KUALA LUMPUR,. Bank Negara Malaysia will introduce minimum standards for the nascent but growing area of mobile payments and it will also ensure greater transparency and safeguards.
Its Governor, Tan Sri Muhammad Ibrahim said mobile payment providers will be required to disclose key security features of their services, such as in-app safeguards against malware and protection against unauthorised transactions.
“This will make it easier for consumers to compare between different providers, thereby promoting greater consumer empowerment to make better informed decisions,” he said in his key note address at the Malaysia e-payments excellence awards.
In his speech, “The resurgence of payments in a digital world”, he said that Malaysia’s migration to e-payments would not be successful without intense public engagement and consumer protection efforts.
However, he said firstly, much more needs to be done to promote debit card usage. Bank Negara, he said, had taken the lead by lowering the costs of debit card acceptance through the Payment Card Reform Framework (PCRF) in 2015.
Consequently, Malaysia’s debit card interchange fee rates are now among the lowest. They are up to 10 times lower than the rates in other regional economies.
“The industry should take advantage of this. We need to educate merchants on the availability of a lower cost debit card network,” he said.
Muhammad said to move this forward, PayNet will drive an industry wide awareness campaign.
“Merchants who cannot afford the cost of accepting the more expensive credit card should opt to accept only debit cards. This would lessen the incentives for merchants to impose surcharges to recover their payment card acceptance cost which would ultimately benefit the consumer,” he said.
Secondly, good customer engagement through effective disclosures can be a source of competitive advantage.
He pointed out that payment providers should consider differentiating themselves by disclosing key security features and safeguards against fraud and malware threats.
“This would demonstrate how the customer’s hard earned money and sensitive personal data are being protected.
“Our regulatory focus going forward will take into account the potential for greater market transparency and competition. Market discipline will be strengthened. The regulatory framework will be improved to ensure that e-payment services remain secure and reliable. Regulators will not be the cause for bankers’ inertia,” he added.
Muhammad said thirdly, enhancing customer awareness of basic safety tips is paramount as a first line of defence against payment fraud. This is particularly relevant for the emerging modus operandi of social engineering, where fraud victims are duped into disclosing confidential information that are used to commit fraud.
“In this regard, the industry can do much more to educate consumers. Consumer education initiatives have to be more targeted.
“They should be designed to address specific modus operandi that are known to be prevalent or emerging. The messages should be simple and tailored to the diverse profile of payment users.
“This should also account for demographic, behavioural and psychological factors that may be at play.
Financial institutions must also regularly review and measure the effectiveness of consumer education initiatives. If the results are not satisfactory, then the strategy must be changed,” he said.
Bank Negara, he said, would continue to collaborate with the industry in the area of public education and awareness.
“The Bank will be working with both bank and non-bank players to develop common promotional messages that provide “do’s and don’ts” for e-payment transactions. This will ensure a more cohesive communication strategy to amplify the impact on the public at large,” said Muhammad.