Myanmar rejoins banking mainstream, cards and all

Myanmar rejoins banking mainstream, cards and all

Less than a year ago, Myanmar did not have a single functioning ATM.

Kanbawza Bank (KBZ) has received central bank approval to offer international banking business. Umesh Pandey

“The Asean market is a key region for Visa, and Myanmar is central within that,” said Somboon Krobteeranon, Visa’s country manager in Thailand.

“Myanmar is an exciting opportunity and we aim to play our part in bringing the benefits, security and convenience of electronic payment innovation to the country.”

Representatives of MasterCard were part of the first US-Asean Business Council visit to Myanmar in July. The US company has since become the first payments operator to issue a licence to a Myanmar bank.

MasterCard entered the agreement with Cooperative Bank Ltd, which has the largest network of ATMs in the country, according to a statement released last week. The licence will allow the bank to issue MasterCard-branded cards and enable merchants to accept them, according to the statement.

Domestic banks have started to roll out a network of ATMs across the country following a deal in September last year with the Chinese electronic payments firm GRG Banking to set up the Myanmar Payment Union, allowing debit cards to be used between customers of rival banks.

The new payment network will then serve as a gateway for international credit card companies from next year, said GRG Banking, which will also reportedly include China’s Union Pay and Japan Credit Bureau.

Cooperative Bank started operating Myanmar’s first cash machine in nine years at the start of November in Yangon. ATMs had been totally absent since a banking crisis in early 2003, when people queued outside branches to withdraw their savings. The Central Bank of Myanmar then suspended a number of banking services including ATM cards while censors attempted to stem the tide of negative reports by banning the phrase “banking crisis” in newspapers.

Myanmar’s banking sector then suffered from rock-bottom confidence among the general public and financial sanctions imposed the same year by the US and the European Union, which effectively cut off the country from the global banking system.

But Washington’s decision to finally remove financial sanctions against Myanmar banks in July — except in the case of military-linked Innwa Bank — means US credit card companies including Visa and MasterCard can now operate there.

“We have received expressions of support from both [the] US and Myanmar sides for MasterCard and other international electronic payment schemes to establish services in Myanmar to facilitate business activity and tourism,” said Venture Liang, a Singapore-based spokesman for MasterCard.

Although in theory Myanmar’s economy has been frozen out of the global credit card network since 2003, the tourism sector in particular has found ways around sanctions by processing payments overseas.

Myanmar Airways International, the national flag carrier, operates a Bangkok office accredited by the Tourism Authority of Thailand, allowing it to process credit-card payments for flights through Kasikornbank’s K-Payment Gateway, an online transactions system.

Although foreign visitors are still unable to use Myanmar’s fledgling ATM network, a handful of tour agencies including Exotic Myanmar in downtown Yangon have offered credit-card bearing tourists cash advances using the same system at a hefty 10% service charge.

Like MAI, Exotic Myanmar runs an office in Bangkok. KBank only allows clients to use its system if they have been registered in Thailand for three years, one of a series of requirements that has barred the majority of Myanmar-based companies from using the system.

Similarly, international hotels in Yangon including Traders, run by the Hong Kong-based Shangri-La group, and The Strand, operated by GHM of Singapore, have relied on their head offices overseas to register credit-card payments for rooms, meals and drinks made by their executive guests.

“We have to process the payment outside of the country,” said a representative of The Strand, a five-star hotel on Yangon’s riverfront, adding that credit-card payments incurred a 6% service charge.

Like the vast majority of foreign tourists in the country, most of Myanmar’s 60 million people still deal exclusively in cash.

Only 10% of people in the country had access to cash machines in March, according to a report by the Yangon-based consultancy Thura Swiss Research, while just 50% of bank customers were ATM cardholders.

Cooperative Bank, which operates the largest network of cash machines in Myanmar, reported100 new customers applying for ATM cards every day.

However, that number is expected to swell with the growing network of ATMs and rising deposits.

In February, Myanmar’s private and state-run banks held 5.94 trillion kyat (US$6.28 billion) in deposited savings, or about $105 for every person in the country, according to the latest figures from the Central Bank of Myanmar.

bangkokpost