KUALA LUMPUR (Nikkei Markets) -- Malaysia's federal government said Tuesday it will disburse 450 million ringgit ($110 million) to nearly half of the country's population through three e-wallet companies to jump-start a nascent digital payments industry.
Up to 15 million Malaysians are expected to receive a one-off 30 ringgit each under the so-called e-Tunai Rakyat initiative, Finance Minister Lim Guan Eng said in a statement. The money will be channeled through one of the three e-wallet operators -- Grab, Boost and Touch 'n Go -- picked for the program.
"The e-Tunai Rakyat initiative is designed to widen digital payments adoption among consumers and merchants, particularly among small retail businesses," Lim said. "The three e-wallet operators were chosen based on their capacity to ensure a quick, effective and successful rollout by January 2020."
The program is part of Budget 2020 measures announced in October. Malaysia is seeking to accelerate the use and adoption of e-wallets and digital payments as part of its transition to a high value-added, high-income economy.
Economists had previously said that the so-called digital stimulus, along with other cash transfer programs and allowances, would help boost consumer spending and support growth at a time when the Southeast Asian nation is grappling with an economic slowdown.
"This is part of the government's commitment to fulfill the Shared Prosperity agenda by reducing barriers to digitalization and improving financial inclusivity in the country," Lim said.
Under a 10-year plan for the financial sector, Bank Negara Malaysia is targeting to increase the number of e-payment transactions per capita to 200 by the end of this year from 44 transactions as it seeks a shift toward cashless society.
To achieve the aim, the central bank has raised the processing fee to cut use of checks and encouraged wider outreach of e-payments infrastructure, such as point-of-sale terminals and mobile phone banking. The BNM also proposed to issue up to five digital banking licenses next year.
Competition, however, is stiff. Singapore-based digital startup Grab, Axiata Group's Boost, and Touch 'n Go, which is controlled by CIMB Group Holdings, are among the dozens of licensed e-money providers in the country, according to Malaysia's central bank.
Touch 'n Go, whose cards are traditionally used for expressway tolls payments, has been ramping up efforts to sign more users and merchants to its platform. The company's e-wallet, which also has the backing of Alibaba's Ant Financial, has 5.4 million registered users as of September.
For Boost, which has 4.7 million users, the company would become a full-fledged financial service provider as opposed to just another e-wallet, Axiata Chief Executive Jamaludin Ibrahim told Nikkei Asian Review previously. "We are aiming to move all the way to becoming a digital bank," he said.
-- Gho Chee Yuan