While the reality of the Internet boom in the nineties brought many e-commerce proponents to revalidate their expectations, the Internet provides us with an outreach, other than wireless technology, that surpasses any other known media. As a result e-commerce through the Internet has been gaining significance and its potential should not be discounted. In meeting this trend, the FPX is indeed a welcome development as a payment system that leverages on banking institutions’ Internet banking services to provide on-line assurance of payments, enables payment references to accompany payments to facilitate reconciliation of transactions, and provides an efficient and cost-effective settlement mechanism. The system is intended to support the various initiatives of the private sector and the government in e-commerce, through the use of an industry-wide payment platform that would have a more comprehensive out-reach to users, compared to the existing bank-centric models. It is our hope that the FPX would facilitate e-commerce transactions and encourage businesses to undertake process re-engineering to reach out to wider markets, facilitate end-to-end e-commerce transaction flows and reduce operating costs through the use of modern day technology. BIS Review 63/2004  1  Ladies and Gentlemen, The payment system landscape is continuing to evolve - shaped for the most part by the availability of various electronic payment infrastructures and the consumers’ adoption pattern. It is noted, however, that while a vast array of electronic payment systems and instruments have been introduced against a background of more flexible regulatory policies and advancements in technology, the use of cheques remains pervasive in Malaysia.

More than 90% of the non-cash retail payments in Malaysia are made by way of issuing cheques, albeit at a slower average annual growth rate of 2% in the recent two years, compared to the use of the Inter-Bank Giro which has increased at the rate of 197%. In most developed countries, the use of cheques has declined to negligible levels compared to electronic payments. These trends underpin the need for the banking institutions to further intensify efforts to encourage consumers and businesses to use the electronic payments systems. Promotional programmes and greater consumer education activities also have to be escalated to promote confidence in Internet transactions and the use of electronic means of payments. The need to build up consumer awareness is essential in an environment that is becoming increasingly challenging and complex. Consumers need to be informed and convinced that the payment infrastructure is safe, efficient and reliable, and that there is an adequate consumer protection mechanism for consumers to be able to confidently use and enjoy the advantages of a low cost and effective payment system. One of the main challenges is to combat fraud. The rising incidences of Internet-based identity theft and phishing scams globally require the banks to remain vigilant about the possible security risks and employ effective security measures and internal procedures to protect their customers. Banks should remain one step ahead in this endeavour.