Press Release & Articles

Facilitating Micro SME’s Within the Spectrum of E-Commerce Activities

Hudhaifa Ahmad, Executive Director of MyAngkasa Digital Services; CEO of MYISCO

Remember those years during the renaissance period where people adopted barter trade as a medium of exchange. The same medium has evolved and improvised over time with the usage of shells, metals and valuable items until the introduction of banknotes that are commonly accepted as the medium that defined a unit of measurement. These banknotes, known as currencies are legally tendered and communicate the price of goods and provide an easier way to preserve individuals wealth in the long term. 

That evolution of money is about to be transformed and reinvented. The advancement of technology, the emergence of the internet, the invention of smartphones and the adoption of block-chain technology has allowed a safer peer-to-peer money transaction that could not be tampered with, and to what will become the future of the new medium of exchange.

Since the outbreak of the Covid-19 pandemic in 2019, there has been a monumental shift in the way people live, communicate and how they do their business. The pandemic has created a new norm that people are now very much concerned over social distances, face-to-face engagement and unnecessary contact that greatly impacted the way trade and businesses were naturally conducted and practised all over the world. Malaysia had even closed its borders and imposed travel restrictions in fighting the outbreak. Movement Control Orders has been exercised and the economy has shrunk to the point that certain clusters of businesses have shut down and are no longer deemed profitable to operate.

During the course of imposed restrictions, Malaysia has seen an astronomical surge in e-commerce activities and the accelerated adoption of internet banking and mobile payment transactions as people turned to e-commerce to fulfil their necessities. According to data from IBM’s US Retail Index, the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years1. However, the medium of exchange to support the rapid growth of e-commerce activities has further room for improvement.

According to JP Morgan insights, Malaysia’s outstanding e-commerce sales growth, rising basket spend and a dynamic, digitally savvy population makes the country full of opportunity for merchants. However, infrastructure issues persist with outdated payment methods, unreliable delivery and incidences of fraud. Merchants should reassure customers that they have the resources and know-how to avoid these problems2.

Malaysian entrepreneurs that engaged in e-commerce activities are mainly Micro Small And Medium Enterprises (MSME’s). They frequently neglected the importance of engaging a safe and secure payment platform environment, where Cash-on-Delivery and bank transfer has always been the preferred medium of choice. These payment methods are highly risky and easily exposed to fraudulent cases. MSME’s generally choose not to acquire the tools that enable them to offer a safer payment method for their e-commerce transactions as the engagement with banks for payment solutions remain costly and most often complicated. The service charges per transaction are usually expensive as they hardly accumulate enough monthly sales to enjoy favourable merchant discount rates.

A JP Morgan report states that Bank transfers dominate as the primary e-commerce payment method in Malaysia, accounting for 44 per cent of all transactions3. Bank penetration is at 85 percent4. The spike in money transacted via digital processes has cultivated a new normal that will be accepted and tolerated.

Porter Erisman in his Six Billion Shoppers book quoted, the smartphone has done more than putting a shopping mall in every consumer’s pocket: it has also put a retail storefront in every entrepreneur’s pocket.

The Digital Bank can overcome this issue by on boarding all MSMEs and sole proprietors to utilise the latest banking technology to meet the complex demands and various needs of customers. As every individual has a unique and different necessity, a Digital Bank will equip the merchants with the right tools and applications such as online banking payments, contactless payments, and buy now pay later options to help reduce their operational costs and streamline their payment methods into a safe and secure platform.

Forrester found that many customers trust payment firms and technology giants over traditional financial services providers to help them better manage their finances. Global technology giants, digital-only banks, payment providers, and e-commerce players are already threatening established firms by offering simple, convenient, and more personalized digital experiences5.

Digital bank as a valued contributor will be the best avenue to support and accommodate merchants business requirements and extend solutions beyond pure banking services. They are capable to build advanced data analytics to understand complicated consumer behaviour with segmented profiling that will serve Micro SME’s needs more comprehensively. They also can deliver additional auxiliary benefits such as e-commerce extension, cash flow budgeting and accounting system assistance among others that could be the game-changer for financial inclusion in Malaysia.


Hudhaifa Ahmad is Executive Director of MyAngkasa Digital Services; CEO of MYISCO

The views expressed are those of the writer and do not necessarily reflect those of Bank Negara Malaysia, the organiser of MyFintech Week 2022.



[3]  J.P. Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company, 2020

[4] J.P. Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company via World Bank, 2018


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