SMALL businesses have been slow to adopt cashless payments as many struggle to understand how these systems work, business groups said.

The hesitation is mainly among older business owners who find it difficult to adapt to new technology.

Bumiputera Petty Traders Association Mohd Baba Kutty said only 10% of 20,000 members have adopted cashless transactions.

“Many still don’t understand how it works and need more explanation. Some smaller businesses don’t even have company bank accounts,” he said.

Most of the 10% who have embraced cashless methods are in the food and beverage sector. They are using e-wallet payment systems, besides allowing credit and debit card transactions, Baba said.

“Most of them are also on the GrabFood and FoodPanda platforms so they know how to use (cashless methods).”

Among the older business owners, part of their hesitancy comes from the fact that they don’t “see” physical money when using cashless systems.

“They are not comfortable even though the money goes straight into their accounts.

“Some are also not very educated and that contributes to the problem,” he added.

After Hari Raya, the association organise a workshop for members to explain cashless payment facilities, Baba said.

About 30% of Malaysian Muslim Restaurant Owners Association members have adopted cashless payment methods, its president Jawahar Ali Taib Khan said.

“E-wallets and credit cards are the new norm for many,” he said.

“These facilities are available everywhere and e-wallets are popular. More than 30% of our members provide this service now, but by the end of this year more will do so,” he said.

In Presma, it is many of the older members who are the ones not keen on embracing cashless payment systems.

“We prefer to go cashless. It is safer and we don’t need to worry as it (money) goes straight to the account.”

Jawahar said there are plans to hold a a seminar for cashless payments after Hari Raya.

The rate of adoption is better among small and medium enterprises, at about 50%, said SME Association of Malaysia vice-president Chin Chee Seong.

This does not include nano (or micro) enterprises and gig workers, Chin said.

He said smaller businesses with smaller turnovers might not find cashless systems appealing due to the cost of implementation.

“The merchant discount rate (MDR) or transaction charges (are one of the main reasons),” said Chin.

“A lack of connectivity, education and a preference for old habits are also contributory.”

The MDR is a fee charged to a merchant to process debit and credit card transactions.

There is also a need for government aid to help businesses digitalise on all aspects.

“We still need government assistance to accelerate digital adoption, not just for the e-wallet but all forms of payment from business to business to business to consumers.” – April 21, 2022.