Malaysian Prepaid Cards Category Market Size (MYR Million), 2008–2017................................................................................ 69 Table 15: Malaysian Prepaid Cards Category Market Size (US$ Million), 2008–2017................................................................................. 69 Table 16: Malaysian Charge Card Category Market Size (Thousands), 2008–2017.................................................................................... 70 Table 17: Malaysian Charge Card Category Market Size (MYR Million), 2008–2017 .................................................................................. 71 Table 18: Malaysian Charge Card Category Market Size (US$ Million), 2008–2017 ................................................................................... 71 Table 19: Malaysian Charge Card Category Market Size by Transaction Volume (Million), 2008–2017...................................................... 72 Table 20: Malaysian Credit Card Category Market Size by Volume (Thousands), 2008–2017 .................................................................... 73 Table 21: Malaysian Credit Card Category Market Size by Transaction Value (MYR Million), 2008–2017 .................................................. 74 Table 22: Malaysian Credit Card Category Market Size by Transaction Value (US$ Million), 2008–2017 ................................................... 74 Table 23: Malaysian Credit Card Category Market Size by Transaction Volume (Million), 2008–2017 ........................................................ 75 Table 24: Malaysian Credit Card Category Market Size by Frequency of Use, 2008–2017 ......................................................................... 76 Table 25: Maybank Key Financial Indicators, 2010–2011 ............................................................................................................................ 78 Table 26: CIMB Bank Key Financial Indicators, 2010–2011 ........................................................................................................................ 80 Table 27: RHB Bank Key Financial Indicators, 2010–2011.......................................................................................................................... 82 Table 28: RHB Bank Key Financial Indicators, 2010–2011.......................................................................................................................... 84 Table 29: Cards and Payments Key Definitions ........................................................................................................................................... 87

EXECUTIVE SUMMARY



1 Executive Summary

While cash remains the dominant method of payment in Malaysia, there have been concerted efforts from

issuers, the government and regulatory bodies to support card usage.

The nation’s credit card category has expanded rapidly. A large part of this growth has been driven by

government initiatives, such as a reduction of income requirements for prospective cardholders and minimum

monthly repayments.

All of this has made payment cards far more accessible, resulting in significant growth for the industry. In

2012, the transaction value of debit and credit cards recorded respective growth rates of XX.X% and X.X%

over figures from 2011. The industry value registered a CAGR of XX.XX% during the review period (2008–

2012) growing from MYRXXX.X billion (US$XX.X billion) in 2008 to MYRXXX.X billion (US$XXX.X billion) in

2012.

Strong economic forecasts and consumer confidence will benefit the industry

Over the forecast period (2013–2017), the industry is projected to grow from MYRXXX.X billion (US$XXX.X

billion) in 2013 to MYRXXX.X billion (US$XXX.X billion) in 2017, increasing at a CAGR of X.XX%. The key

drivers for this growth include a rise in disposable income levels, a positive consumer confidence index, a low

inflationary forecast, positive employment opportunities and an increasing volume of corporate and leisure

travelers. Malaysia is also expected to register high growth in terms of online and traditional retail revenues.

E-money / prepaid cards dominate the industry

In volume terms, prepaid cards dominated the industry with more than XX million prepaid cards in circulation

in 2012 compare to only X.X million credit cards and XX.X million debit cards. The Touch ‘n Go transit fare

payment scheme has been in existence since 1997 and acted as a template for the development of

contactless transaction plat forms.

In 2011, Bank Negara reported that the Touch ‘n Go electronic payment system is the most popular cashless

payment mode, handling over XX% of cashless payment t ransactions in the country. Touch ‘n Go processes

over X million transactions on a daily basis and transactions are around three times faster than cash

payments when passing through transit or toll payment points. As of 2012, there were around XX million

Touch ‘n Go cardholders in Malaysia.

In April 2008, Touch ‘n Go incorporated a retail payment functionality into the Touch ‘n Go card, initially for

use at a range of fast-food merchants, cinemas and convenience stores. Since then, retail transactions using

Touch ‘n Go have increased, with XX% taking place in food and beverage outlets.

Growth of contactless and NFC technology

Contactless and mobile payments are being rolled out extensively across Malaysia. In April 2009, the world’s

first commercial near-field-communication (NFC) payment service for mobile phones was launched by Visa in

conjunction with handset maker Nokia and payments facilitator Maybank. The Maxis FastTap service allows

customers use Nokia NFC phones to make contactless transactions at over X,XXX Visa payWave merchant

locations.

Stuart Tomlinson, country manager for Visa Malaysia, said: “Malaysia was the first place in the world where

Visa trialed its Visa payWave technology, so it is only fitting that it is now the first country in the world to offer

Visa payWave on an NFC-enabled mobile phone on a commercial basis.”

EXECUTIVE SUMMARY



Central bank regulations will reduce credit card volumes

In March 2011, Bank Negara Malaysia (BNM) int roduced new regulation pertaining to the eligibility

requirements of credit cards. These rules limited the issuing of credit cards to those who have an annual

income of MYRXX,XXX (US$X,XXX) or more. Before the introduction of this new regulation, the required

minimum annual income for credit card approval was MYRXX,XXX (US$X,XXX). In addition, the new

regulation limits the number of credit cards each individual can have to two cards for those earning

MYRXX,XXX (US$XX,XXX) or less. These measures are undertaken to prevent mounting credit card debt in

the country. The central bank has also restricted credit limits. According to the new regulation, the maximum

credit limit a cardholder can utilize cannot not be more than two-times his or her monthly income.

Adoption of effective security measures resulted in a low level of card fraud

During the review period, the central bank mandated the use of chip -based automated teller machine (ATM)

cards and EMV standards for credit cards. Moreover, the int roduction of transaction alerts via short message

services (SMS) and the adoption of stronger authentication methods for online t ransactions has resulted in a

decline in the value of card fraud during the review period. In 2012, the value of card fraud was MYRXX.X

million (US$X.X million), registering a declining CAGR of -XX.XX% during the review period.

MARKET ATTRACTIVENESS AND FUTURE

PROSPECTS OF CARDS AND PAYMENT INDUSTRY



2 Market Attractiveness and Future Prospects of Cards and Payment

Industry

The Malaysian cards and payments industry is expected to register a CAGR of X.XX% over the forecast

period to reach MYRXXX.X billion (US$XXX.X billion) by the end of 2017. Given this growth rate, the industry

offers significant growth opportunities for banks and non-banking card issuers. Over the forecast period,

prepaid cards are expected to grow at a CAGR of XX.XX% as a result of the growth in the open-loop prepaid

card segment which is projected to grow at a CAGR of XX.XX%, to reach MYRX.X billion (US$XXX.X million)

in 2017. Closed-loop cards are expected to grow at a CAGR of XX.XX%.

Figure 1: Current and Future Prospects of Various Cards in Malaysia

Source: Timetric analysis © Timetric

EMERGING CONSUMER ATTITUDES AND TRENDS



3 Analysis of Cards and Payment Industry Drivers

3.1 Business Drivers

3.1.1 Retail industry

The retail industry is one of the major areas where payment cards are frequently used by consumers. Growth

in the retail sector directly affects transaction values. During the review period, the Malaysian retail industry

increased from MYRXXX.X billion (US$XX billion) in 2008 to MYRXXX.X billion (US$XX.X billion) in 2012 at a

CAGR of X.XX%. The key factors of such growth are low levels of unemployment, rising disposable incomes,

greater purchasing power, a strong travel sector and promotional offers.

Figure 8: Malaysian Retail Industry (MYR Billion), 2008–2012





3.1.2 Growing mobile commerce

The growth in m-commerce has been enhanced by the increased usage of smartphones, especially in

developing countries such as the Malaysia. The increasing capabilities of smartphone devices, an exponential

rise in mobile device applications and declining prices have been instrumental in driving m-commerce.

Figure 9: Malaysian Smart Phone Penetration (%), 2010–2012


Figure 10: Malaysia Mobile Commerce Sales Dynamics (MYR Billion), 2008–2017


While a growing smartphone adoption offers an opportunity for mobile wallet services, fully-fledged support for

this payment plat form will only be possible through a greater acceptance from merchant acquirers. The growth

of m-commerce is expected to drive the growth of the Malaysia cards and payments industry over the forecast

period.




3.1.3 Online shopping dynamics

The growing market for online trade and e-commerce in Malaysia is one of the primary factors responsible for

the expansion of the country’s payment cards industry. Notably, although cash on delivery is emerging as a

preferred mode of payment for online shopping, c redit and debit cards still dominate the industry due to

promotional offers such as discounts, coupons and co -branded cards.

The benefits offered by online retail, such as its low costs and convenience, are expected to further increase

credit and debit card ownership, as these factors encourage consumers to experiment with cashless

purchases.

Figure 11: Malaysia Value of Online Shopping (MYR Billion), 2008–2012





3.2 Card Fraud Statistics

3.2.1 By channel

The Malaysian central bank has taken number of steps for the safety and efficiency of prominent retail

payment systems and instruments to maintain public confidence in using such systems and instruments.

Operators and card issuers are required to adhere by the regulations including technical security standards,

governance and risk management practices, an adequate transparency including a disclosure on fees and

charges, effective anti-money laundering and the counter financing of terrorism (AML/CFT) measures.

The value of card fraud in Malaysia declined from MYRXX.X million (US$X.X million) in 2008 to MYRXX.X

million (US$X.X million) in 2012 at a CAGR of -XX.XX%. The decrease is mainly resulted from the industry-

wide migration to chip-based automated teller machine (ATM) cards and the EMV standard for credit cards.

Figure 13: Malaysia Card Fraud Statistics (MYR Million), 2008–2012


COMPANY PROFILES, PRODUCT, AND MARKETING

STRATEGIES



4 Competitive Landscape and Industry Dynamics

Although cash may dominate in terms of payment methods, credit transfers, popularly known as the real-time

electronic transfer of funds and securities system (RENTAS), accounted for XX.X% of non-cash retail

transactions in 2012, according to data from the central bank.

The value of card based t ransactions increased from MYRXXX.X billion in 2008 to MYRXXX.X billion in 2012,

accounting for X.X% of the total market share non-cash payments.

The dominant card scheme in Malaysia is that of Bankcard, an ATM card issued by domestic banking

institutions which also serves as a debit card. In 2008, further efforts to widen the appeal of Bankcard included

incorporating it as a payment option at credit card POS terminals. Focus is now being drawn on the promotion

of Bankcard at government locations and petrol stations.

4.1 Market Share Analysis by Payment Channels

This section explores the market shares of various payment channels and details how these channels have

grown during the review period. The popular payment channels were checks, cash transaction, credit cards

and credit transfers.

4.1.1 Overview of payment channels

The payment channel structure changed significantly during last decade as new transaction methods have

gained in popularity. The most popular payment channel is RENTAS. The share of card payment s increased

from X.X% in 2008 to X.X% in 2012.

Table 1: Malaysia Payment Channels (MYR Million), 2008–2012

Payment Channels MYR Million, 2008 Market Share (%), 2008 MYR Million, 2012 Market Share (%), 2012

Credit transfer XX,XXX,XXX.X XX.X% XX,XXX,XXX.X XX.X%

Check payments X,XXX,XXX.X X.X% X,XXX,XXX.X X.X%

Cards payments XXX,XXX.X X.X% XXX,XXX.X X.X%

Direct debit XXX.X X.XXXX% X,XXX.X X.XXXX%

Total XX,XXX,XXX.X XXX.X% XX,XXX,XXX.X XXX.X%



STRATEGIES



5 Market Size and Growth Potential of Payment Card Industry

While cash remains the dominant method of payment in Malaysia, there have been concerted efforts from

issuers, the government and regulatory bodies to support card usage.

The credit card category has expanded rapidly, and a large part of this growth has been driven by government

initiatives such as the reduction of the income requirement for prospective cardholders and reducing the

minimum monthly repayment levels.

This has made payment cards far more accessible. In July 2011, consumer discounts were offered at selected

merchants and saw MasterCard report a XX% increase on credit and debit card expenditure, reaching US$XX

million.

While a large amount of this spending undoubtedly came from tourists from either Singapore or Hong Kong, it

is a significant illustration of how the use o f plastic has become increasingly mainstream in a country that is

still predominantly rural.

5.1 Market Share Analysis by Type of Card

Debit cards continue record strong growth rates, registering a review period CAGR of XX.XX% in volume

terms and a CAGR of XX.XX% in terms value in 2012.

In 2012, the volume of ATM withdrawals using debt card increased from XXX.X million in 2008 to XXX.X

million.

Charge cards accounted for only X.XX% of the total payment cards industry in 2012. For credit cards, over

XXX.X million transactions valued at MYRXX.X billion (US$XX.X billion) were carried out in 2012, an increase

of XX.X% and XX.X% respectively over figures from 2008.

Contactless cards are also gaining in popularity – eight issuers offer contactless cards in Malaysia, which can

be used at more than X,XXX merchants.

Table 2: Malaysian Card Industry by Type of Card, (Thousand), 2008–2017

Types of Card: 2008 2012 2013 2017 CAGR 2008–2012 CAGR 2013–2017

Debit card XX,XXX.X XX,XXX.X XX,XXX.X XX,XXX.X XX.XX% X.XX%

Credit card XX,XXX.X X,XXX.X X,XXX.X X,XXX.X -X.XX% -X.XX%

Prepaid card XX,XXX.X XX,XXX.X XXX,XXX.X

XXX,XXX.X XX.XX% X.XX%

Charge card XXX.X XXX.X XXX.X XXX.X -XX.XX% -X.XX%

Total XX,XXX.X XXX,XXX.X XXX,XXX.X XXX,XXX.X X.XX% X.XX%



STRATEGIES



5.2 Total and Forecast of Card Industry Size

Card categories in Malaysia grew marginally both in value and volume terms during the review period. The

cumulative average growth rate of the market size in volume terms is expected to grow by over X.XX% over

the forecast period. The cumulative average growth rate in value terms is also expected to grow by nearly

X.XX%.

5.2.1 Analysis by number of cards

The industry grew at a CAGR of X.XX% in volume terms during the review period and is forecast to post a

projected CAGR of X.XX% over the forecast period. The growth in the volume of closed-loop and open-loop

prepaid cards is expected to drive industry growth.

Table 3: Malaysian Cards Industry Size by Volume (Thousands), 2008–2017

2008 2009 2010 2011 2012 CAGR 2008–2012

Total Cards – Historical XX,XXX.X XXX,XXX.X XXX,XXX.X XXX,XXX.X XXX,XXX.X X.XX%

2013 2014 2015 2016 2017 CAGR 2013–2017

Total Cards – Forecast XXX,XXX.X XXX,XXX.X XXX,XXX.X XXX,XXX.X XXX,XXX.X X.XX%


Figure 43: Malaysia Cards Industry Size by Volume (Thousands), 2008–2017



STRATEGIES



5.2.2 Analysis by transaction value

The category size by transaction value, grew at a CAGR of XX.XX% during the review period from

MYRXXX.X billion (US$XX.X billion) in 2008 to MYRXXX billion (US$XXX.X billion) in 2012. The overall

category size by value is expected to grow at a CAGR of X.XX%, from MYRXXX.X billion (US$XXX.X billion)

in 2013 to MYRXXX.X billion (US$XXX.X billion) in 2017. Such growth will be driven by an increasing demand

for prepaid instruments.

Table 4: Malaysian Cards Industry Size by Transaction Value (MYR Million), 2008–2017

2008 2009 2010 2011 2012 CAGR 2008–2012

Total Cards – Historical XXX,XXX.X XXX,XXX.X XXX,XXX.X

XXX,XXX.X XXX,XXX.X XX.XX%

2013 2014 2015 2016 2017 CAGR 2013–2017

Total Cards – Forecast XXX,XXX.X XXX,XXX.X XXX,XXX.X XXX,XXX.X XXX,XXX.X X.XX%


Table 5: Malaysian Cards Industry Size by Transaction Value (US$ Million), 2008–2017

2008 2009 2010 2011 2012 CAGR 2008–2012

Total Cards – Historical XX,XXX.X XX,XXX.X XXX,XXX.X XXX,XXX.X XXX,XXX.X XX.XX%

2013 2014 2015 2016 2017 CAGR 2013–2017

Total Cards – Forecast XXX,XXX.X XXX,XXX.X XXX,XXX.X

XXX,XXX.X XXX,XXX.X X.XX%


Figure 44: Malaysian Cards Industry Size by Transaction Value (MYR Million), 2008–2017



STRATEGIES



5.2.3 Analysis by transaction volume

In terms of transaction volume, the Malaysian cards and payments industry grew at a CAGR of X.XX% during

the review period, from XXX.X million transactions in 2008 to X.X billion t ransactions in 2012. Debit cards and

prepaid cards transaction remained the key driver of such growth. Over the forecast period, the transaction

volume of total cards is expected to grow at a CAGR of X.XX% to reach X.X billion by the end of 2017.

Table 6: Malaysian Cards Industry Size by Transaction Volume (Million), 2008–2017

2008 2009 2010 2011 2012 CAGR 2008–2012

Total Cards – Review XXX.X XXX.X XXX.X XXX.X X,XXX.X X.XX%

2013 2014 2015 2016 2017 CAGR 2013–2017

Total Cards – Forecast X,XXX.X X,XXX.X X,XXX.X X,XXX.X X,XXX.X X.XX%


Figure 45: Malaysian Cards Industry Size by Transaction Volume (Million), 2008–2017


APPENDIX



6 Appendix

6.1 Methodology

All Timetric cards and payments reports are created by following a comprehensive, four -stage methodology.

This includes market study, research, analysis and quality control.

1) Market Study

A. Standardization

Definitions are specified using recognized industry classifications. The same definition is

used for every country.

Annual average currency exchange rates are used for the latest completed year. These

are then applied across both the historical and forecast data to remove exchange rate

fluctuations.

B. Internal audit

Review of in-house databases to gather existing data:

Historic market databases and reports

Company database

C. Trend monitoring

Review of the latest cards and payments companies, and industry trends

2) Research

A. Sources

Collection of the latest market-specific data from a wide variety of industry sources:

Government statistics

Industry associations

Company filings

International organizations

Cards and payments regulatory agencies

B. Expert opinion

Collation of opinion taken from leading cards and payments industry experts

Analysis of third-party opinion and forecasts:

Broker reports

Media

Official government sources

C. Data consolidation and verification

Consolidation of data and opinion to create historical datasets

Creation of models to benchmark data across sectors and regions

APPENDIX



3) Analysis

A. Market forecasts

Feeding forecast data into market models:

Macroeconomic indicators

Industry-specific drivers

Analysis of cards and payments industry database to identify trends:

Latest cards and payments trends

Key drivers of cards and payments industry

B. Report writing

Analysis of market data

Discussion of company, and industry trends and issues

Review of financial deals, and cards and payments trends

4) Quality Control

A. Templates

Detailed process manuals

Standardized report templates and accompanying style guides

Complex forecasting tool used to ensure forecast methodologies are consistently applied

Quality-control checklists

B. Quality control process

Peer review

Senior-level QC

Random spot checks on data integrity

Benchmark checks across databases

Market data cross-checked for consistency with accumulated data from:

Company filings

Government sources

APPENDIX



6.2 Definitions

Table 29: Cards and Payments Key Definitions

Category Description

Gift cards Cards suitable for purposes such as key religious festivals or on occasions such as marriages and

birthdays. The gift card can also be used by businesses as gifts to employees, vendors or clients.

Meal cards

Cards specif ically designed to replace paper voucher systems, offering employees a meal

allow ance and eliminating logistical problems associated with procurement, stock-keeping and

distribution of paper-based meal vouchers.

Payroll cards

Cards used to pay salaries to employees, eliminating the need to credit funds into a specif ic bank

account. The payroll card is loaded w ith the salary or reimbursement due, w hich can then be spent

by the recipient using the card.

Travel currency cards Cards targeting international travelers, generally available in multiple currencies.

Remittance cards Cards targeting users who receive remittances from abroad.

Multi-purpose prepaid cash card Cards that can be used to purchase various goods and services from aff iliated merchants.

Average transaction value The average value of transactions made through each card in a year.

Frequency of use The average number of transactions made per card in a year.

Turnover per card The value of transactions generated by a card in a year.

Online spending through mobile Transactions made though mobile payment options.

Card penetration (per '000) The average number of various card available per thousand people.

Contactless cards The total number of NFC-enabled cards in circulation.


6.3 Contact Us

If you have any queries about this report, or would like any further information, please contact

[email protected].

6.4 About Timetric

Timetric is an innovative, fast-growing economic and business research firm that provides critical intelligence

on emerging economies and key global industries. We provide detailed independent economic and sector

research, business insights and authoritative, independent commentary, all delivered using sophisticated

content delivery and data visualization technologies.

We collect data through an extensive primary and secondary research network using robust methodologies,

and highly innovative data acquisition and storage technologies. Our highly qualified teams of economists and

analysts draw on their collective industry experience to deliver analysis, comment, opinion and advic e on the

latest country and market trends and conditions. We provide extensive data services and commentary to

influential business media operations around the globe.

The Timetric product team is based in London, San Francisco, Hyderabad, Sydney and Singap ore, and

consists of over 300 economists, analysts, journalists and researchers and a team of 40 software engineers.

APPENDIX



6.4.1 Our approach

All of Timetric’s products and services are founded on three key principles:

High-quality data

All our services are grounded in high-quality data. We collect data in a number of innovative ways, including

extensive business and consumer surveys conducted via our sophisticated market research technology,

exclusive industry research programs and models, the systematic collection and curation of huge public data

sets such as national statistics sites, regulatory filings and procurement databases, mining of business and

government ‘exhaust data’, plus analysis of business and social media sentiment.

Combined, the Timetric data assets consist of well over 1 billion time series and tens of billions of data points,

creating a powerful resource for our data models, forecasts and analysis.

Expert analysis

Our intelligence services are provided by in-house teams of economists, analysts and researchers, working

for programs that are guided by global advisory boards of leading economists and industry advisors. Our

analysts collectively have decades of research experience and pedigrees from leading institutions.

Timetric analysis draws on high-quality data sources, including proprietary panel and survey data, and is

grounded in proprietary data analysis methodologies, analysis frameworks and forecasts.

Powerful delivery and visualization tools

We understand that our users want to spend more time analyzing information than finding it, so we have

created a highly intuitive and extremely responsive user interface that organizes data in subject -specific

modules, coupled with powerful search and index technologies to enable data to be easily found, classified

and cross-referenced. The Timetric interface is designed by specialized UI experts, and built on a platform

constructed specifically to enable fast, powerful access, visualizations and analytics of big data and content

sets.

6.5 Services

Timetric offers a range of economic, industry and consulting services.

Economic intelligence services

Timetric uses its extensive data assets, through the use of innovative technology, in order to produce thought -

provoking analytical content delivered in the form of economic briefing services. We also enable users to

access the data components that power this analysis, so that they can understand further, dig deeper or

create their own assessments.

Industry intelligence

Our industry Intelligence Centers are premium web-based services that provide access to interactive tools,

comprehensive research and expert analysis in key industry sectors. They provide invaluable decision support

presented in an easily digestible format and grounded in deep research.

Consulting

Timetric specializes in the development and delivery of innovative research solutions that are designed to

provide competitive advantage and profitability to our clients. Our cutting -edge research processes, ground-

breaking technology, and expert researchers and analysts can be employed to produce timely, cost -effective,

insightful and actionable recommendations to support growth strategies.

APPENDIX



6.6 Disclaimer

All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any

means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the

publisher, Timetric.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please

note that the findings, conclusions and recommendations that Timetric delivers will be based on information

gathered in good faith from both primary and secondary sources, the accuracy of which Timetric is not always

in a position to guarantee. Timetric will accept no liability whatsoever for actions taken based on any

information that may subsequently prove to be incorrect.

emerging opportunities in malaysia’s cards and debit card category size and forecast ... 8.2.2...

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