Visa’s Country Manager for Malaysia speaks with FST Media about the key challenges facing the payments industry today.
FST Media: What are your business priorities for the next 12 to 18 months?
Ng: Visa’s role is to build an ecosystem that promotes the use of digital payments. We work closely with multiple stakeholders including financial institutions, merchants, consumers, businesses and government entities to promote the acceptance and use of digital payments. In Malaysia, part of the government’s Economic Transformation Program (ETP) and Bank Negara Malaysia’s vision is to transform Malaysia into a cashless society. Visa Malaysia is supportive of this vision and we are working closely with the banks to introduce innovative products and solutions. With the evolution of technology, we understand that our customers’ needs change accordingly. As a result, we are constantly taking steps to simplify our products and services and introduce innovative solutions to benefit consumers.
We also see a great potential for eCommerce amongst Malaysian consumers. Based on the Visa eCommerce Consumer Monitor survey conducted last year, findings showed that Malaysians’ appetite for browsing and making purchases on their mobile phones and tablets is growing strong. The poll interviewed 500 internet users who access the internet at least once a week and are aged 18 to 55 in Malaysia. 30 per cent of the Malaysian consumers surveyed made purchases on their mobile devices, a huge increase of 100 per cent since 2013. Malaysians also enjoy making purchases online using their mobile tablets, in fact we are the highest users of mobile technology in Southeast Asia.
FST Media: What role will virtual currencies play in the future of payments, how will Visa adapt?
Ng: Visa views virtual currencies as being similar to digital goods that can be bought and sold like airline points, but are not recognized as legal tender in any country in which we operate today. To continue offering consumers the protection and security associated with transactions conducted over the Visa network, only traditional currency may be used within the Visa system. Maintaining trust in the Visa system is our highest priority. Virtual currencies have limited or non-existing government protection which could lead to potential illegal use and do not offer consumers the same security as Visa transactions.
Personally, I find the development of virtual currencies very interesting and it seems there are very different views on virtual currency from a regulatory jurisdiction and financial institution standpoint.
FST Media: What do you regard as the key challenges facing the payments industry today?
Ng: A key challenge for the payments industry is the prevalence of cash and the process of educating consumers and merchants about the benefits of electronic payments.
Many merchants have always conducted their businesses using cash. It is important to help merchants understand the many benefits electronic payments can bring to their businesses. Without proper education, some smaller businesses may view the cost of setting up their electronic payment acceptance infrastructure as barriers to accepting electronic payments.
However, Visa has been working very closely with merchants in Malaysia to increase the acceptance of payment cards. In addition to setting up payment terminals, we have also taken a step forward to introduce Visa payWave in Malaysia.
Visa payWave is Visa’s contactless payments technology and can be found on Visa cards bearing the Visa payWave symbol. It enables cardholders to make faster payments in a convenient and secure manner simply by waving their card against a contactless reader. Visa payWave cards have an embedded antenna and microchip, enabling contactless communication with a reader upon checkout. The transaction is processed through the same secure Visa network used for all Visa transactions.
We have been working closely with several well-known merchants including AEON, AEON Big, Petronas, Jaya Grocer, TGV Cinema, Sogo, and KLIA Express to enable Visa payWave acceptance.
FST Media: How has ‘Verified by Visa’ delivered value to the business?
Ng: Visa invests heavily in new technologies and innovations – from encryption of data to chip technologies – to make sure we are always one step ahead. Our system is consistently and constantly upgraded to provide new services, enhancements and capabilities that consumers expect. Visa also collaborates with the broader payment community on innovative data security techniques, authentication solutions and technologies and fraud prevention strategies to keep payments safe.
Global fraud rates remain at near historic lows. Visa uses several tools to help online merchants and cardholders to remain protected when the card is not present at the point of sale. ‘Verified by Visa’ is one such service that is designed to make internet transactions safer by authenticating the cardholder’s identity at the time of purchase. This additional layer of security helps prevent unauthorised online use before it happens.
FST Media: How have you monitored the success of EMV Chip technology, and what is next big innovation for payments technology?
Ng: Chip technologies add an important security layer to transactions, as well as bringing additional convenience, speed and peace of mind to cardholders and merchants. Visa’s efforts in investing in advanced security measures have kept the level of fraud globally at near-historic lows over the last two decades. EMV chip has effectively addressed counterfeit fraud in Malaysia. In the last five years since we deployed EMV chip technology, we have hardly seen any domestic counterfeit fraud.
Also, the implementation of EMV chip technology paved the way for contactless payments with our introduction of the Visa payWave. We have seen growth in the replacement of the traditional swipe or dip terminals to people simply waving their card at the terminal and paying in a very fast way. We have helped to streamline the process and have now issued over one million Visa payWave cards in Malaysia.
Emergence of new technologies will end up shaping the way consumers shop, pay, and get paid. At Visa, our goal is to constantly innovate to enable the consumer to make digital payments in a faster and more seamless manner. For example, with the growth of eCommerce, we see the need to simplify the process for a customer when they make their purchases online. Together with other payment associations, Visa introduced a new standard for digital payments to enhance the security and simplify the consumer purchasing experience when shopping on a mobile phone, tablet, PC, or other smart device. The traditional 16-digit primary card account number is now replaced with a digital account number or token for online purchases and face-to-face transactions initiated with mobile devices.
This helps to simplify the purchasing experience for consumers by eliminating the need to enter and re-enter the account number when they are shopping online. This solution also reduces the threat of sensitive data being compromised because the data is not being stored at the merchants’ end, so hackers will not be able to steal this data.
FST Media: What role does Visa’s collaboration with financial service providers and retailers play in the overall customer experience?
Ng: At Visa, we ensure that we work closely with financial service providers and retailers to build an ecosystem that promotes the use of digital payments. For example, in the case of Visa payWave, it enhances the consumer’s payment experience due to its speed and convenience to be able to complete a purchase within seconds.
In Malaysia, we are seeing solid growth in Visa payWave with year-on-year transaction growth at more than 100 per cent and payment volume growth of more than 400 per cent as of September, 2014. We also have more than one million Visa payWave cards in circulation issued by six banks including Maybank, Hong Leong Bank, Public Bank, RHB Bank, UOB and Bank Simpanan Nasional. We are looking to work with more banks to start issuing more Visa payWave cards this year.
Visa also collaborates with well-known retailers to ensure a growing acceptance footprint of Visa payWave. To date, we have thousands of Visa payWave terminals in Malaysia with retail outlets such as AEON Stores, Sogo, TGV Cinemas, Borders, Krispy Kreme, Jaya Grocer, RadioShack and we are continuing to grow this number. In December, we collaborated with another major organisation, Petronas, to launch Visa payWave at their convenience stores, offering the speed and convenience of contactless payments.
Another service that we introduced this year was the Maybank Visa Direct solution, which enables consumers to simplify remittance services and is the first of its kind in Malaysia. With the evolution of technology, we understand that our customers’ needs also change accordingly, so we must take steps to simplify our products and services. Visa Direct enhances the experience of our customers as they can now send money to over 1 billion eligible Visa cards globally by simply keying in the recipient’s 16 digit payment card number.
In 2013, we also introduced mobile point of sale devices to small businesses that have not accepted electronic payments before. It is a dongle, a small device inserted into a smartphone that enables the acceptance of Visa cards in a nontraditional merchant situation.
There is a huge opportunity to expand the use of electronic payments by these devices. In Malaysia, we introduced to the wet markets in Kota Bahru, where the merchants are now using these devices to accept electronic payments. You can imagine how much more convenient it is for them than handling cash.
FST Media: How will the development of Malaysia’s Economic Transformation Program (ETP) drive innovation and competition?
Ng: Under Malaysia’s ETP, the goal of creating an integrated payment ecosystem seeks to reduce dependence on cash transactions to 63 per cent of total transactions by 2020, while targeting an increase in e-payments to 200 per capita per year and 25 point-of-sale terminals per 1,000 inhabitants by 2020.
At Visa, we have been working closely with banks to introduce new innovative solutions and merchants to increase acceptance for cashless transactions. We believe Malaysia’s ETP will help to promote the acceptance and usage of cashless transactions.
We also see great potential in terms of Malaysian consumers using credit cards. A recent report by Bank Negara Malaysia shows that Malaysia remains a relatively high user of debit cards – approximately 42 million cards for a population of about 30 million as compared to approximately 8 million credit cards as of 2013.
The Visa Consumer Payment Attitudes Study also revealed that many Malaysians are more than willing to use contactless payments technology, with 58 per cent of the respondents saying that while they have never used contactless payments before, they are keen to use it for future purchases.
The findings also revealed that the majority of Malaysians are aware of the contactless payments technology, with 72 percent of the respondents saying that they know of such technology and how it works. The results of Visa’s survey indicate that Malaysia is on the right track to becoming a cashless society, in line with the government’s drive to migrate Malaysia to electronic payments and the creation of an integrated payment ecosystem.
FST Media: What skills will be in demand for tomorrow’s payments leaders?
Ng: At Visa, we believe a payments leader should be able to create value through a number of ways. Firstly, a leader needs to help financial institutions and merchants grow their business. Leaders need to be able to drive revenue, improve customer satisfaction and offer guaranteed payment and speedier checkout times. Secondly, a payments leader needs to create business-building opportunities through product platforms and marketing initiatives. This involves providing convenient and secure products and services that allow consumers to pay how, where and when they want. A third key focus for tomorrow’s payments leaders is making consumers’ everyday transactions more convenient, reliable and secure. We need to provide reliable, value-added services and risk management tools through our systems. Finally, a payments leader also needs to help governments operate more efficiently.
FST Media: Every leader has a legacy they wish to be remembered for, what is yours?
Ng: I would like to be remembered for changing the payments industry in a positive way and helping the community and government achieve its goal for Malaysia by becoming a cashless society.