It was a chance conversation with a grass cutter that made Johnson Yu realise the extent of income inequality and systemic injustices that migrant workers — documented or otherwise — face, having no access to financial services.
“He was helping me trim the grass in my house and, suddenly, the trimmer stopped working. He checked the machine and found sand clogging the motor.
“I asked how it happened and his response was that some of his countrymen were in the same business and were envious of him because he gets a lot of work in my neighbourhood. So, I asked him why not get a back-up trimmer? He replied that he didn’t have any money,” says Yu.
The response was perplexing, as the grass cutter regularly services houses in the area and acknowledged that he had enough bookings to get him through most days. When Yu pointed that out, the grass cutter simply said he remits all his money to his family back home.
Asked why, he replied that he lived in a house with 20 others and it was unsafe to keep large sums of money lying around.
In that moment, Yu understood that this was the stark reality of unbanked and underbanked populations across the country.
The conversation prompted him to dig deeper. “I found out that there was a lot more to it than migrant workers wanting to keep their money safe.”
Last March, which was roughly a year after he had the conversation with the migrant worker, Yu launched EVOLET, a secure digital wallet with a complimentary pre-paid Mastercard service as an alternative to bank accounts for migrant workers.
Convenience for workers aside, the digital wallet — licensed by Bank Negara Malaysia — is fashioned first as a payroll management tool, which is an immense cost-saving service for employers, as disbursement of cash is very costly and oftentimes perilous.
Malaysia’s economy is one that is heavily dependent on a foreign workforce. Official data from the Immigration Department shows that 1.98 million regular migrant workers were employed in Malaysia until September 2019.
The World Bank estimates, however, that 2.96 million to 3.26 million migrant workers, including 1.23 million to 1.46 million in irregular situations, were residing in Malaysia as at 2017. The migrant population is diverse, comprising workers from Indonesia, Bangladesh, Nepal, Pakistan, Myanmar, Vietnam, China and India, among many others.
Although migrants make up roughly 20% of the country’s labour force of 15.71 million, the level of bank account ownership is low, as many cannot comply with the basic requirements to open a bank account, owing to a lack of proper documentation.
“When I started investigating and spoke to many different industries, I found out that there was a very large number of them who did not have bank accounts.
“One problem is the nationality of the migrant. It is not easy for certain nationalities to open a bank account even if they have employment permits and visas because their countries are red-flagged by Bank Negara,” says Yu.
The central bank’s Financial Action Task Force does this as a means to address deficiencies in high-risk jurisdictions with weak measures to combat money laundering, terrorist financing and proliferation financing.
While these regulations are pivotal in protecting the international financial system, in reality, most migrant workers are unable to furnish the additional documents needed to open bank accounts, and employers find the process too cumbersome.
As such, they come to rely on cash-transfer agents and remittance services, as payment of wages is done in cash — which increases their chances of becoming victims of theft.
“For undocumented workers, they obviously prefer to get paid in cash. Once they get the cash, they immediately go and remit the money to their home countries.
“It is a monthly affair. Some employers have told us that their staff will take a half-day off every month after getting paid because they have to run out to remit a large portion of their money back home as they receive it in cash,” says Yu.
Seeing that the problem starts at having a secure place to deposit their wages, Yu decided to focus on providing payroll management, followed by remittance services for the migrant workforce.
“We saw a need to provide a secure avenue for them to keep their salaries. For EVOLET, our main focus is to provide secure salary management for employers first,” he says.
According to him, employers are charged RM1 per employee, making the EVOLET payment management systems the lowest-cost in the market.
But Yu does not intend to focus only on the migrant workforce. He hopes to expand EVOLET as a means of addressing financial inaccessibility for lower-income groups as well.
“We feel the characteristics and needs of migrant workers and lower-income groups are quite intertwined.
“The needs of migrant workers and the B40 community are similar. Both want good deals and savings on medical services and groceries. Once we are able to onboard these kinds of services, we will be able to negotiate cheaper options and a more transparent fee structure,” Yu says.
Locals interested in EVOLET can top up their e-wallet using Public Bank ATM machines or via FPX. “There is no transactional fee for top-ups and card-to-card transfers.”
Unlike its rivals, EVOLET is positioned as an ecosystem provider that is a combination of a seamless salary disbursement platform, e-wallet, remittance and, conveniently, a marketplace for access to services such as insurance and basic needs such as food, transport and mobile reloads.
“For example, Filipinos like to purchase items from Malaysia and send these items back to their home country instead of remitting money. A refrigerator from Malaysia is much cheaper than one in the Philippines,” Yu explains.
Moreover, the wallet not only provides local mobile reloads but also allows migrants to reload for their families and friends overseas. “They can top up from the app itself on behalf of their family members back home. With such behavioural data, we can offer products on the EVOLET platform and they can buy locally and send it abroad. This way, there is twice the impact — we are able to improve spending locally while reducing the cash outflow,” says Yu.
Once they can go cashless, they can also use other digital services such as e-hailing and delivery services — which helps minimise their movement, especially in current times.
“They can use their card to make payments, which they are unable to do now,” he says.
Apart from the lack of documentation to apply for a bank account, many migrants also do not trust the banking system, especially if they come from countries where banks are not properly regulated.
“Also, for a person who does not speak Malay or English, it’s difficult for them to walk into any bank to open an account because of the language barrier.
“This is why the EVOLET application is translated into 12 different languages,” he says.
Currently, EVOLET has around 800 users and is in the process of onboarding 7,000 more. Yu says the company hopes to get 140,000 users in three years.
He says the onboarding process is fairly straightforward: All that employers need to do is sign an agreement and EVOLET handles onboarding of users, e-KYC (electronic know-your-customer process) and issuing of Mastercard credit cards.
“e-KYC is a very simple process where all a migrant worker has to do is provide a picture of his passport and a selfie of him holding his passport. Once that is submitted, e-KYC will be approved after 24 to 48 hours, then he can just add his Mastercard on the e-wallet and start using it.
“We provide employers with the entire software system to pay salaries themselves and we also offer the option of doing it for them,” says Yu.
Migrants from countries flagged by Bank Negara might need to provide additional documents but, even then, it is not as tedious a process as it would be if one were to apply for a bank account, he says.
“At the moment, we are concentrating on the four largest nationalities — Nepalese, Bangladeshis, Filipinos and Indonesians, who make up more than 60% of Malaysia’s migrant workforce,” says Yu.