Payment Systems in Malaysia

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Malaysia's Payment System

 Systemically Important Payment System (SIPS)

A systemically important payment system or large value payment system (LVPS) typically processes high-value and time-critical payments

Real Time Electronics Transfer of Funds and Securities (RENTAS)

Imagine a superhighway for money in Malaysia. This highway is called RENTAS , and it's specifically designed for big, urgent money transfers between banks. Think of it like a high-speed rail for funds, ensuring that large payments happen quickly and smoothly.

Why is it so important?

  • Keeps the economy moving: Businesses rely on RENTAS to make large payments, like settling big deals or moving money internationally. If RENTAS were to break down, it could cause major disruptions in the economy.
  • Minimizes risk: RENTAS is designed to be very secure and reliable, reducing the risk of financial problems for banks and businesses.

Real-world example:

Imagine a large company in Malaysia needs to pay a supplier overseas urgently. Instead of waiting days for the payment to clear, they can use RENTAS to transfer the funds quickly and securely. This ensures the supplier gets paid on time, and the company can continue its operations without delays.

Key Features & Benefits:

  • Efficiency: RENTAS streamlines financial transactions, making them faster and more efficient. This reduces costs for banks and ultimately benefits businesses and individuals.
  • Reduced Risk: It minimizes the risk of delays or errors in financial transfers, especially crucial for large transactions.
  • Interbank Transactions: Banks can easily transfer funds between themselves, settle debts, and conduct various financial operations through RENTAS.
  • Securities Trading: RENTAS facilitates the electronic trading and settlement of securities, making the stock market more efficient and transparent.
  • Cross-border Payments: RENTAS enables seamless cross-border transactions, such as those involving the Chinese Yuan (RMB), reducing settlement risks and costs for businesses engaged in international trade.

Real-World Business Case Example:

Let's say a Malaysian company imports goods from China and needs to pay the Chinese supplier in RMB.

  • Before RENTAS: The company might have faced challenges like delays in payment processing, higher transaction costs, and potential risks associated with international money transfers.
  • With RENTAS: The company can now easily and securely transfer RMB funds through the RENTAS system. This significantly reduces processing time, minimizes costs, and ensures the timely settlement of payments to the Chinese supplier.

Key takeaway:

RENTAS is a critical system for Malaysia's financial health. It enables fast, secure, and reliable large-value payments, which are essential for the smooth functioning of the economy and the financial markets.

sources from BankNegara

There are two types of transactions handled by RENTAS namely Interbank Funds Transfer System (IFTS) and Scripless Securities Transfer System (SSTS). The following transactions can be performed by RENTAS members via the system:

  1. Interbank funds transfer;
  2. Cash withdrawals from Bank Negara Malaysia;
  3. Statutory reserve adjustment;
  4. Money market settlement;
  5. Ringgit leg of foreign exchange;  and
  6. Scripless securities transfer.


Retail Payment Systems in Malaysia refer to the underlying infrastructure and processes that enable the transfer of funds between individuals and businesses for everyday transactions. These systems encompass various technologies and networks that facilitate the movement of money.

Key Components of Retail Payment Systems:

  1. Payment Instruments: These are the tools used to initiate and execute payment transactions. Common examples include:

    • Cash: Physical currency, still widely used for small transactions.
    • Cheques: Written orders instructing a bank to pay a specific amount to a payee.
    • Credit Cards: Allow users to borrow funds for purchases and repay later.
    • Debit Cards: Deduct funds directly from the user's bank account.
    • E-Wallets: Digital platforms for storing and transferring funds.
    • Mobile Banking: Banking services accessed through mobile devices.
    • Online Banking: Banking services accessed via the internet.

  2. Payment Channels: These are the methods through which payment transactions are initiated and processed. Examples include:

    • Physical Stores: Point-of-sale (POS) terminals for card payments.
    • Online Platforms: E-commerce websites, online marketplaces.
    • Mobile Apps: Mobile banking apps, e-wallet apps.
    • ATMs (Automated Teller Machines): For cash withdrawals and deposits.
    • Branch Banking: Transactions conducted at bank branches.

Key Considerations in Retail Payment Systems:

  • Efficiency: How quickly and smoothly transactions are processed.
  • Security: Measures to protect against fraud and data breaches.
  • Accessibility: Ensuring access to payment services for all segments of the population.
  • Innovation: Adopting new technologies and services to improve the user experience.
  • Regulation: Compliance with relevant laws and regulations to ensure a safe and sound payment system.

Examples of Retail Payment Systems in Malaysia:

  • RENTAS (Real Time Electronic Transfer of Funds and Securities): Primarily for large-value interbank transactions, but indirectly supports retail payments.
  • MEPS (Malaysian Electronic Payment System): Facilitates electronic fund transfers between banks.
  • FPX (Financial Process Exchange): Enables online banking transfers for e-commerce transactions.
  • DuitNow: A real-time funds transfer service for individuals and businesses.


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