Moving Towards Interoperable Credit Transfer in Malaysia
Credit transfer means a payment service which allows a payer to instruct the institution with which the payer’s account is held to transfer funds to a beneficiary. For example, it is common that people use credit transfer services such as debit card, credit card or mobile phones to make payment, substituting cash and cheques. As such, banks and non-banks (e-money issuers) shall collaborate to ensure the interoperability of their credit transfer services. Against such backdrop, the Bank Negara Malaysia (“BNM”) in Dec 2017 issued a draft of the Interoperable Credit Transfer Framework (“The Framework”), aiming to foster an
“efficient, competitive and innovative payment system in Malaysia that will enable customers of banks and non-banks to transfer funds across payment networks seamlessly, and set in place adequate safeguards to promote the safety and integrity of credit transfer systems.”
The Framework is expected to come into force on 1 July 2018. The full draft can be found here, it is open to feedback until 8 January 2018.
The key features of the proposed Framework are as follow:
-
Interoperable credit transfer services on shared payment infrastructures
An approved operator of a shared payment infrastructure (“Operator”) shall establish an interoperable QR code schemes to facilitate credit transfers between (1) bank accounts (inter-bank credit transfers), (2) e-money accounts, and (3) bank accounts and e-money accounts (inter-scheme credit transfers). The Operator shall also establish a National Addressing Database that links bank and e-money accounts to certain common identifiers such as identity card or company registration numbers. The Operator shall provide access to the shared payment infrastructures and the National Addressing Database to banks and e-money issuers.
Among all other things, banks and e-money issuers are required to:
- ensure that all inter-bank credit transfers and inter-scheme credit transfers are processed through shared payment infrastructures;
- enable their customers to register their account information and identifiers in the National Addressing Database; and
- waive transaction fees on customers for any credit transfer of up to RM 5,000.
-
Innovation sandbox and open API
The Operator is encouraged to coordinate with its participants to publish its Application Programming Interface (“API”) for the shared payment infrastructure and to allow the open access of APIs by third parties to experiment and test new products and services. It is also envisaged that operators will establish ‘sandbox’ facilities to provide test environments mimicking the functionality of the shared payment infrastructures.
Conclusion:
The Framework represents the BNM’s efforts to displace the use of cash and cheques, signalling Malaysia’s move towards digital economy.
