E-Wallets in Malaysia: How They Are Regulated and What Happens to Your Money If an Issuer Fails

You tap “pay” at the counter, your e-wallet balance drops by a few ringgit, and the transaction is done in a second. But where is the RM200 you “topped up” this morning actually kept — and what happens to it if the company behind the app suddenly goes bankrupt? The answer is different from what happens to the money in your bank account, and the difference matters.

Who regulates e-wallets in Malaysia?

E-wallets like Touch ‘n Go eWallet, Boost, GrabPay and ShopeePay are not banks. They are regulated by Bank Negara Malaysia (BNM) as e-money issuers (EMIs), approved under section 11 of the Financial Services Act 2013 (FSA) — or section 11 of the Islamic Financial Services Act 2013 (IFSA) for Shariah-compliant products.

The detailed framework is set out in BNM’s Electronic Money (E-Money) Policy Document, effective 31 January 2025. It defines e-money as a payment instrument that “stores funds electronically in exchange for funds paid to the issuer” and can be used to make payments to parties other than the issuer.

All four major brands are listed as non-bank e-money issuers in BNM’s official list, under their registered company names:

• TNG Digital Sdn Bhd — Touch ‘n Go eWallet
• Axiata Digital E-code Sdn Bhd — Boost
• GPay Network (M) Sdn Bhd — GrabPay
• ShopeePay Malaysia Sdn Bhd — ShopeePay

Issuers that are large enough are classified as eligible EMIs and are subject to stricter governance requirements. The thresholds include having at least 500,000 active users for six consecutive months, or a 5% market share of the total value, volume or outstanding e-money liabilities in Malaysia.

Is an e-wallet balance the same as bank savings?

No — and this is the most common misconception. When you keep money in a savings account, the bank borrows that money, pays you interest, and uses it to lend to others. An e-wallet balance works in a completely different way.

Paragraph 26.1 of the policy document prohibits e-money issuers from:

• issuing e-money at a premium or discount (the monetary value must equal the funds received);
• using the funds collected to lend or provide financing to anyone; and
• paying interest, profit or any return on your e-money balance.

That means your e-wallet balance is neither an investment nor a deposit. It is stored value representing money you have already paid — no more, no less. All e-money transactions in Malaysia must also be in Malaysian Ringgit.

What is “safeguarding” and how is your money protected?

This is where the real protection lies. Paragraph 16 of the policy document requires every issuer to segregate user funds, and non-bank issuers must place them in a trust account:

• Full segregation (16.1): funds collected in exchange for e-money must be kept in an account separate from the issuer’s working capital or any other business.
• Trust account (16.2): a non-bank issuer must deposit those funds in a trust account at a banking institution, established under the Trustee Act 1949. The funds may only be used for refunds to customers, settlement to merchants, or credit transfers made by customers.
• Restricted investment: if invested, trust funds may only be placed in high-quality liquid ringgit assets — deposits at banking institutions, debt securities of the Federal Government or BNM, and Cagamas debt securities.
• Always sufficient (16.3): the funds in the trust account must at all times be enough to cover the total outstanding e-money liabilities. If they fall short, the issuer is encouraged to top up the funds within one (1) business day.
• Risk spreading (16.6): issuers are advised to spread funds across several banking institutions to reduce exposure to any single bank.

Small issuers with outstanding e-money liabilities of less than RM1 million may safeguard funds through a bank guarantee as an alternative option, with BNM’s written approval.

E-wallet balance versus bank account: what’s the difference?

Feature	Bank account (savings/current)	E-wallet balance
Regulator	BNM (licensed banks under the FSA)	BNM (e-money issuers, section 11 FSA)
Status of the money	Deposit — the bank borrows it	Stored value — held in trust
Interest paid?	Yes (depending on product)	No (prohibited by policy)
Where is the money kept?	The bank’s balance sheet	A segregated trust account at a bank
PIDM protection	Yes, up to RM250,000 per depositor per member bank	Not directly; only through the trust account, conditionally
Can be used for lending?	Yes	No (prohibited)

Why doesn’t PIDM directly protect e-wallet balances?

The Malaysia Deposit Insurance Corporation (PIDM) protects deposits at member banks — savings accounts, fixed deposits, current accounts, Islamic deposits and foreign currency deposits — up to RM250,000 per depositor per member bank.

An e-wallet balance is not a deposit, so it is not covered by this direct protection. What PIDM protects is the trust account where the issuer places user funds. PIDM provides separate protection for deposits held in trust — including deposits held for an approved e-money scheme — provided the trustee discloses the interest of each beneficiary in the bank’s records. In that case, protection of up to RM250,000 applies per beneficiary per member bank.

The distinction is subtle but important: if the bank holding the trust account fails, PIDM protection may kick in. But if the e-wallet company itself fails, PIDM is not your safety net — it is the trust structure that protects you.

What happens to your money if an e-wallet issuer fails?

Because user funds are segregated in a trust account and are not part of the company’s assets, they are protected from the issuer’s general creditors. The policy document sets out an orderly process when an issuer is directed to cease or its approval is revoked (paragraph 25):

1. The issuer must return the funds collected from customers and settle the amounts outstanding with merchants within a reasonable time.
2. It must contact and periodically remind customers to claim any unclaimed balances.
3. It must maintain records identifying the beneficiaries of the e-money funds, and make those records available to the trustee administering the trust account to facilitate proper distribution.

As an additional layer, every non-bank issuer must submit an exit plan together with an undertaking to BNM when applying to issue e-money. Unclaimed balances are ultimately dealt with under the Unclaimed Moneys Act 1965.

For ordinary refund requests — for example when you close your account or are charged in error — the issuer must refund without additional cost within 14 days, or up to 30 days for complicated cases.

What should you do as a user?

• Don’t treat an e-wallet as a savings account. It is designed for payments, not for storing large sums. It pays no interest and is not a PIDM-protected deposit.
• Keep only what you need for day-to-day spending. For savings, use a PIDM-protected bank account.
• Use only issuers that are listed in BNM’s official list of e-money issuers.
• Enable security features such as strong authentication; remember that cross-border and card-not-present transactions are disabled by default unless you choose to enable them.

What’s next

BNM’s e-money framework continues to evolve as digital payments grow, and its layers of governance, cyber security and fund protection are tightened over time. To understand the full picture of how your money is protected, read the related guides on PIDM’s deposit insurance system and how DuitNow QR payments work. Always refer to the official BNM (bnm.gov.my) and PIDM (pidm.gov.my) websites for the latest version of the policy document and the list of approved issuers before making financial decisions.