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PayNet’s Financial Inclusion and Independent ATM Deployer Initiatives

Friday, September 13, 2024

by Marcus Lim Wooi Loon

August 10, 2024 marks one year since I conducted an online seminar with PayNet focusing on Payments Insight related to trends in cash payments and the rise of cashless systems. During this seminar, I also presented three key ATM-related initiatives that included,

the introduction of industry-wide interbank cash deposit (IBCD) services to enhancefinancial inclusion,
the early stages of independent ATM deployment, and
the ATM Pooling initiative.

Since that time, there has been a significant increase in transaction volumes for IBCD services and notable advancements within the space of independent ATM deployment.

Industry-wide IBCD Implementation Gains Momentum
In a span of one year, we managed to onboard an additional 5 acquirers, bringing our total to 7 acquirers. This increase boosted the IBCD transaction volume by over 800x since its inception, covering 13% of the cash deposit machines (CDM) or cash recycling machines (CRM) from the total install base.

By end 2025, we forecast an additional 27% coverage to reach29.8 40% of the total install base.

Centralised Push
To drive the initiative, we continued to engage with the remaining acquirer banks, highlighting the cost savings, Bank Negara Malaysia’s (BNM) vision and financial inclusion agenda for full industry participation.

Typical cost savings include a reduction of the cost of funds as more cash is recycled through deposits rather than ordering cash for replenishing.

For background purposes, in July 2021, the idea of IBCD was mooted by BNM to allow bank customers to deposit cash at any CDM/CRM similar to the cash withdrawal service.

In June 2023, BNM published the 2nd Financial Inclusion Framework 2023 – 2026 strategy paper to outline the vision, desired outcomes, policy objectives and strategies in pushing for holistic

financial inclusion. This framework further emphasizes the importance of interoperability of services such as IBCD, especially in the unserved and underserved areas.

Divestment of PayNet’s White-Label ATM Business
Euronet and Safeguard CS (SCS) have entered the Malaysian white-label ATM deployment business. PayNet had on April 1, 2024 divested its entire 800 ATMs under the label MEPS ATM to Euronet. The divested ATMs will be integrated into Euronet’s existing independent ATM deployer (IAD) network and a rebranding exercise will be carried out to convert to Euronet’s brand in a year’s time. For clarity, the interbank network owned and operated by PayNet remains with PayNet.

With the divestment, PayNet can fully focus on building innovative digital payment initiatives and no longer operate the ATM pooling for the banks.

More Independent ATM Deployers Are Expected
The IADs machine deployment growth has been phenomenal. Since its inception in 2023, the number of ATMs (including CRMs) has grown from zero to 4.1% (696 units) of the total industry install base. If we include PayNet’s divested ATMs, the total install base of IADs rises to 8.4% (1,495 units). Over 10% of the deployments are situated in underserved or unserved areas.

We have been in discussion with several interested parties to participate as IAD. One of them, Japan’s Seven Bank has announced in June 2024 that they will be establishing a presence in Malaysia with deployments planned between October to December 2024. Seven Bank is an established IAD with large installations in Japan, United States, Indonesia and the Philippines.

Our Financial Inclusion Commitment
With more IADs participation and industry-wide IBCD implementation gaining pace, we believe that we are moving in the right direction to fulfilling our collective responsibility and provide underserved and unserved communities with better access to financial services.

The Asia/Asia Pacific Region Just Got Stronger!

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