Instead, it should be about putting customers at the core of innovation to address real pain points and drive greater value creation. This means delivering integrated solutions to enhance the value proposition to end-users. In the e-wallet space, we have noticed the practice by some players in offering generous rewards including cashback to stimulate usage among users. While such practice may be effective in driving e-wallet adoption at the initial stage, it is questionable whether such practice is sustainable in the longer run. For instance, we have observed that the transaction volume of some players tend to fall significantly once the promotion period is over. To achieve a more sustainable migration, the industry should strengthen the value proposition of e-payments. Greater focus should be placed on creating innovative and value-added solutions that go beyond payments. This may serve as a natural incentive for customers to adopt digital 2/4  BIS central bankers' speeches  financial services. To enhance the value proposition to end-users, Bank Negara Malaysia has also focused its efforts on evolving our regulations to facilitate new business models. The ongoing work on the digital banking framework is one example, amid growing interest among traditional and nontraditional players to enter this segment. Of importance, the success of these new business models will depend on the industry players’ ability to harness customer data to develop value-added services while ensuring compliance with data protection laws and regulations. This is key to enable greater customisation and offering of new services.

Greater scope to enhance inclusivity and quality of e-payment adoption The first priority is to improve the quality of our e-payment migration to be more inclusive, broadbased and sustainable. The good progress so far means that Malaysia has a solid foundation for more widespread adoption of e-payments. E-payments are increasingly prevalent, with adoption picking up across a wide range of use cases. A wider network of merchants is also increasingly open to accepting e-payments as a possible driver of efficiency gains and revenue growth. Importantly, these encouraging developments have been contributed, in part, by the market reforms and incentive structures implemented since 2013. These measures have corrected market distortions and facilitated the pooling of industry resources to continuously enhance the payment infrastructure and services. Nonetheless, there are opportunities for more inclusive and broad-based adoption. Studies have shown that cash usage is still prevalent with more than 80% of Malaysians reportedly using cash in a majority of their everyday spend such as F&B, groceries and fuel. E-payment adoption is also uneven across geolocation and is largely concentrated in the urban centres. This calls for greater efforts in two key areas to address such market gaps. The first key area is to significantly expand merchant acceptance, with a focus on lower-tier merchants. E-payment acceptance points are not yet ubiquitous, especially among microenterprises that are frequented by many Malaysians, such as wet markets, night markets and hawker stalls. In this regard, solutions that are ‘infrastructure-light’ could go a long way in boosting e-payment acceptance among micro-enterprises who are cost-sensitive.