The theme of today’s Forum – Sustainable, Secure and Scalable – is particularly appropriate as it underscores the importance of building a strong foundation to support a dynamic and resilient payment ecosystem. Malaysia’s payment landscape has come a long way especially over the past decade. The payment system, with PayNet being a central component, has provided the critical lubricant to oil the Malaysian economy with digital payments becoming an essential part of our daily lives. As we continue to advance the digital payment landscape, we must ensure that every component can effectively play its part and is seamlessly connected, to deliver an efficient, customer-centric payment experience and resilient payment ecosystem.

In line with the theme today and to realise the 3S (Sustainable, Secure and Scalable), our approach to push Malaysia’s payment system forward should be guided by 3R – Reach, Resilience and Responsive. I’ll elaborate more on each of these factors throughout my speech. Together, they will shape not just where we are heading but also provide a roadmap on how we will achieve the vision.

Let me start with the first “R” which is – Reach – that underscores the need to ensure that digital payment is accessible to everyone. On this front, Malaysia is on the right track. Achieving our digital payment adoption growth target as set out in the Financial Sector Blueprint well in advance of 2026. Every Malaysian on average makes at least one digital payment transaction per day, with affordable payment channels such as DuitNow QR is being widely accessible for consumers and businesses nationwide. This achievement is a testament to the collective effort and commitment of everyone in the industry in supporting this vision.

Widespread awareness programs have been instrumental in driving digital payment adoption.  Such programs, especially those in the rural areas, which involved community outreach efforts, such as e-Duit Desa and Karnival Celik Kewangan, have tremendously helped build people’s confidence in the use of digital payment among this important segment. These initiatives coupled with the ongoing drive to onboard more merchants, including those within government agencies through PayNet’s Cashless Boleh 4.0 program, continue to expand access and ensure benefits of digital payment are shared by everyone.

While we have made remarkable progress in expanding ‘Reach’, our work certainly does not stop here. The digital payment landscape is evolving faster than ever and with that, comes new challenges and risks. Sustaining our momentum and strengthening our collaboration across both the public and private sectors is therefore key in delivering more impactful outcomes to ensure Malaysians can fully reap the benefits of digital payment. Notably, a review on our blueprint project ‘Cashless Redang’ conducted last year, found compelling evidence to show that digital payment adoption has significantly improved the economic livelihoods of the local community in Pulau Redang – and this is with more than 90% of merchants on the island now accepting digital payments.

It would be a remiss of me to speak about inclusivity without also touching the importance of affordability – a key factor supporting ‘Reach’. In line with this, I’m pleased to share that we have secured a permanent sales and service tax (SST) exemption for digital payment services including on the Merchant Discount Rate, or MDR. This represents an important development that provides the industry with long term certainty and continued relief from some cost pressures. With this support and the roll-out of PayNet’s phased pricing review – part of which has already delivered cost savings to players – the timing may be right for industry players to revisit pricing structures and pass on some of these savings to consumers, ensuring digital payment remains affordable.

While we also understand the needs to generate income from payment-related activities for the industry to remain sustainable, any upward adjustments or introduction of new fees should be taken with careful consideration of the burden it creates to the general public. Any introduction of fees should be clearly communicated to customers and must be justified by corresponding value-added services, alongside alternative options available to help customers make informed choices. Importantly, we urge the industry to continue to ensure that digital payments remain affordable for smaller merchants. Micro and small enterprises are an important driver of the nation’s economy and it is important that they can continue to leverage on efficient payment services to uplift their productivity and efficiency

Turning to the second ‘R’ – Resilience. The safety and soundness of our payment systems form the cornerstone of users’ trust and confidence in the digital payment ecosystem. This is further underpinned by two key pillars: (i) ensuring resilient payment infrastructure and (ii) building resilience against fraud.

Ladies and gentlemen,

Amid the growing volume of retail transactions, the overall performance of our retail payment services (RPS) has generally remained stable and resilient. The RPS has consistently operated at high system availability of more than 99.9% with minimal system downtime – a testament to industry’s commitment in maintaining high system reliability. However, we have observed a slight uptick in isolated incidents. In today’s digital age, negative customer experiences, even isolated ones, can rapidly go viral and damage public confidence. Affected parties should therefore take accountability, act proactively and communicate openly to consumers on service disruptions to prevent public panic. Coordinated, effective and timely communication will go a long way in preserving trust in the system.

The rapid rise in Real-time Retail Payments Platform (RPP) transactions also inevitably exposes participants to higher settlement and credit risks. Recognising this, Bank Negara Malaysia (BNM) has taken steps to mitigate these risks by introducing RENTAS+ which enables interbank fund transfer and settlement on a 24 by 7 basis throughout the year. The migration to RENTAS+ is a clear demonstration of our infrastructure’s agility in responding to the rapidly evolving payment landscape. On this, I would like to thank PayNet and the industry for the unwavering commitment and collaboration in ensuring the complex migration to RENTAS+ was successful. These efforts are part of broader efforts to modernise our financial market infrastructure with BNM also exploring expanding RENTAS access to potential eligible non-bank participants and enabling API connectivity for industry to access RENTAS data.

Another dimension of Resilience that warrants attention is building our defences against online fraud. It is without a doubt that our collective efforts have yielded notable and encouraging outcomes. Through strengthened fraud detection capabilities, in just the first half of this year alone, banks have successfully prevented about RM370 million in potential fraud losses, an amount that is nine times greater than actual fraud losses reported to BNM. Following the launch of the National Fraud Portal (NFP) in 2024, the time taken to trace stolen funds has markedly reduced by 75%, an improvement that reflects the strengthened industry-wide coordination.

However, we cannot rest on our laurels and must continue to bolster our defences in ensuring the safety and security of the entire ecosystem. On this, we are planning to expand NFP access to more players including to those across sectors such as the telco and the digital asset providers. Such access will also enhance the richness and depth of the NFP data. This complements our proposed plans to ensure almost all ‘on-us’ QR payment data are automatically routed to RPP and fed into the NFP upon the cessation of proprietary QR schemes.

While enhanced data coverage is key to NFP’s success, ensuring data credibility is equally important. To this end, the integrity of data, particularly the mule account reporting modules must be safeguarded to avoid false positives. Given that the NFP is central to our efforts in combatting fraud, BNM will take the necessary actions to ensure robust data governance and compliance within the NFP ecosystem as strong data management practices are essential to maintain trust and reliability in the system.

With the consumer being the first line of defence in our fight against financial fraud, ongoing efforts to raise awareness on online fraud and scams such as through ‘Jangan Kena Scam’ campaigns have also played a vital role in helping the public to stay vigilant and better safeguard themselves against fraud. Financial institutions have also played a role in taking proactive steps to empower customers to protect themselves from fraud by enabling self-service tools such as the kill switch and transaction limit setting features. Equally important is the need to educate customers on the availability of these tools and to guide them on the use of these tools to better protect themselves.

Ladies and gentlemen,

The final ‘R’ that I would like to touch on is Responsive, which underscores the need to embrace innovation to futureproof the ecosystem.

Responsive encompasses two key areas. First, fostering a digitally enabled and forward-looking financial system and second, further modernising our payment systems.

On the innovation front, Bank Negara Malaysia is committed to provide a regulatory environment that is conducive to inclusive and responsible innovation. The launch of Fintech Hub by PayNet to accelerate fintech growth in Malaysia, embodies the commitment to being responsive to industry needs. It serves as a gateway to surface credible fintech players to emerge and complements Bank Negara’s own Regulatory Sandbox.

Looking ahead, the newly formed Digital Asset Innovation Hub (DAIH) will also pave the way for greater BNM and industry collaboration with the focus on co-creation of innovative solutions driven by emerging technology. This would include exploring opportunities to enhance existing settlement processes leveraging on distributed ledger technology (DLT) or digital assets, to drive greater payment efficiency. We highly encourage both banks and non-banks which are part of the payment ecosystem to engage with the Hub on potential solutions that may bring real-world benefits to the financial sector and the broader economy.  

Bank Negara Malaysia will also be issuing an exposure draft on Open Finance in the coming months. This sets out our vision for a seamless customer-permissioned data sharing ecosystem. Having said that, I did want to acknowledge PayNet’s instrumental role as a shared infrastructure provider in laying the foundation for the Open Finance platform. Realising the potential of Open Finance requires collective commitment. With strong industry support, we can unlock transformative outcomes – a financial sector that is more innovative, competitive and responsive to customer needs. This begins by clearly communicating the benefits of this initiative – from a more seamless and personalised user experience when obtaining and consuming financial products, improved efficiency in industry-wide data sharing, while ensuring unwavering trust through strong data privacy and security controls.

I would now like to shift our focus to the second key area – modernising our payment systems to support cross-border payments. Strengthening cross-border payment connectivity is central to our broader agenda of modernising the payment system through faster, cheaper and more seamless transaction across borders. 

I am pleased to share that Malaysia is already ahead in achieving commitments on payment connectivity agenda under our ASEAN Chairmanship this year with strong support from PayNet and a number of players in this room today. As of today, 26 live payment linkages are already up and running involving ASEAN member countries. For Malaysia in particular, QR payment volumes from our linkages have continued to surge by 201%, while P2P payment volumes for our corridor between Malaysia and Singapore have also increased by 272% year-on-year in the 1H 2025. This experience places our tourists and businesses in good stead especially as we head into Visit Malaysia Year 2026.

Despite the vast benefits that cross-border payment service can offer – such as seamless transactions, competitive exchange rates for users, as well as wider market access for merchants – the offering of this service remains limited to selected banks. To ensure both locals and tourists enjoy the convenient of this payment service – in particular the ability to leverage this service not only in major outlets but also at small merchants – BNM envisages an ecosystem where all RPP participants are expected to enable not just domestic but also cross-border payment service. This is also intended to ensure our players are future-ready for Project Nexus once it goes live in 2027. Engagements on Project Nexus and cross-border payments more broadly will therefore intensify next year as we identify potential technical, operational and commercial challenges that the industry may face in supporting this intended outcome.

To conclude, I would like to reiterate that the key to realising the 3S vision of Sustainable, Secure and Scalable – hinges critically on our collective ability to embrace the 3R – Reach, Resilience and Responsive – as guiding pillars for continued progress in the payment ecosystem.

As we approach the tail-end of the current Blueprint, now is the time to reflect upon our journey so far – and to chart the next phase of work to take the industry further forward. Guided by the principles of Reach, Resilience and Responsive, BNM is committed to engage closely with the industry to determine future priorities.  Thus, PEF can be the springboard for ideas that will shape the next generation of the payments ecosystem.

On that note, I wish everyone a fruitful and productive discussion ahead. Thank you.