Mastercard, MDEC ink MoU to spur e-commerce, foster financial inclusion among micro SMEs

  • Collaboration to rollout Mastercard payments and business technologies to MSMEs
  • Partnership will also help broaden financial inclusion through the use of data

(L to R) Anna Amalina, Deputy-Sec, Communications Technology Division, Ministry of Communications and Multimedia; Perry Ong, Country Manager, Malaysia and Brunei, Mastercard; Zahidi Zainul Abidin, Deputy Minister of Communications and Multimedia; Surina Shukri, CEO of MDEC and Devesh Kuwadekar, VP of Market Development, Malaysia, Mastercard.

Mastercard signed a memorandum of understanding (MoU) with the Malaysian Digital Economy Corporation (MDEC) today, kickstarting a partnership that will focus on enabling e-commerce for micro, small-and-medium enterprises (MSMEs), on top of fostering financial inclusion to unbanked and underbanked in rural communities as well as drive adoption for digital disbursement solutions.

The collaboration is part of an effort to advance the digitalisation of Malaysia’s economy, and to support digital initiatives outlined by the Malaysian government’s PENJANA economic recovery plan following the Covid-19 pandemic.

“The MoU between Mastercard and MDEC brings a dynamic synergy that will see the sharing of best practices and knowledge between both parties to enable the economy’s digital transformation and fuel business growth in Malaysia,” says Zahidi Zainul Abidin, Deputy Minister of Communications and Multimedia Malaysia.

“It is KKMM’s (Malaysian Ministry of Communications and Multimedia) and MDEC’s aspiration to firmly establish Malaysia as the Heart of Digital ASEAN and reinforce its regional digital powerhouse role that engages global champions, such as Mastercard, by ensuring the digital economy will drive shared prosperity for all Malaysians as well as the region,” he adds.

Under the collaboration, Mastercard will work together with MDEC to support industry partners and facilitate the rollout of Mastercard payments and business technologies.

This includes Mastercard Payment Gateway Services, Kionect microcredit platform (which helps agents of FMCG sector), Mastercard Tap-on-Phone Contactless Technology and Simplify Commerce – a platform which gives small businesses much of the ready-made infrastructure they need to engage in e-commerce.

The expansion of digital payments technologies will in part be geared towards helping create smarter, more sustainable and inclusive communities for residents and local businesses. Besides that, Mastercard will provide a comprehensive suite of smart digital solutions covering transit, lifestyle, health, and education to empower the country, enhance efficiency and productivity and improve quality of life.

Mastercard, MDEC ink MoU to spur e-commerce, foster financial inclusion among micro SMEs

Facilitating digitalisation

In elaborating on the collaboration as well as the rolling out of Mastercard’s services, Mastercard country manager for Malaysia & Brunei Perry Ong says that the MoU is predicated on a few initiatives. “The whole idea, firstly, is to create financial inclusion,” he says.

It should be noted that Bank Negara Malaysia (BNM), on its website, scores Malaysia’s financial inclusion at 0.90 out of 1 on a Financial Inclusion Index, based on 2015 data versus 0.77 in 2011. And, in a table of core financial inclusion indicators on the BNM site, Malaysia’s data is off the charts (pix above), with the country registering 96% of adults with at least one regulated deposit account and 40% of adults with at least one type of regulated credit account.

Another goal of Mastercard is to give MSMEs e-commerce capabilities. “In order to do that, they’re going to need the facilitation and the tools and services that we (Mastercard) will bring through our partnership,” Ong adds. Mastercard can, for instance, come in to facilitate the payment gateway to allow for online payments by the MSME.

Mastercard also aims to broaden financial inclusion through data. An SME that needs to borrow from the bank may not have enough data to obtain a loan. “By creating a platform, we are now connecting the banks and principles such as the FMCG, agents, sellers and consumers. When all of this come together, we will have data to share to the bank, who can then provide the loan to the SME,” Ong explains.

Lastly, the collaboration will help SMEs get on-boarded to receive payment beyond just cash, as well as receiving payment from consumers locally and overseas.

MDEC chief executive officer (CEO) Surina Shukri notes that the collaboration complements a variety of MDEC and KKMM’s initiatives. For one, the recently-concluded SME Digital Summit held by MDEC saw engagement of close to one million participants – business owners and entrepreneurs that are now looking for products and tools on their digitalisation journey.

“By working with Mastercard and drawing on their expertise in developing an electronic payment infrastructure, we look forward to tackling a range of pressing economic and social issues through technologies that better connect individuals, communities, and businesses to become digitally-skilled Malaysians and digitally-powered businesses of all sizes across the country,” Surina says.

 

Leveraging programmes

The MoU will also see both partners leveraging on each other’s programmes, such as Mastercard’s global mentorship programs and signature Girls4Tech STEM curriculum, to promote digital and financial literacy for vulnerable groups, such as underprivileged women and girls, and women-led enterprises.

These areas are also being championed by MDEC through its various existing programs such as digital talent development, empowering women in cyber risk management, online eCommerce services with Perkhidmatan e-dagang setempat (PeDas), eUsahawan (entrepreneurship) and eRezeki (sustenance) initiatives.

Additionally, MDEC will now be a corporate member of StartPath, Mastercard’s global initiative that supports innovative early stage companies, to enable Malaysian Islamic fintechs to grow and expand.

MSME’s represent 76.5% or equal to 693,670 of all Malaysian business establishments, many of which had been hit hard by the Covid-19 pandemic. According to a recent Mastercard IMPACT study, while there had been an increasing migration to e-commerce prior to the pandemic, 25% of businesses still lacked the necessary infrastructure to take advantage of the growth in online shopping.

The inking of the MoU follows the release of research conducted by Mastercard that showed an uptick in the use and need of cashless payments in Malaysia in March and April of this year. In fact, Malaysia’s reported use of cashless payments was higher than in other Southeast Asia markets surveyed.

For instance, in April, more than 18% of Malaysian respondents indicated they’d increased their use of cashless payments, while during the same period, the figures in Thailand were 15%, 15.75% in Singapore, and 16.9% in the Philippines.

“The Malaysian government has laid out ambitious goals for moving the country forward and create a smart, informed community—both out of the pandemic and beyond—and Mastercard is incredibly excited to be supporting this pursuit of progress and look forward to working with the MDEC to deploy the most secure, efficient, and versatile payment technologies in the world,” says Ong.

 

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