Bank Negara launches JomPAY to speed up e-payments

KUALA LUMPUR: Bank Negara Malaysia (BNM) launched the JomPAY on Thursday to complement current measures to accelerate the country’s migration to e-payments.

BNM deputy governor Datuk Muhammad Ibrahim said on Thursday the benefits in terms of cost savings and efficiency gains from a successful migration to e-payments are substantial.

“The launch of JomPAY today is part of the journey towards realisation of these objectives.

“JomPAY provides greater efficiency, convenience and accessibility for the public to make bill payments. It also represents a conscious strategy that will contribute towards making the way we conduct financial transactions more efficient,” he said.

Muhammad said at the official launch of JomPay that it addresses the limitations of the current bank-centric model by establishing an open electronic bill payments platform.

The platform, he said, leverages on the combined infrastructure and network of the entire banking industry.

“With JomPAY, merchants only need to maintain a banking relationship with one bank, in order to receive bill payments from customers of all other banks.

“Likewise, customers only need to maintain an account with one bank in order to make bill payments to the entire network of merchants registered with JomPAY,” he said.

Muhammad pointed out the JomPAY model reduces duplication and facilitates the pooling of resources from the entire banking industry.

This would enable the building of a wider and more efficient network for online bill payments.

He urged businesses to leverage on JomPAY to accept online bill payments from their customers.

He pointed out handling cash and cheques is very costly. Businesses incur an estimated RM2.7bil annually for cash handling, in addition to bearing the risk of pilferage and theft.

Businesses also incur an estimated RM113mil annually for cheque handling.

Migrating to electronic bill payments would lower the cost of transactions and provide businesses with a faster, more secure and more efficient means of collecting payments.

“Businesses should leverage on JomPAY not only for bill payments, but also for invoice payments to facilitate a more efficient management of their receivables.

“Consumers, on the other hand, should also take advantage of the increased convenience of making bill payments via this new channel,” he said.

He said JomPAY provides a one-stop centre for consumers to make bill payments electronically anytime, anywhere and without any transaction fee.

By migrating to electronic bill payments, a lot of time and effort previously incurred by travelling and queuing to make over-the-counter payments can be saved and redirected to more productive use.

Malaysia’s cash usage measured by currency-in-circulation (CIC) over GDP was about 6% in 2013, which was 100% higher than the average in advanced economies. Malaysia’s cheque usage per capita was 6.6 in 2013, which is 33 times higher than that in advanced economies.

However, recent measures had shown tangible results since the introduction of the Pricing Reform Framework in May 2013 and efforts to improve and promote the use of Interbank GIRO (IBG).

In 2014, cheque usage declined at a faster rate of 10%, compared to only 3% in 2013. At the same time, the number of IBG transactions increased by 36% in 2014 compared to 19% in 2013.

Hence, Malaysia’s cheque usage had fallen from 6.6 per capita in 2013 to 5.8 per capita in 2014.

As a follow-up to reduce the country’s reliance on cash usage, BNM issued the Payment Card Reform Framework which took effect in stages beginning Jan 2, 2015.

The thrust of the framework was to ensure cost of accepting payment cards is fair and reasonable, whilst creating an enabling environment for the wider acceptance of payment cards, especially by smaller merchants.

“Over the next six years till 2020, together with the banking industry we plan to expand the payment card acceptance network from about 240,000 terminals to 800,000 terminals and further accelerate the use of debit cards.

“These measures, if implemented successfully, will lessen the need for cash payments. While this target seems ambitious, we can achieve this milestone with collective efforts by all,” he said.

Muhammad pointed out that while efforts are made to make payment cards gain wider acceptance, bill payments in Malaysia were still predominantly made with either cash or cheques.

In Malaysia, bill payments made via electronic channels are still relatively low at 2.4 transactions per capita in 2014 compared to more than 10 transactions per capita in countries with successful electronic bill payment platforms such as Australia.

He also noted that Malaysia has an online bill payments model where merchants need to maintain multiple banking relationships in order to receive bill payments from customers who bank with different banks.

Merchants, especially SMEs, find it difficult and costly to maintain multiple banking relationships.

Hence, only about 1,000 merchants are registered to accept online bill payments via the individual banks’ proprietary bill payments system.

“Therefore, there is still tremendous potential for greater efficiency and cost savings through the consolidation and expansion of the online bill payments market in Malaysia,” he said.

Source : The Star Online / 9 April 2015