E-Payment Services to Come Online in February

By Kyaw Hsu Mon 30 January 2015

RANGOON — Burma’s sole domestic card-based payment system, Myanmar Payment Union (MPU), will offer online services beginning in early February, according to an executive.

Chief Executive Officer of MPU, Zaw Lin Htut, told The Irrawaddy that local cardholders will soon be able to make online purchases after companies enroll with one of the firm’s 20 local banking partners.

Businesses can enroll at their local branch, and a service network will be developed among local businesses. Zaw Lin Htut said that businesses will have to bank with one of its 20 partners to be eligible for e-commerce, and member banks will provide technical support and consultation as businesses establish online shopping systems.

“[Businesses] will first have to build websites before they can offer online shopping and sales services, so we will support this,” he said, explaining that once the systems are in place customers will be able to make secure, PIN code-protected online payments.

According to company data, there are currently more than 850,000 MPU cardholders nationwide. Debit cards were first introduced in Burma in 2011, after the MPU was formed among existing banks. Three of MPU’s 20 member banks are state-owned.

United Amara, CB and military-backed Myawaddy are among the Union’s member banks that have already enrolled to develop e-commerce services.

Zeyar Aung, head of the card department at CB Bank, said that service testing is already underway and the bank is currently negotiating with several companies that wish to enlist the service, including several travel and tour agencies. Online payment could be particularly useful for the tourism industry, he said, because many users prefer to book travel tickets online.

“We’re testing the service now,” he told The Irrawaddy. “It is only for local users. We will provide technical support, collect service fees, explain how to connect and help solve problems if merchants have difficulties.”

As Burma becomes more connected to the Internet, online shopping is increasingly popular on social networks based in Rangoon and Mandalay, but the lack of any online payment system currently limits sellers to cash-on-delivery sales.

Banking partners anticipate that the service might take some time to catch on, but will become exponentially useful as consumers familiarize themselves with electronic sales.

“Users might worry that their payments won’t reach the sellers, so for now it’s about awareness. The Internet is almost everywhere now, and we expect that [online finance] will soon succeed,” he said.

Burma operated on a cash economy until 2011, the start of political and economic reforms under President Thein Sein’s government. Since that time, two foreign telecoms operators have entered the market, rapidly expanding mobile and Internet access.

Currently the only card provider in Burma, MPU established the country’s first ATM card system. Decades of military rule and resultant isolation crippled the country’s economy and stalled financial sector development.

In February, MUP plans to further expand its services by signing a bilateral agreement with China Union Pay that would allow MPU to produce debit cards that can be used internationally.
The agreement is expected to go into effect later this year, with a similar deal likely to be struck with the Japan Credit Bureau.

The number of MPU cardholders has risen rapidly over the past year, from about 200,000 in early 2014 to about 850,000 at present, and more than 1,000 ATM machines have been installed in Rangoon, Mandalay and Naypyidaw since cards were introduced.

MasterCard became the first international electronic payment system to be used in Burma as of November 2012, followed by Visa in December of the same year.