What Are E-Wallets? Are They Better Than Banks?

What is an E-Wallet?

Think of the E-Wallet as a digital prepaid account with better benefits compared to your bank and credit card. E-Wallets still can’t replace your traditional bank.

E-Wallets companies offer strong promotions and discounts on your favorite purchases to persuade you to use their specific services over your regular credit card.

Pros of E-WalletCons of E-Wallet
Make Payment for a specific service easier or cheaperNot all merchants accept all E-Wallet brands
Get exclusive discounts and reward pointsYou need to deposit money into each E-Wallet accounts

As of 2019, there are over 30 different E-wallet companies that are simply too many in my opinion. In this article, we will only be discussing 5 E-Wallet brands and their benefits to you:

E-Wallet BrandSpecific UseBenefit
Grab PayRide Hailing & Food DeliveryReward Points & Exclusive discounts
Merchantrade & BigpayTraveling & Foreign ExchangeBetter Foreign Exchange Rates than Banks
Touch N GoToll paymentsConvenient, occasional discount
SetelPetrol RefuelingSafer, easier to redeem points

Types of E-Wallets

There are two main types of E-Wallets:

  1. Cloud-based E-Wallet. Make payments using an app on your mobile phone, e.g., GrabPay, Boost, Touch N Go, etc.
  2. Physical card-based E-Wallet. Make payment using a physical (Visa or MasterCard) card tied to your E-Wallet account, e.g., BigPay & MerchanTrade.

Ultimately, an E-Wallet that can be accepted by all merchants is the clear winner.

What Problems are E-Wallets Solving?

You already have a bank account and credit cards. What can E-Wallets do that your bank and credit card can’t?

Benefit 1: As mentioned before, you’ll get exclusive discounts and promotions.

Example: Load money into your BigPay card and use it to pay for your AirAsia flights and get your processing fee waived.

Benefit 2: Penetration in the micro-entrepreneur market: Banks typically don’t entertain small vendors to accept online payments using Visa or MasterCards. But E-Wallets such as GrabPay do, enabling small vendors to reach a broader range of customers and increasing their sales:

A Kyros Kebab in a MyTown mall only accepting cash and GrabPay

Benefit 3Cheaper Foreign Exchange Rates: BigPay and MerchanTrade offer better exchange rates than traditional banks when spending outside of Malaysia.

24 Hour in-app money changer: With MerchanTrade, you’re able to exchange currencies just by a few taps on your phone at any time.

Benefit 4Money Management Apps: Some E-Wallets such as BigPay have a fantastic app with a built-in expenditure breakdown feature that helps to categorize and keep track of your spending habits.

Why are There so Many E-Wallets?

To use the E-Wallet’s services, you have to top up real money into your accounts. All these companies want your money upfront. Plain and simple. When your money is invested in their ecosystem, you’ll most likely end up spending it on their services & their affiliates.

After personally downloading and depositing money into several of them, I can safely say there is no one perfect E-Wallet for everything as of yet. 

E-Wallets Limitations

No Consolidation: As each E-wallet company wants you to deposit your hard-earned cash into their E-Wallet ecosystem. You’ll end up having more E-Wallets than you want to handle and spreading your money thin.

Risk of Bankruptcy: Being in the financial service industry is extremely competitive. If you deposited money into an E-wallet and just your luck that that company goes bankrupt, you’re not going to get your money back.

Can’t Replace Banks: E-Wallets can’t accept payments yet (accept top-ups). i.e., it can’t receive your salary payments. E-Wallets also can’t loan out money to you. It operates 100% on your deposited money. There’s just no way E-wallets can replace your regular banks. At least not as of now.

Who is the E-Wallet for?

I see E-Wallets benefitting people in these categories:

  • Malaysians who want to get the best deals and reward points for specific purchases.
  • Foreigners or Digital Nomads in Malaysia who don’t want to get charged a hefty fee every time they use their home country’s card.
  • Malaysians who frequently travel and spend abroad.
  • Malaysians who want to take control of their personal finances by splitting their money and spending wisely.

I will review E-Wallets based on their specific benefits:

Grab Pay: Ride-Sharing and Food Delivery

Grab started life as a ride-sharing app. They quickly expanded their services to food delivery, document delivery, online services, and prepaid top-up (to name a few), but they’re most popular for two things:

  1. Ride-sharing (GrabCar).
  2. Food delivery (GrabFood).

Grab’s E-Wallet is appropriately named Grab Pay.

Ride-Hailing (GrabCar): Foreigners and Malaysians alike, we all are bound to end up using GrabCar at some point in our lives.

Grab Food Delivery: Grab Food helps restaurants generate more sales by assisting them in reaching more customers who can’t physically come to the restaurant.

Grab Pay to pay at restaurants: Some restaurants and merchants can accept GrabPay as a method of payment. 

Paying for a kebab using GrabPay QR code scan feature

Paying for these Grab services using GrabPay has several benefits over traditional credit cards:

  • Exclusive special discounts.
  • Rewards points.
Reward Points from using GrabPay

Download Grab:
Google Play Store
Apple Store
Grab website.

E-Wallets for Travelers

If you travel overseas a lot, you’ll need the physical card E-Wallets. These E-Wallets have partnerships with Visa & MasterCards, so their payments are accepted worldwide. 

  • BigPay by AirAsia
  • MerchanTrade

Here’s how they work: 

  1. Apply and get your physical Visa or MasterCard linked to your E-Wallet.
  2. Deposit MYR currency into your E-Wallet account.
  3. Whenever you make an oversea purchase with the Visa or MasterCard, the E-Wallet will deduct your MYR account using a much better exchange rate than what your bank is charging you on your credit card.

BigPay and MerchanTrade are challenging traditional banks to help their users save money by offering a much better exchange rate compared to banks.

Out of the two, the best for traveling, in my opinion, is Merchantrade. Because:

  1. MerchanTrade’s currency exchange rate is better than BigPay (every time I compare the exchange rates at least).
  2. MerchanTrade has multiple currency accounts while BigPay doesn’t.

Let’s take a look at how BigPay works:

Spending Overseas with BigPay

Let’s assume you are traveling to the USA and charge your BigPay card to purchase a USD1 cookie at a cafe:

BigPay uses the MasterCard exchange rate which they claim is better than a typical bank exchange rate. This will be the formula that they will use to charge your BigPay account that is in MYR currency.

MasterCard: 1 USD = MYR 4.18

This means that MYR 4.18 will be deducted from your BigPay account for that USD 1 cookie. Now let’s take a look at Google’s exchange rate:

Google’s exchange rate

As we compared above, the MasterCard rates are better than Google! Along with the no-fee policy, this is hugely beneficial to the consumer.

Don’t get too excited though, as MasterCard rates are not always better than Google’s all the time. A little comparison due diligence between BigPay & MerchanTrade exchange rates would be smart before you head off for your vacation.

Reward Points: 1 Big Point for every RM10 that you spend will be automatically linked to your AirAsia membership account.

BigPay ATM Cash Withdrawal Overseas

If you need cash overseas, you can use the BigPay card at any ATM worldwide and you’ll only get charged MYR 10 per withdrawal or 2% of withdrawal amount, whichever is higher.

Download BigPay
Android App Store
Apple App Store
BigPay website.
Use my referral code I3M7KXTBO3 to get RM10 free!

Spending Overseas with MerchanTrade

MerchanTrade works similarly to BigPay to a certain point. When you charge your MerchanTrade card abroad, it will deduct the money from your MYR account with their impressive exchange rates.

MerchanTrade: USD 1 = MYR 4.18

As of this date, for MerchanTrade and BigPay (MasterCard) USD to MYR exchange rates go head to head at USD 1 to MYR 4.18.

Sometimes depending on the day and also the currencies being exchanged, you’ll be able to get a better deal on MerchanTrade as compared to BigPay.

But what sets MerchanTrade apart is that they have the ability to have multiple currency wallets.

I have USD 29.99 in my USD foreign currency wallet

In other words, you have a 24-hour money changer on your phone. There’s no need to visit and queue at the physical money changer at the mall.

A thing of the past with MerchanTrade app

The smart thing to do before you set off for your travels is to purchase some foreign currency using the app. The purchased foreign currency will be stored in your E-Wallet. So in my example above, I purchased USD 29.99 at a great rate.

Purchasing USD 1 at MYR 4.17 as opposed to Google’s rate of MYR4.18

If I would ever charge my MerchanTrade card for anything in USD currency, the card is smart enough to deduct the funds in the available foreign currency first.

So if I purchase an online course that is charged at USD20, MerchanTrade will deduct USD20 from my USD account and not from my main MYR account and hit me with another currency exchange fee. Pretty smart if you ask me.

If I ran out of money in my USD multicurrency account, only then will it convert and deduct whatever I have in my MYR account.

Cash Withdrawal fee:
RM1 in MYR Malaysia
RM10 overseas

If you don’t travel often, but buy a lot of stuff online in foreign currencies (USD), the Merchantrade card will help you save money. Read about that in this article.

Download MerchanTrade
Google App Store
Apple App Store
MerchanTrade website.

Best for Personal Finance Management

Hands down, BigPay. Not only is the turquoise card beautiful, but the BigPay app is very user-friendly and visually appealing.

On the transactional history of the app, it will automatically show the logo of the company that you made a purchase on. I think this is a great attention to detail that no banks are doing:

Your spending will automatically be shown split into categories so you’d know exactly how much you’ve spent on food for example:

I see this app together with it’s more readily accepted MasterCard to be a fantastic personal money management tool.

For example, you can allocate monthly funds from your personal bank into your BigPay account, so in a month, you’d end up only using what you have allocated into the card.

Another great idea is to use this E-Wallet as a joint account for couples. Both of you can pool some money together into this account every month and use it for common expenditures such as bills or eating out.

E-Wallet for Paying for Vehicle Tolls

All vehicles in Malaysia are required to go cashless at toll booths as of 2018. The only company accepting payment is Touch N Go.

Previously, you purchase a physical Touch N Go card and top up money into it and tap the card to make toll payments.

Now, you can link your Touch N Go physical card to the Touch N Go E-Wallet app.

You’ll have money balance in two accounts; 

  1. The physical card itself,
  2. The E-Wallet Touch N Go app.

It all sounds confusing. Why do you still need both? It’s because not all highway tolls are participating in the Touch N Go E-Wallet program (called Pay Direct). In other words, if you pay for the toll on non-participating highways, they will deduct money from the physical card.

The physical Touch N Go card requires a 50 cent reloading fee, but it’s free to reload your Touch N Go E-Wallet online.

Download Touch N Go E-Wallet
Android App Store
Apple App Store
Touch N Go wallet website.

E-Wallet for Pumping Petronas Gas

Petronas has launched its own refueling app, Setel. You can use this app to make petrol purchases at the Petronas pump. 

I know what you’re thinking, now we’ll end up having apps for everything!

Not going to lie, I was skeptical about this when it first came out. It also only works for selected Petronas pump stations in Klang Valley for now.

How it works:

  1. Topup money into the Setel E-Wallet.
  2. Open the app when you have parked at a Petronas petrol pump.
  3. Notice the pump number that you will be filling up at.
  4. Click the pump number on the app followed by the amount of petrol in RM you want to purchase. The app will communicate with the Petrol station.
  5. Start filling up petrol in your car. Once done, you’ll get a receipt and Mesra reward points automatically.

Benefits of using Setel as compared to just paying using your credit card:

  1. Identity Theft: There have been several cases where thieves install credit card skimmers at the petrol pump. By using the app, you won’t expose your card to any of that.
  2. One less card to keep: You don’t have to bring your Mesra reward card everywhere. Your Mesra account is linked to your app.
  3. Easy points redemption: You can make an instant rewards point to cash redemption on the spot with the app.

Verdict: Although it is tedious to have yet another app, I think the benefits outweigh the inconvenience on this one. I will rate this as a smart financial move.

Download Setel
Android App Store
Apple App Store
Setel website.

What needs to be Improved in the E-Wallet Ecosystem in Malaysia

I see 2 main problems with the current E-Wallets in Malaysia:

  1. Consumers will end up with too many E-Wallets to take care of.
  2. Unlike E-Wallets that are linked with a physical Visa/MasterCard, it will be an uphill battle to make merchants accept individual cloud payments.
  3. Once the promos dry out, people will lose interest in E-Wallets.
  4. If there’s a way to consolidate all these E-Wallets into 1 easy to use app, that would be perfect.

Wrapping it all up

I’d like to simplify my life and minimize the stuff I need to take care of. Striking the perfect balance for maximum benefits with the least upkeep will be ideal for me and also for most people.

As for a typical person living in Klang Valley, the following E-Wallets will be ideal for our day to day life:

  • Best for food delivery and ride-sharing: GrabPay.
  • Best for personal money management: BigPay.
  • Best for international travels: Toss between BigPay & MerchanTrade. But I give a slight edge to MerchanTrade for their Multi-Currency Accounts.
  • If you pay for vehicle tolls, you have no choice but to download Touch N Go E-Wallet, unless you want to manually top up your card and pay a reload fee.
  • The only E-Wallet for pumping gas for your car is by Petronas: Setel.

Helmi Hasan

Hi, I'm Helmi Hasan, the founder, and writer for the personal finance blog, Balkoni Hijau. Read more in the 'About Me' page or follow me on Twitter.

2 thoughts on “What Are E-Wallets? Are They Better Than Banks?

  1. Is there any additional annual fee for Merchantrade card? I reloaded RM100 but the balance shows RM70

    1. Hi Wyen,

      I got my Merchantrade Card for free at an event. Maybe that’s the card setup fee? I’m not sure, can visit their website: https://www.merchantrademoney.com/fees/ or contact them directly

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