73% of Malaysians use social media for shopping!

Malaysian consumers are leading the charge in embracing alternative payment methods and cutting-edge technologies, according to the latest findings from Adyen, the global financial technology platform for businesses. 63% of Malaysians utilise mobile wallets for transactions, boasting the highest adoption rate globally.

The Adyen Index 2024, based on a survey of over 38,000 shoppers and 13,000 merchants across 26 markets, unveils these insights.

A notable trend among Malaysian consumers is the shift away from physical wallets, with 41% now relying on mobile-enabled solutions like tap-to-pay. Malaysian shoppers are inclined towards quick and convenient ways of paying, fueling the demand for streamlined in-store experiences such as kiosks and one-click checkouts.

The Adyen Index also unveils the popularity of social commerce among consumers, with 73% of Malaysians utilising social media for shopping, a contrast to the global average of 44%. Malaysians also shop on these platforms approximately six times per month.

“As the retail landscape rapidly evolves, the integration of technology and personalisation is becoming increasingly apparent. Our recent findings reveal a significant shift towards digital payments and social commerce with Malaysian consumers leading the global trend in mobile wallet usage. To retain customer loyalty and maintain competitiveness, businesses must be nimble in catering to these changing consumption preferences,” said Soon Yean Lee, Country Manager, Malaysia, Adyen.

Adyen’s research further showed that Millennials were most likely to shop on social media platforms than any other age group, with 80% saying they’d done so in the last 12 months. There is growth across all age demographics using these platforms to shop. Gen Z consumers clocked the greatest growth;  of all of the Gen Z consumers that have shopped on social media, 17% of them are first-time buyers.

Recognising the growth potential, businesses are swiftly adapting strategies to align with evolving customer preferences. A striking 73% of Malaysian retailers report experiencing revenue growth after enabling social commerce, affirming the tangible connection between customer-centric approaches and business success.

45% of consumers also express loyalty to retailers who facilitate direct purchases via social media platforms, emphasising the need for seamless omnichannel experiences in fostering customer loyalty.

Fraud: A Persistent Challenge for Malaysian Business

The advent of mobile wallets and social commerce also presents a natural rise in fraud. In 2023, 95% of businesses in Malaysia experienced attempts of cyber-attacks or data breaches, placing the country second globally after Canada. 65% of businesses acknowledge that fraudulent transactions and chargebacks have significantly impacted their operations and profitability, surpassing the global average stat of 51%.

A chargeback happens when a payment is reversed after a customer disputes a charge on their account statement. Chargebacks can put revenue at risk, especially as friendly fraud becomes more common.

To combat fraud and reduce chargebacks, 69% of Malaysian businesses are considering collaborating with their payment providers to  chargeback liability guarantees.

“Online shopping is all about trust and consistency. When creating a safe space strengthened by robust customer authentication and chargeback management capabilities, retailers allow consumers to shop with peace of mind. Businesses themselves can also rest assured that the risk of chargebacks is also minimised, leading to a boost in revenue and more efficient operations.” said Lee.

Enriching shopping experiences

To enrich shopping experiences and amplify consumer engagement, businesses are investing in technology. Unified commerce solutions are pivotal for cost optimisation and operational efficiency, leading to a 16% higher growth rate for retailers compared to those not leveraging such technology.

By using a single platform, retailers can streamline processes and automate tasks, reducing manual work and errors.

Additionally, consolidating multiple systems into one platform helps reduce expenses related to maintaining, upgrading, and developing payment systems, ultimately enhancing ROI.

Additionally, 51% of consumers are increasingly willing to share data in exchange for discounts and access to loyalty incentives compared to 48% globally. This highlights the importance of personalised experiences and incentives in driving consumer engagement and loyalty.

The Adyen Index reveals Malaysia’s rapid shift towards digital payments and social commerce. While these advancements promise growth, the threat of fraud looms large, urging businesses to prioritise security measures.