How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

Malaysia’s digital payment market has become a hotspot for fintech innovation, and Indian startups are making significant inroads.

With a supportive regulatory environment and growing demand for digital financial services, Malaysia offers fertile ground for these companies.

However, while the success of Indian fintech firms in digital payments is evident, there remains a substantial opportunity for growth in areas like insurance, credit management and short-term lending.

The Rise of Indian Fintech in Malaysia
Indian fintech companies have capitalized on Malaysia’s rapidly evolving digital landscape. Among the notable players is Razorpay, an Indian payment solutions provider that made headlines with its acquisition of Curlec, a Malaysian recurring payment solutions provider.

Now branded as ‘Curlec by Razorpay,’ the company has expanded its offerings to become a full-stack digital payment gateway. This strategic move has positioned Razorpay as a key player in Malaysia, where it now serves over 700 businesses, including major names like Tune Protect and Mary Kay.

Curlec by Razorpay’s involvement in the DuitNow service, a real-time payment system similar to India’s Unified Payment Interface (UPI), further underscores its commitment to the Malaysian market. By facilitating fund transfers using mobile numbers and national IDs, Curlec is helping to drive the adoption of cashless transactions across the country. DuitNow is a part of the larger digital public infrastructure initiative by Malaysia, called PayNet.

This aligns with Bank Negara Malaysia’s (BNM) vision of a cashless society, a goal that is becoming increasingly attainable with the help of innovative players like Razorpay.

Another Indian fintech company making waves in Malaysia is Pine Labs, known for its point-of-sale (POS) systems and digital payment platforms. Pine Labs has successfully introduced its technology to Malaysia, catering to both small businesses and large enterprises. This has contributed to the growth of Malaysia’s digital payment infrastructure, offering consumers more flexibility and security in their transactions.

A Favorable Regulatory Environment
The success of Indian fintech startups in Malaysia can be attributed in part to the country’s supportive regulatory framework. Malaysian authorities, particularly Bank Negara Malaysia, have been proactive in creating an environment that fosters innovation in the fintech sector.

The Financial Sector Blueprint 2022-2026, introduced by the Bank Negara Malaysia or BNM, emphasises the importance of open data ecosystems, national digital identity schemes, and real-time payment linkages. These initiatives have created a solid foundation for digital payments and have encouraged foreign fintech companies to establish a presence in Malaysia.

Additionally, the Malaysian government’s exploration of Central Bank Digital Currencies (CBDCs) and the upcoming regulatory framework for digital insurers and takaful operators highlight the country’s commitment to advancing its fintech sector. This regulatory foresight ensures that Malaysia remains an attractive destination for fintech investment, particularly for companies like those from India, looking to expand their global footprint.

The Untapped Potential in Financial Products
While Indian startups have made significant strides in Malaysia’s digital payment market, there remains a substantial gap in the provision of other financial products, particularly insurance.

The upcoming regulatory framework for digital insurers and takaful operators presents a golden opportunity for Indian fintech firms to diversify their offerings. By venturing into digital insurance, wealth management, and other financial services, these companies can further solidify their presence in Malaysia.

This potential is particularly evident as Malaysia’s first digital banks are set to launch, bringing new levels of innovation and financial inclusion. Indian fintech companies, with their expertise and experience in other markets, are well-positioned to tap into this emerging sector.

Expanding into digital insurance and financial products not only meets the growing demand but also contributes to a more comprehensive financial ecosystem in Malaysia.

BNM’s 2022–2026 Blueprint also paints a rather fascinating picture of how the nation plans on adopting digital currencies, through Central Bank Digital Currencies (CBDCs).

However, there is a need to both, recognise the potential of CBDCs while following a deliberate, data-driven approach that is cautious, and protects Malaysia’s interest. Indian fintech and crypto startups, certainly have the wherewithal to capitalise on this in a way that is beneficial to both, India and Malaysia.

Indian fintech startups have established a strong foothold in Malaysia’s digital payment market, thanks to a supportive regulatory environment and a growing demand for digital financial services. However, the journey doesn’t end here.

With the upcoming regulatory frameworks and the untapped potential in insurance, short-term lending, credit management and other financial products, Indian fintech firms have a significant opportunity to expand their influence and contribute to Malaysia’s evolving fintech landscape.