Myanmar's Upswing in Payment Tech a Model for New Markets
MasterCard's Antonio Corro is building a new payments system in Myanmar, a country that's springing to economic life after decades of military turmoil and political unrest.
As the card network's country manager for Thailand and Myanmar, Corro's goal in Myanmar is to expand MasterCard's role by negotiating with the central bank and other authorities to offer new payment types to outside companies. The strategy thus far has been to introduce prepaid cards for travelers, with the hope of a broader product set in the near future.
Myanmar, which is officially called Republic of the Union of Myanmar and is often informally called Burma, is a newly democratic country that is slowly building a market economy after years of Western sanctions against the former military regime.
"Things have been isolated for so long in Myanmar, and there are a lot of changes happening at the same time," said Corro.
The country is also migrating away from a cash-heavy payment system toward cards. This effort involves a mix of prepaid accounts, mobile money and diplomacy with local authorities and can be seen as an example of how payment companies can approach other countries where the U.S. is removing sanctions, such as Cuba.
The key is to have patience, since the scale and complexity of political change can present challenges in expanding payment projects in the short term, Corro said. "Even the central bank is changing, having only obtained its independence from the government [by a vote in] parliament in 2013," Corro said. "They are overwhelmed right now with all of the changes."
There is an incentive for outside payment companies to operate in Myanmar. According to McKinsey & Co., Myanmar is expected to quadruple the size of its economy from $45 billion to more than $200 billion by 2030, with per capita GDP rising from $1,300 in 2010 to $5,100 by 2030. "There is a fast-growing business and professional class," Corro said.
MasterCard just launched two prepaid cards with KBZ Explore and AYA Bank, two of the five major banks in Myanmar. These launches follow the earlier introduction of a prepaid travel card with CB Bank in Myanmar. In another recent product launch, 2C2P, a Singapore-based payment service provider, and Myanmar Citizens Bank launched Citizen Card, a reloadable prepaid MasterCard product.
The AYA card is designed for young professionals and students while the KBZ card targets travelers. Both cards use EMV chips to prevent counterfeiting. The Citizen-issued card also links to an app for Android and iOS devices, and provides offers at specific destinations in Thailand and Singapore, two common travel destinations.
"Before, people used cash whenever they were outside the country and they didn't have access to international card networks," Corro said.
Travel is one of the few use cases open to outside payment companies. There are no credit cards, and Myanmar's Central Bank does not allow foreign networks to operate domestically. The country has one payment network, the Myanmar Payment Union (MPU), which falls under the authority of the central bank. The MPU's members include more than a dozen local banks.
"It's a very similar system to UnionPay in China," said Aung Kyaw Moe, group CEO and Founder of PC2P, which is based on Bangkok. "So there's really only use for business people or wealthy or middle class Burmese who are traveling."
There is also the possibility of marketing directly to merchants outside Myanmar, who can sell inside the country, similar to Alibaba's strategy of linking U.S. merchants to consumers in China, Moe said.
MasterCard is working to loosen restrictions in Myanmar to allow outside companies to support domestic payments, though Corro said it's a gradual process. Working in MasterCard's favor is the lingering dominance of cash in Myanmar. Despite the centralized card scheme, only about one million cards are in circulation for a country of about 60 million people.
"Everything is cash," Corro said. "People literally go into the banks with sacks of cash."
To alleviate the reliance on cash, MasterCard is working with mobile operators such as Telenor and government authorities to build a mobile payment system that would circumvent the relative lack of infrastructure in Myanmar, Corro said.
It's a model that worked in Africa, where the high number of mobile phones helped spark a migration away from cash and also got convinced reluctant banks and government agencies to adopt mobile payments and financial services.
2C2P recently introduced the iACCEPT mobile point of sale system in partnership with Visa, Myanmar Citizens Bank and Myanmar Hotels International. 2C2P has additionally partnered with Myanmar National Airlines and Air KBZ to provide payment services and has allied with Creative Web Studios, a Yangon-based e-commerce technology provider.
"We will have a strong foundation to add more meat," Moe said. "In my view, the prepaid travel card is just the beginning."