to drive financial inclusion via e - payments while there are success stories globally where e - payments have helped advance financial inclusion, such success stories must be the norm rather than an exception. in this respect, the public and private sector collaboration goes to the heart of any successful policy and developmental agenda. we also need to take a longer term view rather than focusing on short term and narrow self - interests. in this regard, i wish to highlight four ( 4 ) areas that could drive financial inclusion to the next level, via the use of e - payments. these areas are : 1. correcting price distortions and promoting competition ; 2. development and sharing of infrastructure investments ; 3. strengthening transaction security ; and 4. consumer protection and education. 1. correcting price distortions and promoting competition we need to address price distortions and promote competitive practices. a market driven environment would ensure that the correct price signals are provided to promote the usage of the more cost - effective payment instruments whilst injecting competition. the idea is for market players to lower cost and widen the access channels to make financial services more affordable and accessible to the general public. a monopolistic market would result in less innovative products and higher cost over the long term. in malaysia, the presence of price distortion had caused e - payments to be costlier than paper - based instruments, thus making it less affordable to the masses. for instance, e - payment services such as interbank giro ( ibg ) used to be priced above cost at rm2 per transaction. cheque, which costs rm3 to process however, was not directly priced except for the stamp duty of 15 sen. to correct the price distortion, bank negara malaysia had introduced a pricing reform framework where the price of ibg and cheques are aligned closer to their cost of production. at the same time, the public are provided with an alternative e - payment option which is cheaper and more efficient. to ensure that adequate e - payment services are provided, bank negara malaysia will collaborate with the industry to establish a market - driven incentive framework to drive expansion in the various delivery channels. the total sub - districts served have increased to 92. 5 % while the total state legislative assembly districts served has increased to 99. 8 %. with at least 1 transaction per month. australia, the united kingdom and norway. bis central bankers ’ speeches since the commencement of the pricing reform framework, we have seen significant improvements. ibg transaction volume grew at a higher rate of

45. 6 % on a year - on - year basis for the first half of 2014 compared to 12. 4 % for the same period last year. likewise, cheques declined at a faster pace of 9. 8 % or 10 million cheques for the first half of 2014 compared to 2 % or 2 million cheques for the same period last year. while the data suggests some improvements, more need to be done. a particular area that requires huge efforts is the distortions in the debit card usage in malaysia. despite a seemingly high debit card penetration of about 19. 2 million “ active ” debit cards in contrast with 5. 5 million “ active ” credit cards, the per capita debit card transaction is only 1. 7 compared to 11. 3 for credit card in 2013, indicating a ratio of 1 debit card transaction to about 6 credit card transactions. acquirers charge merchants the same merchant discount rate ( mdr ) for the acceptance of debit and credit cards despite their differing cost structure, which makes debit cards just as expensive as credit cards. it is difficult to comprehend the charges imposed on debit cards, which have ready cash in them, is similar to the charges on credit cards. there has also been a slowdown in the growth rate of pos terminals in malaysia since 2012, which indicates a potential saturation of pos terminals at those merchants who can afford the mdr. this is further compounded by increases in interchange fees which are likely to cause the mdr to be raised to even higher levels on a system - wide basis, thus hindering the wider expansion of the pos network and depriving society from the convenience of using costeffective payment cards. the debit card should be positioned as a cost - effective payment card to make it more affordable for small merchants to accept card payments. the expansion of the pos network would allow for wider acceptance of the debit card to be used more pervasively, to displace the use of cash, thus bringing about cost savings for the country in the long run. to correct the distortions and promote competition in the domestic payment card market, a payment card reform is certainly timely to stem the indiscriminate increases in interchange fees and correct the price signals with the view to widen the pos network especially in non - traditional industries and rural areas. 2. development and sharing of infrastructure investment to be successful, e - payment solutions must not only be affordable,