Touch ‘n Go loses its monopoly in Malaysia. What now?

Dan Lain-Lain (Malay for “and others”) is a weekly column by TIA journalist Emmanuel Samarathisa that dissects the goings-on in the Malaysia tech scene but with a heavy mix of current affairs, policy and politics. Click here to read past articles.

On Sunday, Prime Minister Anwar Ibrahim received thunderous applause after telling youths during a town hall that his government will review the monopoly of digital payment provider Touch ’n Go (TNG).

A toll plaza in Malaysia / Photo credit: Touch ‘n Go

The firm has been a thorn among users simply because it disallowed them to pay for public transport and tolls with anything other than its prepaid card.

Imagine driving interstate and you are short of cash as you approach the toll booth. Or, you’re rushing to a meeting and you get off the train only to find out that your TNG card has insufficient balance? Yeah… What you have to do is ensure that you have cash on hand to either reload your card or pay the difference at the counter.

For toll fare payment, you can link your card to TNG’s e-wallet. If there’s not enough money in the card, the fare is deducted from the e-wallet.

The other problem is TNG’s RFID: a sticker with a radio-frequency chip that drivers need to attach to their front windscreen.

This tag is unique to each user and is synced to TNG’s e-wallet. So a driver simply needs to pass through the RFID toll gate, and the fees are deducted from the e-wallet directly. But take-up is slow and toll companies haven’t increased RFID lanes, leading to congestion during peak hours.

What followed the town hall was a swift action from Anwar’s administration. Just after a few days, it announced that first, commuters can also use credit or debit cards to pay for bus and train fares. Second, there will be a phased introduction of the said payment system for tolls.

The unprecedented announcement came with promises that the measures will be implemented in the coming months. Why unprecedented? Simply because of how quickly things progressed since the town hall. Government moving fast?

Anyway, this has led to chatter about the end of TNG’s dominance. To be sure, the government did say that it isn’t going to kill off the fintech firm for good reason: Doing so will surely invoke some sort of severance clause requiring the government to pay for breaking up the state-controlled monopoly.

Quicker tech adoption

So, what does this mean? Well, obviously, financial services companies will get a chance to ride this by issuing cards to pay for public transport or toll fares. Fintech companies such as Wise have also released their prepaid cards.

The number of providers will increase. I won’t rule out the likes of Grab and Sea joining the bandwagon too simply because they have digital wallets. So it’s just a matter of linking their wallets to a smart card.

Grab and Sea are also digital bank licensees, so naturally users can also connect their bank accounts to their e-wallets and cards. Malaysia’s largest bank Maybank already has this system in place with its MAE prepaid Visa debit card. Customers can sync it with the Maybank e-wallet, also called MAE, as well as with their account.

Missed opportunity

Riding on momentum