Malaysia a high income country? Part 2

Bank Negara has been pushing for greater use of electronic money. I recall back in the day that BNM was trying to get the banks to push more debit card usage and the banks did try, believe me.

There are a lot of advantages to going cash-less - especially in Malaysia, because honestly, I think there is a lot (A LOT) of physical cash moving around in the underground sector of loan sharks, drugs, prostitution and all manner of legit businesses acting as a frontage.

Using electronic money saves on physical cash management which is a PAIN (for banks lah), provides better monitoring and better record keeping - if you have nothing to hide, that is!

So why didn't debit card usage take off, especially with BNM breathing down the necks of all the banks?
A few reasons:

1. The majority of M'sians are actually living hand-to-mouth, there's practically nothing left in their savings account the day after pay-day. It's all been taken out to pay off debts / rent and buying groceries. There's not enough in there to swipe for debit card transactions - hence, credit cards rule the day.
2. Merchant acceptance - most outlets don't want to accept card transactions for receipts below RM50, some even raise it RM70. Their reason being that they can't absorb the merchant discount rate - which is frankly BS because most established merchants only get charged about 1.2% to 1.8% these days. Yes, it used to be as high as 5% back in the old days but not any more.

Actually, it's very simple - all the government needs to do is mandate a low MDR for transactions below, say 50 ringgit. Or maybe even zero MDR for anything below 20 ringgit - but it can concede that these transactions do not attract reward points. What's so difficult about that? It's a win-win, the small businesses don't have the risk of carrying so much cash and customers have a fuss-free way of paying AND keep their balances in the bank to earn some interest, yeah not a lot but better than nothing.

Then, you can really scrutinise the significant cash transactions and see where they're going to and coming from. 

But I guess apart from BNM trying to make this happen, if there is no interest by the legislators because, oh I'm going out on a limb here but maybe they don't want to have such a bright light shone on substantial cash transactions... then we'll always be in this situation where money continues to leak out from the legitimate economy to ... somewhere else.

Sigh, what to do, all the high tech in the world cannot help if the current low tech system serves vested interest, or if I were to give the benefit of the doubt, that people are just too lazy to change.