The following is a guest post from Wayne Liew of Lazada Malaysia, the largest online shopping mall in Malaysia with the widest range of products and brands. Visit the store today to enjoy ongoing promotions, a variety of payment methods for your convenience and free shipping for your purchases to all of Malaysia.

Online shopping has been getting more mainstream in Malaysia in the last couple of years. Statistics show that the Malaysian e-commerce spend was RM1.8 billion in 2010 and the number is expected to reach RM5 billion in 2014.

Despite the huge numbers, most Malaysians are still hesitant to shop online because they lack understanding when it comes to paying for their goods. Also, many shoppers have the presumption that shopping online equals to paying with credit cards. In this post, we are going to look at various ways you can pay for your goods online together with the respective pros and cons.

1. Credit Cards and Debit Cards

Although many payment methods were developed for online shopping, the credit card is still preferred by many as their way of paying for goods and services online. In Malaysia, as the government is trying to reduce household debts, we have seen evidence of a sharp increase in the usage of debit cards too, especially among young adults and teenagers.

With a credit card or a debit card, all you need to do in order to pay online is to fill up a dedicated form with your card details. You will then be requested for a PIN number, which you have to register with your bank. Once everything is done, your card will be charged with the payment amount.

Pros: Secure (depending on merchants and payment processors they use), widely acceptable and very convenient.

Cons: Credit card fraud and technical failures during payment processing.

2. Cash on Delivery

To protect the interests of customers and to establish credibility, a small number of prominent online shopping destinations offer cash on delivery as one of their payment options. With cash on delivery, customers simply pay cash to a person representing the store where they bought their goods from, after they have actually received what they order.

Pros: Safer, as you get to see the goods first before paying.

Cons: Not available as an option for many e-commerce stores due to high costs for merchants, danger of meeting strangers at specified locations, not convenient as arrangements for meetups may be required.

3. Online Banking or e-Banking

Apart from credit cards, certain e-commerce stores have enabled online banking or e-banking as a payment option. With online banking, customers are routed to their preferred banks to make payments. Most of the time, the source of fund is either the savings account or the current account of the customers.

With online banking, customers get to enjoy the convenience of paying online but does not risk getting themselves into credit card debt caused by excessive shopping.

Pros: Secure, receipts automatically generated by banks, convenient and paying with what you have (sensible spending).

Cons: Need to have sufficient funds in account and not everyone has an online banking facility.

4. Bank Transfer

What if you have cash in the bank or on hand but do not have any online banking facility? Well, with some e-commerce stores and online marketplaces, you can finalize your purchase on the website first before transferring the payment to a designated bank account later. The transfer can be made either through Internet banking, phone banking or over-the-counter.

Once the payment is done and cleared, you need to obtain a receipt or reference number, which is required by e-commerce stores so that they can verify the payment made.

Pros: Does not require prior setting up of any banking facility.

Cons: Troublesome because there is a need to obtain and keep proof of payment.

5. Prepaid Shopping

This concept of prepaid shopping is still new in Malaysia. It is taking off slowly because most Malaysian customers do not want to pay upfront for products or services unless the merchant that they are dealing with is highly trustworthy.

This concept is adapted from online games whereby gamers are required to purchase game credits, golds or coins in order to make in-game item purchases. In the context of e-commerce for physical products, customers will pay for their goods using store credits that are purchased earlier in a separate transactions.

Pros: Convenient and credits may be cheaper due to promotional activities such as loyalty programs, etc.

Cons: Paying upfront and unused credits are perceived as wastage.

Be Smart, Only Shop at Trusted Online Shopping Malls

Before making any purchase online, make sure you have done your homework. A quick research on major search engines and social networks will give you a better idea on the reliability, credibility and the level of service of any online stores, sellers or merchants.

Have you shopped online before? Which payment method do you prefer over the rest? Feel free to share with us your online shopping experience in the comments section below.

Image Credits: IntangibleArts and Philip Taylor PT


Personal finance author and trainer

    3 replies to "Pros and Cons of the Five Payment Methods for Online Shopping in Malaysia"

    • mary

      i dont have c/crd card (im scared who i’ll become when i have 1 😀 ) so i only have a debit card. unfortunately, d/crd is useless 4me especially in our local on9 transaction. but it sick when i need to purchase airflight ticket on9 since i dont have a c/crd. im hesitate to have an online banking at 1st bcoz of the ‘invincible enemies’ threat last i decided to have a cimbclicks for online transaction. no regret…. nw i can pay bills, purchase my ticket n the most important it is acceptable on most of our gov agencies

    • Netmask8

      Greetings + G’Day,

      Try using more secured + reliable/trusted online trasactions :-

      1. PayPal
      2. Moneybookers

      Credit Card payment is quite safe too, as the payment centre re-direct to the mechant online website (starting with https:// which authentication/communication is secure, encrypted ..etc ) .. More info about https ===>
      All the best

      • Wayne Liew

        Hi Netmask8,

        Yup, PayPal is definitely picking up in terms of customer adoption in Malaysia but I’m not too sure about Moneybookers. Malaysian consumers don’t really get the idea and benefits behind PayPal yet. Also, many ecommerce stores in Malaysia are still not offering PayPal as a payment option.

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