How Embedded Finance and Super-Apps Are Powering Malaysia’s Digital Payments Boom
The payment landscape in Malaysia is going through a profound transformation. According to the Mark & Spark Solutions report, the Malaysian payment market was valued at USD 86.10 million in 2024 and is forecast to grow at a compound annual growth rate (CAGR) of 12.35%, reaching USD 14.05 million by 2032. This rapid growth is not just about transactions, but it reflects a fundamental shift in how Malaysians pay, save, borrow, and invest. Digital wallets and banking platforms are no longer isolated tools; they are evolving into a fully integrated financial ecosystem by combining everyday payments with credit, insurance, investing, and more.
Embedded Finance Is the New Normal
The main driving force of this change is increased adoption of mobile wallets such as Touch ‘n Go eWallet, GrabPay, and Boost. What once served primarily as a peer-to-peer payment method is now becoming a financial hub. These wallets offer microloans and buy now, pay later (BNPL), investment features such as fractional investing or robo-advice, and insurance, including micro insurance for health, travel, or accidents. These value-added services are making digital wallets stickier with consumers. The Mark & Sparks report also notes that users with digital wallets are 30-40% more likely to have more frequent transactions and maintain higher wallet balances.
Open Banking & Regulation Fueling Growth
A big reason for enabling this is the regulatory support from banks. Bank Negara Malaysia is pushing towards pen banking, promoting APIs and interoperability so fintechs, super-apps, and banks can access and share account data securely. This regulatory framework enables smooth collaboration between traditional banks and fintech firms, accelerating payment services.
Financial Inclusion & Islamic Fintech: Reaching the Underserved
One of the most compelling reasons for this transformation is financial inclusion, which is provided through this development. Embedded finance through digital platforms is helping reach underserved groups, including gig workers, rural entrepreneurs, and young users, by enabling them to access previously hard-to-reach financial services. Importantly, Islamic fintech is also playing a significant role in advancing the payment story in Malaysia. Over 60% of the population in Malaysia is Muslim, due to which there is more demand for Sharia-compliant financial products. Digital wallets and banking apps are offering:
• Profit sharing rather than interest-based accounts
• Halal investments
• Micro lending according to the Islamic financial principles
• QR payment methods that comply with Sharia norms
These partnerships between Islamic banks like Bank Islam and fintech startups are creating versatile hybrid models that combine regulatory trust with digital innovation, broadening access and fostering deeper trust.
Which End-Use Sectors Are Driving Payments?
This growth is not uniform across all sectors; some segments are accelerating faster than others.
• Retail and E-Commerce: This sector is already at a large scale and is projected to grow significantly from (USD 31.67 million in 2023 to USD 90.63 million by 2032 which is mainly driven by QR payment options, wallet adoption, and BNPL.
• Transportation: Online payments for ride-hailing, tolls, and public transport are also booming and are projected to grow from USD 18.16 million in 2023 to USD 50.07 million in 2023.
• BFSI (Banking, Financial Services, and Insurance): Embedded finance is fueling growth here as well, with Sharia-compliant banking and investment products attracting tech-savvy users.
• Media & Entertainment/Healthcare: These sectors are also contributing to increased digital payments for subscriptions, telemedicine, micro insurance, and in-app purchases.
Pricing Dynamics and Merchant Economics
The payment pricing model is evolving interestingly. Key models include:
• Merchant Discount Rates (MDRs) on card payments typically range from 1.2% to 2.5%, depending on the type of card and transaction volume.
• E-wallets also often use tiered pricing, in which small transactions may be free, but higher-volume transactions or specific merchant payment methods may incur fees.
• Bank transfers via systems like FPX or DuitNow remain a very cost-efficient option, often under RM 0.50 per transaction, which helps drive their adoption in e-commerce and micropayments.
• Additional services like instant settlement, fraud protection, and API gateways may cost more, but many merchants are willing to pay for reliability and advanced features.
Super apps are shifting away from revenue per transaction toward lifetime value, focusing on cross-selling financial products, subscriptions, and value-added services to deepen customer relationships.
Implications for Key Stakeholders
Wallet providers and fintech: there’s a massive opportunity to build financial products on top of payment options.
• Traditional Banks: through partnerships with fintech and embracing more open banking practices, these banks can retain relevance and even reach underserved segments
• Regulators: Continued support for open banking and Sharia-compliant frameworks becomes a critical factor in sustaining innovations and inclusiveness
• Merchants: Small businesses will benefit from a low-cost QR payment system, whereas larger merchants can leverage embedded finance to increase loyalty and basket size.
• Consumers: This option gives consumers more choices, seamless financial services, and a pathway to build savings or access credit through everyday payment methods.
Conclusion
The payment market in Malaysia is entering a transformative era in which embedded finance, digital wallets, and super apps are reshaping how consumers save, invest, borrow, and insure themselves. With strong regulatory support and increased adoption in QR payments, open banking, and Sharia-compliant fintech, the country is building one of the most dynamic financial markets in Southeast Asia.