The COVID-19 pandemic has disrupted consumer payment space in Malaysia as consumers are gradually switching from offline to online purchases. The closure of physical stores due to lockdown and social distancing measures led consumers to ramp up online shopping, which in turn accelerated the e-commerce market growth in Malaysia, according to GlobalData, a leading data and analytics company
According to GlobalData’s E-Commerce Analytics, Malaysia’s e-commerce market is estimated to register 24.7% growth in 2020. The market is expected to reach MYR51.6bn (US$12.6bn) by 2024, increasing at a compound annual growth rate (CAGR) of 14.3% between 2020 and 2024.
Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “Malaysia is among the fastest-growing e-commerce markets in Southeast Asia, driven by rising Internet and smartphone penetration, growing middle class population and tech-savvy millennials. The fear of virus spreading through cash handling and visiting physical stores amid COVID-19 outbreak has further accelerate this growth.”
The government launched a three-month campaign in June 2020 with a budget of MYR140m (US$34.2m) to drive e-commerce adoption among small merchants and help widen their reach across the country.
According to GlobalData’s 2020 Banking & Payments Survey, in Malaysia payment cards is the most preferred payment method for e-commerce purchases, accounting for 40.3% share by value in 2020. Alternative payment methods are also gaining prominence with combined market share of 25.3%. While this space is mainly driven by domestic players, international payment solutions like Google Pay, Masterpass and Visa Checkout are gaining popularity.
Mr Reddy concludes: “The Malaysian e-commerce market has been registering growth during the last few years, which has been further accelerated by the COVID-19 pandemic. This, coupled with the growing consumer preference for online shopping, availability of customized online payment options and government support, will further drive e-commerce market in Malaysia.”