What is an E-Wallet?
Think of an E-Wallet as a virtual bank account. Each E-Wallet company (e.g. GrabPay) will ask you to deposit money via online transfer (from your real bank) into your E-Wallet account.
This move is in line with government efforts to make Malaysia a cashless society. Therefore, most major online app companies are in a race to develop their own E-wallets (GraPay, Touch N Go, Boost, Merchant Trade etc).
Paying for stuff using your E-Wallet will benefit you in terms of special discounts or reward points in efforts to promote customer loyalty.
|Pros of E-Wallet||Cons of E-Wallet|
|Make Payment for a specific service easier||Not all merchants accept all E-Wallet brands|
|Get exclusive discounts and reward points||You 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.
Types of E-Wallets
There are 2 main types of E-Wallets:
- Cloud-based E-Wallet. Make payment using an app on your mobile phone, e.g GrabPay, Boost, Touch N Go, etc.
- 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’s the point of having an E-Wallet that has amazing reward points and discounts but no one accepts it but the E-Wallet company themselves?
So I am personally biased towards card-based E-Wallets such as MerchantTrade and BigPay for its vast acceptance rate as they have partnered up with MasterCard.
What Problems are E-Wallets Solving?
The biggest competitors of E-Wallets besides other E-Wallet companies are the old fashioned banks and Credit Cards. You need to be benefitting to steer you away from the convenience of your old fashioned credit cards.
Penetration to micro-entrepreneurs: Typically small vendors don’t have the capability of accepting Visa or MasterCards. However, some E-Wallets such as GrabPay has enabled small vendors to accept E-Wallet payments.
Exclusive Discounts & Rewards: To attract users to actually deposit money and use their E-Wallets, the companies have to come up with special discounts and a better reward program for its users.
Example 1: Load money into your GrabPay E-Wallet account and use that account to pay for GrabCar rides and get a seasonal discount and better reward points as opposed to paying it with your regular Credit Card and paying full price.
Example 2: Load money into your BigPay card and use it to pay for your AirAsia flights to get your processing fee waived.
Cheaper Foreign Exchange Rates: BigPay and MerchanTrade offer no commissions aside from an exchange rate which is better than traditional banks when spending overseas (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.
Money Management Apps: Some E-Wallets such as BigPay (owned by AirAsia) have an amazing app with a built-in expenditure breakdown feature that can help to categorize and keep track of your spending habits.
Why are there so many E-Wallets?
All these companies want your money upfront. Plain and simple. E-Wallets acts as prepaid virtual banks, you have to load money into your E-wallet account and therefore, you will end up spending it on their services & their affiliates.
As each company wants you to deposit your hard-earned cash into their E-Wallet brand, you’ll end up depositing money into several E-Wallets that could be tedious and require upfront cash from the user.
Also, a lot of street and micro-entrepreneur vendors don’t accept any form of online payment as their profit margins are already razor-thin.
This will hinder the mass usage of E-Wallets. Malaysians will still need to bring cash with them all the time, especially when purchasing from small businesses.
If E-Wallets want to penetrate the micro-entrepreneur market, they will have to charge very competitive rates for small businesses to entice and educate them to start accepting E-Wallet payment over regular Visa and MasterCards.
No Consolidation: There’s no way around it at this point of time, you will end up with more than 1 E-Wallet account. This article will help you to only have the ones that make the most sense to you and ditch the gimmicks.
Who is the E-Wallet for?
E-Wallets seem like a lot of hassle as of 2019. But after personally downloading and depositing money into several of these E-Wallets, I can safely say there is no 1 perfect E-Wallet as of yet. But some will be excellent at a specific task.
I see E-Wallets benefitting people in these categories:
- Malaysians who want to get the best deals and reward points for their purchases.
- Foreigners or Digital Nomads on a tourist visa staying in Malaysia for a few months who don’t want to keep charging their international cards in Malaysia and pay a hefty fee each time.
- Frequent international travelers who are based in Malaysia.
- Malaysians who want to take control of their personal finances by splitting their money and spending wisely.
Best E-Wallet for Ride Sharing and Food Delivery
The best Ride-Sharing app as of 2019 is hands down GrabCar. Grab also does food delivery under its brand, GrabFood. Grab’s E-Wallets are called GrabPay and it can be used to pay for both services.
Foreigners and Malaysians alike, you would bound to end up using GrabCar at some point in your life while living in Malaysia.
From taking a trip to and from KUL airport or an emergency day when your car breaks down and you need to get to work by taking Grab to the nearest MRT station.
Not to mention the occasion when you got home all exhausted from work and couldn’t be bothered to go out to get something to eat. That’s when you whip out Grab app and order a more variety of food. Back in the day before GrabFood, the only food you can get delivered is fast foods.
At this point, I only load money into my GrabPay to pay for my GrabCar rides and to order GrabFood delivery. What I see the benefit of paying for these services using GrabPay over my credit card are:
- Occasional special discounts for GrabCar rides.
- Rewards points for ordering GrabFood.
Some restaurants and merchants can also accept GrabPay as a method of payment. However, this would not be an ideal E-Wallet to depend your life on as the number of participating GrabPay merchants are still limited.
Best E-Wallets for Frequent Travelers Based in Malaysia
If you are based in Malaysia and travel a lot overseas, only card-based E-Wallets will be viable for your travels and accepted worldwide due to their partnership with MasterCard and Visa. There are only 2 contenders for your travel needs:
- BigPay by AirAsia
Both work on the same basic principle, you have to deposit MYR currency first into your E-Wallet account.
You can use your physical MasterCard to make payment for anything in Malaysia and the funds will be deducted automatically from your E-Wallet account.
How BigPay and MerchanTrade differs is how you are charged when using their cards overseas.
Traditional Credit Cards and banks might charge you when you swipe your card abroad along with a horrific exchange rate.
BigPay and MerchanTrade are E-Wallets that are challenging traditional banks to help their users save money by offering a much better exchange rate with zero fees.
Traveling Overseas with BigPay & MerchanTrade
The best E-Wallets for traveling overseas out of the two, in my opinion, is Merchantrade. Simply because:
- MerchanTrade’s currency exchange rate is better than BigPay (every time I compare the exchange rates at least).
- MerchanTrade has multiple currency accounts while BigPay doesn’t.
But first, let’s take a look at how BigPay works when you travel overseas:
Spending Overseas with BigPay
Let’s assume you are traveling in the USA and charge your BigPay card to purchase a USD1 cookie at a cafe:
There are no fees, but 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.
So 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:
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.
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.
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.
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.
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.
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
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 spent on food for example:
So I see this app together with it’s more readily accepted MasterCard to be a fantastic personal money management tool.
You can allocate monthly funds from your personal bank into your BigPay account so in a month, you’d only 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 payments is Touch N Go.
Previously, you purchase a physical Touch N Go card and topup money into it and tap the card to make toll payments.
But now with the introduction of RFID technology (a metal sticker that you stick on your windscreen or headlamp), your balance will be stored in the new Touch N Go E-Wallet, which is separate from the old school Touch N Go physical card.
So if you are using the RFID sticker on your car, you will have to download this app no matter what to make topup purchases to your account.
Good thing is that you won’t be charged a reload fee when you reload your E-Wallet.
E-Wallet for Pumping Petronas Gas
Petronas has launched its own app, Setel to pay for gas at the petrol pump. I know what you’re thinking, oh no, now we will end up having apps for everything!
I too was skeptical about this when it first came out. it also only works for selected Petronas pump stations in Klang Valley only for now.
How it works:
- Topup money into the Setel E-Wallet.
- Open the app when you have parked at a Petronas petrol pump.
- Notice the pump number that you will be filling up at.
- Click the pump number on the app followed by the amount of petrol you want to purchase. The app will communicate with the Petrol station.
- 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:
- Identity Theft: There have been several cases where thieves install credit card skimmers at the petrol pump. So when you swipe your card, they have stolen your card info and purchase things with your card. By using the app, you won’t expose your card to any of that.
- 1 less card to carry: You don’t have to bring your Mesra reward card everywhere. as you can link your account with the app.
- 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.
What needs to be Improved in the E-Wallet Ecosystem in Malaysia
I see 2 main problems with the current E-Wallets in Malaysia:
- Consumers will end up with too many E-Wallets to take care of.
- Unlike E-Wallets that are linked with a physical Visa/MasterCard, it will be an uphill battle to make merchants accept individual cloud payments.
- 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
Personally, I’d like to simplify my life and minimize the stuff I need to take care of. So 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 topup your card at the petrol station.
- The only E-Wallet for pumping gas for your car is by Petronas: Setel.