Introduction

The development of a nation's payment system is of the utmost importance due to its relevance for national monetary policy, financial stability and the overall economy. Reforms in a nation's payment system strive for improved safety and efficiency. According to the Bank for International Settlement (BIS) Committee on Payment and Settlement System's General Guidance for National Payment System Development (2006) report, recent trends in national payment system development involved initiatives to broaden the range of payment instruments and services; improve cost efficiency in terms of operating costs and access to and usage of liquidity; enhance the interoperability and resiliency of banking, payment and securities –infrastructures; better contain legal, operational, financial and systemic risks in payment infrastructures; create more suitable oversight and regulatory regimes for the national payment system and improve the efficiency and stability of payment service markets. Malaysia, a rapidly developing country, has undertaken reforms in the country's payment system after the Asian financial crisis, as evidenced by the Malaysian Central Bank's mapping of the country's future financial sector landscape in its Financial Sector Master Plan 2001 (2000). This paper discusses the development of payment systems in Malaysia and the benefits they bring to small- and medium-sized enterprises (SMEs) in the country. In addition, the paper also discusses the possible impact of the recent global financial crisis on the payment system.

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