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Malaysian Payment Systems
 > Malaysian Payment Systems > Types of Payment Systems

Payment Systems in Malaysia

Malaysia's Payment System


Systemically Important Payment System (SIPS)

A systemically important payment system or large value payment system (LVPS) typically processes high-value and time-critical payments. It is an essential payment system to ensure the smooth functioning of the economy, financial system and financial markets, and its failure could trigger disruptions or transmit shocks within the economy and the financial market, both at the domestic and potentially at the cross-border level. RENTAS is the only LVPS for Malaysia and it is operated under Real Time Gross Settlement (RTGS) basis.

Real Time Electronics Transfer of Funds and Securities (RENTAS)

RENTAS was implemented in July 1999 with the objective to improve the overall efficiency of the large value payment system, particularly in respect of reducing interbank settlement risk. It enables the transfer and settlement of high value interbank funds and scripless securities transactions. There are two types of transactions handled by RENTAS namely Interbank Funds Transfer System (IFTS) and Scripless Securities Depository System (SSDS). The following transactions can be performed by RENTAS members via the system:

  1. Interbank funds transfer;
  2. Cash withdrawals from BNM;
  3. Statutory reserve adjustment;
  4. Money market settlement;
  5. Ringgit leg of foreign exchange;  and
  6. Scripless securities transfer.

Currently, there are 68 participants in RENTAS, which comprise of commercial banks, Islamic banks, investment banks, Development Financial Institutions as well as institutions that are active players in the money market or capital market.

There is no limit set for the transfer of funds between members. However, the minimum transaction amount for third party payments (payments that originate from a non-RENTAS member or beneficiary) is set at RM10,000. This limit does not apply for payments to and from BNM and government agencies.

In November 2006, BNM in collaboration with the Hong Kong Monetary Authority, implemented the Payment versus Payment (PvP) infrastructure for settling interbank ringgit-US dollar trade transactions. The direct link between RENTAS in Malaysia for the settlement of ringgit and the USD CHATS system in Hong Kong for the settlement of US dollar, enable the simultaneous settlement of ringgit in Malaysia and US dollar in Hong Kong during Malaysian business hours, thus eliminating foreign exchange (FX) settlement risk for ringgit and US dollar FX transactions.

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Retail Payment System

In general, the retail payments in Malaysia can be divided into three - Retail Payment Systems, Retail Payment Instruments and Retail Payment Channels.

Types of retail payment systems

  1. Cheque Truncation and Conversion System (CTCS)
  2. Shared ATM Network
  3. Interbank GIRO
  4. Financial Process Exchange
  5. Direct Debit

Types of retail payment instruments

  1. Cheques
  2. Credit cards
  3. Charge cards
  4. Debit cards
  5. E-money

Types of retail payment channels

  1. Internet banking
  2. Mobile banking
  3. Mobile payment
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Types of retail payment systems

Cheque Truncation and Conversion System (CTCS)

BNM had implemented the Cheque Truncation and Conversion System (CTCS) in the Klang Valley and neighbouring states to replace the previous Sistem Penjelasan Imej Cek Kebangsaan (SPICK) cheque clearing system on 13 June 2008. It has been fully rolled out nationwide in July 2009.

The objectives of CTCS are to implement a paperless cheque clearing process, achieve a common dayhold throughout the nation and increase the efficiency of the clearing and settlement process.

In cheque truncation, the clearing of cheques are based on the image and Magnetic Ink Character Recognition (MICR) Codeline data of the cheque and not the physical cheque. In place of the physical cheque, the image and data of the cheque, such as the MICR fields, date of presentation, presenting bank, etc., would be transmitted electronically throughout the clearing process. Thus, the need to move the physical cheque from the collecting bank to the clearing house and the paying bank will not be necessary. This would effectively reduce the time required for clearing of cheques.

In CTCS, in the event of dishonour, where the cheque can be represented, the original cheques will not be returned. Instead, an Image Return Document (IRD) will be issued, where these can be represented. The IRD acts as a substitute for the original cheque.

Customers and businesses will benefit from the speedier and more efficient cheque clearing system, especially in the timing of the availability of funds from the deposit of outstation cheques. Under the CTCS, outstation as well as local cheques will be cleared on the same day and funds made available as early as the next business day, compared to between 5 to 8 business days for outstation cheques currently.

Link to press release on CTCS

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Shared ATM Network (SAN)

MEPS Shared ATM Network
Malaysian Electronic Payment System Sdn Bhd (MEPS) is the operator of Shared ATM Network. Services offered includes cross-border cash withdrawal, interbank ATM funds transfer (IBTF) and interbank mobile prepaid top-up

Link to MEPS Website

Four locally-incorporated foreign banks, namely, HSBC Bank, OCBC Bank, Standard Chartered Bank and UOB Bank had, in July 2006, teamed up and established a new shared ATM network known as HOUSe, which offers cash withdrawal and balance enquiry services.

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InterBank GIRO

Operated by MyClear Sdn Bhd, the Interbank GIRO (IBG) services facilitate bulk electronic interbank credit transfers of up to RM500,000 per transaction on either T+0 or T+1 basis (depending on when the payment is submitted to the banking institution).

Link to MyClear Website

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Financial Process Exchange

Financial Process Exchange (FPX), is an Internet-based multi-bank payment platform that facilitates online payment for e-commerce transactions. The FPX leverages on the banking institutions' Internet banking services to provide the online payments.

Link to MEPS Website

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Direct Debit

Direct debit, which is operated by MyClear Sdn Bhd, is an interbank collection service for regular and recurring payments enabling automated collection directly from a customerís bank account at multiple banks with a single authorization.

Link to MyClear Website

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Types of retail payment instruments


A cheque is a paper based payment instrument. It is a form of written order directing a bank to pay money to the beneficiary. Based on the market practices in Malaysia, a cheque is generally valid for six months after the date of issue. The use of cheques has traditionally dominated Malaysian non-cash payments. Despite the development of other payment instruments, cheques remain an important form of non-cash payments.

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Credit Cards

A credit card enables its holder to buy goods and services with a credit line given by credit card issuer and the amount will be settled at a later date. Cardholders are billed on a monthly basis and cardholders would have to bear finance charges (interest) on the outstanding amount if payment is not made by the due date. For a hefty fee, a credit card can also be used for cash advances at Automated Teller Machines (ATMs) and at respective credit card issuers' counters. Examples of credit card brands are Visa, MasterCard and JCB.

A tiered pricing structure for credit cards was implemented in July 2008 with the objectives to promote prudent financial management and inculcate good financial discipline amongst credit card users. The tiered pricing structure is based on the following tiers:

  1. Tier 1 - Maximum of 15% per annum (those who promptly settle their minimum payment due for 12 consecutive months);
  2. Tier 2 - Maximum of 17% per annum (those who promptly settle their minimum payment amount due for at least 10 months in a 12-month cycle); and
  3. Tier 3 - Maximum of 18% per annum.
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Charge Cards

The functionality of a charge card is similar to a credit card. However, charge card holders must settle their outstanding amount in full by the due date every month. Since charge cards are often associated with prestige, the fees are generally higher than credit cards. This is compensated by the differences in terms of benefits, with charge cards generally offering more privileges. Its popularity has dropped in Malaysia.

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Debit Cards

A debit card is a payment card where the transaction amount is deducted directly from the cardholder's bank account upon authorisation. Cardholders can manage their finances more effectively and need not worry about late payment penalties, finance charges, and snowballing card debts. There is also no income requirement to qualify for one. In Malaysia, anyone having a bank account with a domestic bank and has an ATM card can make payments using the card at any merchants displaying the Bankcard logo, as it doubles as a debit card. There are also international brand debit cards under the VISA and MasterCard brands.

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E-money is a payment instrument that contains monetary value that has been paid in advance by the user. E-money users can use their e-money to purchase goods and services from merchants. When users pay using e-money, the amount will be automatically deducted from their e-money balance. E-money comes in different forms and can be broadly categorised as card-based and network-based, which are currently accessible via the internet and mobile phones.

Link to list of approved e-money issuers

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Types of retail payment channels

Internet Banking

Internet banking provides a fast and convenient way of performing common banking transactions, such transferring funds from your savings account to your current account, or even to a third party's account. Through Internet banking, you could also make payments to relevant parties, such as your utility bills, your assessment tax, and others. If you have a computer with Internet access, a web browser and a registered account for Internet banking from your banking institution, you'll be able to do your banking and payments from the comforts of your home, office, or virtually anywhere else in the world.

All internet banking transactions are secured to ensure that users' information could not be stolen. However, users should also practise precaution, which include keeping your Login ID, password or PIN confidential; checking that you have logged into the right website; logging-off at the end of each session and clearing the memory cache and history after logging out from the website; and protecting your personal computer from viruses and malicious programmes by installing an up-to-date hackers firewall and a reputable anti-virus program.

Link to list of offering Banks

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Mobile Banking

Mobile banking is similar to Internet banking in that it provides a fast and convenient way of performing common banking transactions. To enjoy the benefits of mobile banking, all you need is a mobile phone that is equipped with the features required by your bank that provides this service. Once you obtained a registered account for mobile banking from your banking institution, you'll be able to do your banking transactions from anywhere that has your mobile telecommunication network coverage.

All mobile banking transactions are secured to ensure that users' information could not be stolen. However, users should also practise precaution, which includes not leaving your mobile phone that is linked to your account unattended to; keeping your PIN confidential; and never reply to any SMS claiming to be from your bank or asking for your banking details.

Link to list of offering Banks

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Mobile Payment

Mobile payment allows you to make payments to selected merchants by using your mobile phones. Bill payments and purchase of goods and services are among the cashless transactions that can be made. To enjoy the benefits of mobile payments, you have to register and open an account with mobile payment service providers. Non-bank mobile payment services are provided using an e-money account. For more information on e-money, please refer to the e-money section.

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