In one scene in an advertisement of an\ne-hailing company last Hari Raya, a little boy promptly reminded his big\nbrother that he had yet to give him \u201cduit raya\u201d. The latter then took out his\nsmartphone and effortlessly transfered the money from his e-wallet to the\nformer\u2019s. This is an example of cashless fund transfer using e-wallet or mobile\nwallet payment solution. <\/p>\n\n\n\n
E-wallet is a virtual wallet in which we do not\nneed physical money to make payments or fund transfers. Generally, we can use an\ne-wallet to make cashless payments for many things\u2014from paying bills, transportations,\ngroceries, food and beverages (F&B) and even giving donations to charities.\nTo start using the e-wallet, one has to download the e-wallet issuer app which is\navailable on the apps store and activate the app by submitting one\u2019s personal\ndetails. Once the wallet is set up, one tops up some money into it through\nonline transfer from one\u2019s bank account, and one will able to use the features\nof the app. <\/p>\n\n\n\n
There are two types of e-wallets namely bank and\nnon-bank e-wallet. As its name implies, the bank e-wallet is a virtual wallet\nprovided by commercial banks which is linked to the customer\u2019s debit or credit\naccount maintained with the bank. Once the account is linked or customers load\ncash into the e-wallet, they will be able to make transactions with a broad\nrange of merchants. To ensure all transactions are secured and only authorised\nusers have access to their e-wallets, the app requires users to enter passcode\nor fingerprint to login and no sensitive information will be stored on the\ndevice. As a matter of fact, in the case if the device is stolen or lost, the\nbank can remotely disable the account from unauthorised use by the perpetrator.\n<\/p>\n\n\n\n
The non-bank e-wallet, on the other hand, is\nthe one provided by a non-bank issuer. As of June 2018, 44 non-bank e-wallets\nare active in this country\u2014a 33.44 per cent increase from the 2016 figure. For\nthe record, 25 non-bank e-wallets operated in Malaysia in 2016. Among the popular non-bank e-wallets in the\ncountry are Grab Pay, Touch n Go E-wallet, Boost, Lazada E-wallet, vcash etc.<\/p>\n\n\n\n
According to a newspaper report, cashless\npayments make up about 20 per cent of total payments in Malaysia with only half\nof that involving e-wallet. In 2018, PwC conducted a survey to gain insight on\ncustomer behaviour and adoption of the e-wallet in the country. The survey\nreveals that only 22 per cent of the respondents are e-wallet users who mostly\nuse it for F&B, retail and e-commerce purposes. Low merchant adoption,\nsecurity risk and poor user interfaces were cited as key concerns among the\nrespondents. For this, most industry observers concede that mobile payments and\ne-wallet are still at an early stage of development in Malaysia. <\/p>\n\n\n\n
Nevertheless, they are also positive that the\ntrend would change. Even Bank Negara Malaysia (BNM) shares the same\nexpectation. This is owing to the fact that the e-wallet has gradually become a\nlifestyle necessity especially among the young and tech-savvy population.\nBesides, the internet and mobile phone penetration in the country is also high.\nAccording to BNM, as at the end of 2017, 42.4 million mobile phone were subscribed\nout of which 75.9 per cent were that of smartphones for a population of 32.1\nmillion in Malaysia. <\/p>\n\n\n\n
In order to promote greater adoption of mobile\npayment among citizens, BNM as the main financial regulatory authority has come\nup with the Guidelines on Electronic Money (E-Money) and Interoperable Credit\nTransfer Framework (ICTF). Both serve as an enabling environment which\nfacilitates the development of cashless payment in the country. <\/p>\n\n\n\n
Briefly, the guidelines outline the broad\nprinciples and minimum standards that must be abided by e-money issuers in\nrelation to the operation of their e-money schemes. It contains operational\nrequirements relating to the aspect of governance and integrity, risk\nmanagement, compliance with other requirements; as well as rights and\nresponsibilities of all e-money stakeholders. \n<\/p>\n\n\n\n
At present, there is no interoperability among the\nvarious mobile payment solutions offered by bank and non-bank e-money issuers\nin Malaysia. As such, the ICTF was introduced by BNM and came into effect on 1\nJuly 2018. It seeks to foster an efficient, competitive and innovative payment\nlandscape by enabling the interoperability of credit transfer services among\ne-money issuers through fair and open access to shared payment infrastructure.<\/p>\n\n\n\n
For bank e-wallet, we already know how its\nissuer i.e. bank makes money. As the e-wallet is linked with user\u2019s respective\ndebit or credit account with the bank, for those who tied their e-wallet with\nIslamic account, the issue of compliance or non-compliance to Sharia is therefore\nnot a problem. However, if the issuer is a non-bank establishment, then there\nmight be some Sharia concerns that need to be addressed.<\/p>\n\n\n\n
Unlike bank institutions which survive on\nrotating clients\u2019 money and in the case of Islamic banks, such a process is\nbased on Sharia principles such as mudharabah<\/em>, musharakah<\/em>, murabahah<\/em>,\ntawarruq<\/em>, ijarah<\/em> etc; the non-bank e-wallet issuers make money\nfrom several means. They earn commissions from businesses for transactions\nusing the e-wallet. Besides, they also generate income from advertising or\nmarketing fees for promoting merchants and businesses. Since e-wallet users\nkeep some upfront value (e-money) in their e-wallet, the issuers also gain\ndeposit interest from this fund deposited by users. <\/p>\n\n\n\n This raises some important questions especially\namong Muslim users who are concerned with halal and haram as they have no\nknowledge where the issuers place the deposit and as to whether the money is used\nfor Sharia or non-Sharia compliant purposes. \n<\/p>\n\n\n\n E-wallet is mainly used for payments and\ne-commerce. Thus, this will involve various transactions and contracts between\nparties and give rise to another Sharia concern. Besides ensuring that all\ntransactions must be entirely free from elements of riba<\/em> (interest), gharar<\/em>\n(uncertainty) and maisir<\/em> (gambling); the contracting parties must also\nknow the type of aqad<\/em> applying to the contract and whether all terms and\nconditions of the aqad <\/em>are fulfilled because this will determine the\nvalidity of such contracts from the Sharia point of view.<\/p>\n\n\n\n In the guideline on electronic money, BNM among\nothers, generally mentions that the issuer of e-money shall not use the money\ncollected to extend loans to any other persons or extend credit to the user or\npay interest or profit in the e-money balances or anything that would add to\nthe monetary value of the e-money. But the bank does not state that the issuer\n\u2013 especially the non-bank issuers \u2013 should create a separate account to\nconsolidate deposit received from Muslim users. <\/p>\n\n\n\n Similarly, issues underpinning aqad<\/em> apply\nto the transaction. Based on the writer\u2019s limited knowledge, there is no\nguideline or regulation that governs \u201cIslamic e-wallet\u201d and its related\ntransactions. As the e-wallet adoption is still at its infancy in the country, it\nwould therefore be better for relevant authorities to look into these concerns\nand address them from the beginning. This can help provide assurance to Muslim\nusers to receptively adopt the payment technology with confidence<\/p>\n","protected":false},"excerpt":{"rendered":" In one scene in an advertisement of an e-hailing company last Hari Raya, a little boy promptly reminded his big brother that he had yet to give him \u201cduit raya\u201d. The latter then took out his smartphone and effortlessly transfered the money from his e-wallet to the former\u2019s. This is an example of cashless fund…<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_analytify_skip_tracking":false,"_wpzoom_pinterest_image_url":"","_wpzoom_pinterest_hidden_image":"0","_wpzoom_pinterest_description":"","footnotes":""},"categories":[225],"tags":[],"class_list":["post-26223","post","type-post","status-publish","format-standard","hentry","category-article","category-225","description-off"],"_links":{"self":[{"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/posts\/26223","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/comments?post=26223"}],"version-history":[{"count":0,"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/posts\/26223\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/media?parent=26223"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/categories?post=26223"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ikim.gov.my\/en\/wp-json\/wp\/v2\/tags?post=26223"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}