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Affordable Access to Digitalisation: Financial Inclusion for MSMEs

Is financial inclusion for MSMEs thriving in Southeast Asia, or are they still stinging from limited access? What statistics show that MSMEs get their fair share of the financial love and support they deserve?

High five, Southeast Asia! Among 42 global markets, 4 Southeast Asian countries (Singapore, Thailand, Vietnam, and Malaysia) excelled in the 2023 Global Financial Inclusion Index. All four countries have secured top 20 positions, with Singapore leading the pack. Thailand was at a solid 10th place, Vietnam closed at 17th, and Malaysia occupied 18th.

Source: 2023 & 2022 Global Financial Inclusion Index, Principal Financial Group

So, how did the SEA-4 countries climb the mountain of financial inclusion? There are three distinct ‘‘phases’’ each country goes through (refer to the image below) under three different pillars of financial inclusion. Each phase reflects how mature the market economy is and how the citizens interact with financial institutions.

The results also show that:

  • Malaysia & Vietnam are still building their financial inclusion muscles, currently in Phase 1 → Phase 2 with plenty of room for growth.
  • Thailand is a higher achiever and advances from Phase 2 → Phase 3.
  • Singapore has aced all 3 phases and is now tapping into a new level of financial inclusion with its unique approach. What could that be?

Diverse World of Malaysian MSMEs

Who are the hidden giants of the Malaysian economy? Precisely, a whopping 1.2 million MSMEs make up 97.4 percent of all businesses in the country! These unassuming MSMEs are the backbone of Malaysia and have contributed 38 percent to GDP, with an employed workforce of 48 percent, and generated 10.5 percent of exports in 2022.

Moreover, Malaysia defines micro, small, and medium slightly differently than other ASEAN neighbours. The table below shows how diverse these MSMEs are and vary in terms of the number of employees, and sales turnover with revenue.

Challenges and Potential Solutions to Digital Financial Inclusion for MSMEs

Although Malaysia has made strides in financial inclusion based on the global index, smaller-scale MSMEs are still facing hurdles when fully embracing digital financial services. 

1. Limited Access to Affordable Digital Payment Solutions

Traditional payment terminal providers often have high upfront costs and long-term contracts, primarily catering to larger businesses. This leaves micro-merchants with limited options for affordable digital payment solutions due to restricted capital or fluctuating incomes, hindering financial inclusion for MSMEs.

Solution: Fintech companies like Qashier are stepping in with more accessible options. Their pricing structures are competitive, with lower upfront costs and flexible payment options, making acquiring a terminal a realistic possibility for MSMEs’ needs. Scroll to the bottom to find your MSME business needs.

2. Financial Literacy and Digital Divide

Many MSME owners lack the necessary digital literacy skills to manage businesses remotely, access online training resources, or navigate government support programs offered online. Their limitations hinder them from leveraging the benefits of digitalisation.

Meanwhile, the upfront costs of hardware, software, and potentially internet upgrades can be a significant financial barrier for rural MSMEs. Many are hesitant with digital tools without a clear understanding of the return on investment.

Despite Malaysian internet users reaching 33.59 million in 2024, rural areas in East Malaysia like Sabah and Sarawak suffer from poor and unstable internet connectivity.

Solution: Bank Negara Malaysia and collaborations with fintech companies can address this gap by offering financial literacy programs specifically for MSMEs. These programs help MSME owners manage finances and utilise digital tools. 

In addition, expanding internet access in rural areas and providing mobile-friendly financial services can narrow the digital divide gap across Malaysia. The Malaysian government is actively working to address internet access issues as internet services are unstable, even with 4G internet in rural areas.

3. Regulatory Hurdles and Informal Business Practices

Navigating the complex regulations surrounding financial services often discourages micro-merchants from exploring alternative financing options or delaying access to essential financial services. This poses a barrier to financial inclusion for MSMEs. Moreover, micro merchants operating in the informal sector face difficulties meeting the formal requirements of traditional financial institutions.

Solution: Regulatory reforms that simplify financial services for MSMEs can streamline the application process and boost participation. Additionally, initiatives that encourage the formalisation of informal businesses can help these enterprises access the mainstream financial system. MyBijakNiaga SME toolkit enables MSMEs and new entrepreneurs to record financial transactions, and financial health, and track sales and profits for banking purposes.

4. Limited Access to Alternative Financing Options

40 percent of MSMEs have unmet financing needs and struggle to secure bank loans. It is challenging for MSMEs to obtain financing for equipment upgrades or working capital since many microbusinesses operate informally and lack credit history and formal documentation for loans.

Meanwhile, there are market-based financing options aimed at business expansion, but MSMEs under-utilise them. Interestingly, 61 percent of MSMEs with no prior experience in market-based financing are aware of its existence and open to exploring it. The remaining 39 percent are still unaware of these alternative financing options.

Solution: Malaysian government has introduced various grants and government-linked investment funds subsidies to support MSMEs in advancing their businesses.

Other viable financing solutions include fintech peer-to-peer (P2P) lending and crowdfunding. The current P2P lending platforms to look for include CoFundr, microLEAP and Capshere. View the list of P2P financing options and equity crowdfunding options here.

Power Up Your MSMEs Business with Qashier

Are you feeling left behind in the digital age?

Stop wondering, ‘Where do I get a reliable payment terminal?’ .

Many merchants, like you, face limited choices when accepting digital payments, hindering financial inclusion for MSMEs. Qashier is here to be your financial shinobi, helping smaller-scale businesses to bridge the digital gap.

QashierXS Smart Terminal 

QashierXS (under 500 grams) is an ultra-portable POS terminal that packs a punch. This full-function system is the key to your mobile business freedom. 

  • Bawa saje to sell from anywhere – pasar, gerai, pop-up events, or straight to your customer’s location.
  • Accept all the payment methods your customer loves – credit/debit cards, popular e-wallets, pay-by-link options, and QR payments with QashierPay. 
  • Issue digital receipts instantly via e-invoice and keep your sales records organised.

Skip the Wait for Bank Approval

Qashier ditches the banking red tape and gets you set up to accept payments faster. You get a super-easy signup process without any lengthy application process, while skipping the long wait

Qashier Support Package: Your Partner in Digital Success

Go Digital Together! Transitioning your business digitally can be more than a solo mission. Qashier is your MSMEs business digital partner with a comprehensive support package, helping you to dominate the cashless world.

Here’s what Qashier Support Package has in store for you:

  • Have A-Z Questions to Clarify? Sure, we have the Answers! Our friendly trilingual support team is just a call or message away, ready to guide you through any digital concerns.
  • Level Up Your Skills: You get full access to exclusive training materials and resources online and learn all the ins and outs to maximise the features while taking your business to the next level.
  • Stay Ahead Digitally: The digital payments world changes fast. Qashier helps you stay ahead of the curve with ongoing industry insights and updates. Even with all the twists and turns, your business is always compliant and competitive.

Ready to take your MSMEs digital success? Get started with the Qashier Support Package OR sign up for your QashierXS terminal today! 

(*New users in Malaysia are entitled to 3 months or 6 months flexible payment plans, check your eligibility with our team*)

More about Qashier

Qashier offers multiple digital solutions, including QR code table ordering, table management (F&B), employee management, customer relationship management (loyalty programs), inventory management, data analytics, and cashless payments, in an all-in-one device.

Qashier promises a seamless setup without any need for technical expertise. It boasts a user-friendly interface that is simple for anyone to learn and use. In addition, you’ll find 7 days-a-week responsive technical support from the local team if you require assistance.

Try the Qashier app for free on your own Android device! Alternatively, you can speak to us to see how Qashier can meet your business needs. Schedule a meeting with us here, WhatsApp (+60) 12 660 2741, or email [email protected].

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