Creating online banking in Myanmar, a country with little of either

Machine, yes. Teller, yes. Automatic, no.
Machine, yes. Teller, yes. Automatic, no.
Image: Getty Images/Paula Bronstein
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YANGON— How do you set up mobile and online banking in a country where most people have no access to mobile phones, the internet, or for that matter, banks?

Myanmar’s banking system has long existed behind a wall. Many of its largest banks are internationally blacklisted. Ninety-seven percent of the population have no bank accounts. Those who do cannot obtain credit cards, and their debit cards cannot be used for online—much less mobile—transactions.

That is starting to change. In the last few months, Visa, Mastercard, Japan Credit Bureau and China Payment Union have entered Myanmar, licensing ATM services and card issuance (though the central bank has yet to approve the cards). “Now what we’re doing is looking at how to have it so the people of Myanmar are able to transact with the rest of the world,” says Rajiv Ramanathan, head of payment systems partnerships for Visa, which partnered with three local banks in setting up its ATM system. In December, Visa hosted a two-day conference in the capital city, Naypyidaw, where it pitched a “branchless” banking system of networked mobile bank accounts paired with pre-paid debit cards.

There are some obstacles, though. No foreign banking-services company has yet made a deal to with most of Myanmar’s banks to license its services to existing debit-card holders. One reason is that to do so requires working with the Myanmar Payments Union (MPU), an alliance and governing body for Myanmar’s banks that includes a few banks still on a US sanctions blacklist.

Companies that abide by the sanctions must find workarounds. In the case of the ATM licensing, that meant working only with three banks, those deemed acceptable. Visa’s solution to online and mobile banking is to create “human ATMs”, people who can carry out mobile deposits and transfers on customers’ behalf.

Similarly, for Visa or any of its competitors to set up mobile banking, it would need to partner with a mobile-phone operator. At the moment, it is not clear who that would be. The government is still deciding to what extent it will license foreign operators to offer services inside the country. But it recently proposed a development framework that sets somewhat ambitious goals in various sectors, such as reaching 80% mobile penetration by 2015. That suggests that both payments networks and telcos may be getting a clearer idea of the opportunities soon. “We know the president in Myanmar has been very interested in pushing for mobile and mobile payments,” said Ramanathan.

MasterCard is taking a different tack. “It’s too early,” said Antonio Corro, MasterCard’s country manager for Indonesia and Myanmar. After setting up ATMs, he said the next step is payment terminals at hotels, tourist sites and the like, and after that, issuing local cards. Mobile and online banking, he thinks, is some way off, after the country’s legal institutions and infrastructure are more developed and people are better trained. “We need to guide them properly,” he said.

Within Myanmar, the MPU has developed its own online and mobile payment systems for use with debit cardholders from its member banks. It plans to demo the first one next month. But because of the sanctions, only local transactions will be possible.

There is also some innovation by local start-ups. Some have a way for Burmese to buy credit that can then be spent at a few online Burmese stores. The central bank has curbed expansion, though, by limiting the extent to which they can partner with banks. The largest of the systems, MyanPay, handles only about $15,000 in transactions per month.

These next few months will tell how much scope there is for financial-services firms. The parliament has started to review several draft laws to overhaul the banking sector. But for the time being, many companies are finding that grand visions clash with hard realities. “We still don’t have regulatory clarity,” said Ramanathan.

Sam Petulla is a freelance journalist.