Kyat is king (Photo credit: Wikipedia)
First-time visitors to Myanmar (Burma) can be caught short by its cash-only style of commerce. It's nigh impossible to pay by credit card for goods and services, and even luxury hotels refuse to swipe your plastic. In Myanmar, cash is king, queen and ace, and your greenbacks best be squeaky-clean and creaseless (local kyat notes bear more scars). As a result of U.S. sanctions, those rare businesses that did accept cards used to route payments via Singapore banks, which added greatly to the cost and hassle. Thankfully this is now changing as the U.S. and other Western powers have eased sanctions on trade and investment. This year has seen many of Myanmar's banks open their first ATMs and form a credit alliance known as Myanmar Payments Union (MPU) for card transactions. But most of the population stash their savings, if they even have any, in cash, jewellery and gold and never dream of settling a bill with an electronic transfer. Local banks are few and far between, and memories of a 2003 run on poorly-run private banks are still fresh in the memory. Big international banks are nowhere to be seen.
Good timing, perhaps, for card-processing giant Visa to wave the flag in Myanmar for card payments, with an emphasis on the potential for mobile-phone transfers to speed up the rollout of financial services. It held a conference Tuesday in the capital Nyapyidaw that attracted around 200 participants, including officials from the ministries of finance, communications and tourism, as well as a deputy governor of the central bank. They must all be wondering how exactly Myanmar is supposed to adopt electronic payments. MPU only launched three months ago with 17 member banks, so it's fair to say that everyone is on a steep learning curve. "It's absolutely a frontier (market)," says Rajiv Ramanathan, head of Payment Systems Partnerships for Visa in Singapore. "There are really no merchants that accept international cards." He spoke to me from Yangon on a mobile phone, one of only 2-3 million that serve a population of 60 million or so. Mobile phones have proven dynamite in other developing countries in providing banking services where no banks exist (Kenya is a well-documented pioneer). So Myanmar urgently needs to roll out both mobile networks and financial services, if it's serious about bringing its mainly rural population into the 21st century.
Last year Visa processed 77.6 billion transactions and had around 2 billion cards in circulation. Ramanathan says Visa wants to see that foreign travellers have the option of using plastic in Myanmar as a first step to building a presence there. The next step it takes could depend on the adoption of mobile phones, since this is such a powerful tool for innovation. The government is rumoured to be preparing to issue up to four new licenses to mobile operators, spurring the kind of competition that has brought down the cost of telecommunications in countries like Cambodia, where you can get a prepaid SIM card for $5 when you land. In Myanmar, the cost is around $250. Even that is progress: two years ago it was $1,000. Remember, this is a country with per capita GDP of $1,300 on a purchasing-power basis. Imagine dropping that much money to get connected (handset not included). Cutting the cost of getting connected would open the door for mobile payments and make Myanmar a more attractive market for Visa. "It's not early to start to think about it," says Ramanathan.
