Interoperable Credit Transfer Framework

Credit transfers are payment services that enable a payer to instruct their account-holding institution to transfer funds to a beneficiary. In Malaysia, credit transfer systems such as Interbank GIRO IBG and Instant Transfer are accessible to current and savings account CASA holders through Internet banking, mobile banking, and Automated Teller Machine ATM channels.

With high penetration of debit cards and mobile phones in Malaysia, most adults carry both a debit card and a mobile phone. These tools can be used to make payments as alternatives to cash and cheques. Over the past 12 months, credit transfer services have increasingly been offered not only by banking institutions through mobile banking applications but also by non-bank electronic money e-money issuers via person-to-person P2P fund transfers in their mobile payment applications. Credit transfer services, particularly when accessed through mobile devices, can complement debit cards as a convenient and cost-effective alternative to cash and cheques. The growing adoption of smartphones and the availability of diverse mobile payment solutions from both banking institutions and non-bank e-money issuers have the potential to accelerate the shift to electronic payments e-payments and promote financial inclusion by enabling every adult in Malaysia to make or receive payments electronically.

Given the importance of network effects in promoting greater payment efficiency, banking institutions and non-bank e-money issuers should collaborate at the infrastructure level by leveraging on a shared payment infrastructure and ensuring the interoperability of their respective credit transfer services. This would bring about economies of scale and expand network reach, thus lowering costs while encouraging competition at the product and service level. This is envisaged to create a more efficient, competitive and innovative payment landscape that fosters continuous improvements in payment services to keep pace with emerging technological changes and evolving user demands.

This policy document outlines requirements aimed at—
(a) enabling interoperability of credit transfer services leveraging on shared payment infrastructure to expand network reach and avoid market fragmentation;
(b) ensuring fair and open access to shared payment infrastructure to promote a level playing field and foster collaboration at the infrastructure level;
(c) facilitating effective oversight of shared payment infrastructure to maintain the safety and integrity of credit transfer systems and to ensure the integrity and stability of the financial system;
(d) encouraging innovation through the establishment of innovation sandbox facilities and publication of Application Programming Interfaces (APIs) by an operator of a shared payment infrastructure;
(e) establishing risk management measures proportionate to the nature, scale and complexity of the activities and risk profile of the respective providers of credit transfer services; and
(f) strengthening customer protection and fostering confidence in the use of credit transfer services.

This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking