How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

Aug. 20, 2024, 4:58 a.m.

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Malaysia's digital payment landscape has become a hub for fintech innovation, attracting significant interest from Indian startups.

With a favorable regulatory framework and an increasing demand for digital financial services, Malaysia presents a conducive environment for these companies.

While the success of Indian fintech firms in digital payments is undeniable, there remains a significant opportunity for expansion in areas such as insurance, credit management, and short-term lending.

The Rise of Indian Fintech in Malaysia

Indian fintech companies have capitalized on Malaysia’s rapidly evolving digital landscape. Among the notable players is Razorpay, an Indian payment solutions provider that made headlines with its acquisition of Curlec, a Malaysian recurring payment solutions provider.

Now rebranded as ‘Curlec by Razorpay,’ the company has broadened its services to encompass a comprehensive digital payment platform. This strategic move has positioned Razorpay as a prominent player in Malaysia, currently serving over 700 businesses, including notable names like Tune Protect and Mary Kay.

Curlec, powered by Razorpay, plays a crucial role in Malaysia's DuitNow service, a system similar to India's Unified Payment Interface (UPI), demonstrating the company's commitment to the Malaysian market. By enabling fund transfers using mobile numbers and national IDs, Curlec is accelerating the adoption of cashless payments nationwide.

This aligns with Bank Negara Malaysia’s (BNM) vision of a cashless society, a goal that is becoming increasingly attainable with the help of innovative players like Razorpay.

Another Indian fintech company making waves in Malaysia is Pine Labs, known for its point-of-sale (POS) systems and digital payment platforms. Pine Labs has successfully introduced its technology to Malaysia, catering to both small businesses and large enterprises. This has contributed to the growth of Malaysia’s digital payment infrastructure, offering consumers more flexibility and security in their transactions.

A Favorable Regulatory Environment

The success of Indian fintech startups in Malaysia can be attributed, in part, to the country's supportive regulatory framework. Malaysian authorities, particularly Bank Negara Malaysia, have been proactive in creating a conducive environment that encourages innovation in the fintech sector.

The Financial Sector Blueprint 2022-2026, introduced by Bank Negara Malaysia or BNM, emphasizes the importance of open data ecosystems, national digital identity initiatives, and real-time payment interconnections. These initiatives have laid a strong foundation for digital payments and have encouraged foreign fintech companies to establish a presence in Malaysia.

Advertisement Furthermore, the Malaysian government's exploration of Central Bank Digital Currencies (CBDCs) and the upcoming regulatory framework for digital insurers and takaful operators highlight the country's commitment to advancing its fintech sector. This forward-thinking approach ensures that Malaysia remains an attractive destination for fintech investment, particularly for companies like those from India, seeking to expand their global reach.

The Untapped Potential in Financial Products

While Indian startups have made significant progress in Malaysia's digital payment market, there remains a substantial gap in the provision of other financial products, particularly insurance.

The upcoming regulatory framework for digital insurers and takaful operators presents a significant opportunity for Indian fintech firms to diversify their offerings. By venturing into digital insurance, wealth management, and other financial services, these companies can further solidify their position in Malaysia.

Advertisement This potential is especially evident with the anticipated launch of Malaysia's first digital banks. These institutions will introduce unprecedented levels of innovation and expand financial access. Indian fintech firms, with their established expertise and global experience, are well-positioned to leverage this emerging market.

Expanding into digital insurance and financial products not only meets the growing demand but also contributes to a more comprehensive and robust financial ecosystem in Malaysia.

BNM's 2022-2026 Blueprint provides an intriguing roadmap for Malaysia's digital currency adoption through Central Bank Digital Currencies (CBDCs).

However, it is essential to acknowledge the potential of CBDCs while adopting a thoughtful, data-driven approach that prioritizes caution and safeguards Malaysia's interests. Indian fintech and cryptocurrency startups possess the resources to capitalize on this opportunity in a manner that benefits both India and Malaysia.

Advertisement Indian fintech startups have established a strong foothold in Malaysia’s digital payment market, thanks to a supportive regulatory environment and a growing demand for digital financial services. However, the journey doesn’t end here.

With the upcoming regulatory frameworks and the untapped potential in insurance, short-term lending, credit management and other financial products, Indian fintech firms have a significant opportunity to expand their influence and contribute to Malaysia’s evolving fintech landscape.