Visa Card Expands Services, Local Card Payments Hampered by Problems

By Kyaw Hsu Mon 2 April 2015

RANGOON — International payment cards continue to improve their financial services in Burma with Visa Card announcing on Wednesday that its cards can now be used at several Rangoon supermarkets of City Mart, the country’s biggest retailer.

The domestic card system of Myanmar Payment Union (MPU) meanwhile, continues to suffer from problems as ATMs and bank card readers at stores for the country’s approximately 1 million cardholders are often out of service, according to bankers and customers.

Visa has teamed up with City Mart and local KBZ Bank to provide payment services for debit and credit card at supermarkets at Rangoon’s Junction Square, Golden Valley and Parkson, The Bangkok Post reported. The US firm said its cards are now accepted at 1,800 retailers and at MPU ATMs in Burma.

Visa is among a number of international card payment providers that have quickly entered the market after Burma’s economy opened up and trade sanctions were lifted following the introduction of reforms by President Thein Sein’s government in 2011.

MPU announced in 2011 that its card holders can make digital payment or withdraw cash; it now operates more than 1,000 ATMs and 3,000 card readers at retailers in Burma. The number of MPU cardholders is growing rapidly, rising five-fold in the last year to about 1 million now.

However, the MPU system, which is being used by 20 local banks that are MPU members, is known to suffer from frequent technical problems that force banking clients to rely on bringing cash instead.

“I heard that most users can’t pay at available retail shops because of system errors, they just pay with cash until now,” said Pe Myint, managing director at Corporative Bank, an MPU member.

“MPU is also trying to solve the problem. That’s why they’re going to form a public company and expect to upgrade the system,” he said. “It won’t work without system upgrading, as long as they can’t do it, card use will not be easy.”

Banking representatives familiar with the MPU card payment system said it was of poor technological quality, while retailers who obtained the card readers were not offered proper after-sales services to maintain functionality. Another reason cited for continuing problems with card payments and cash withdrawals is a lack of understanding of the card system among customers.

Tin Ei, a school teacher from North Okkalapa Township who has a MPU card, said the card readers at the retailers were highly unreliable, adding that she could not leave her home without cash as a result.

“I don’t want to bring much cash for my shopping, but I can’t use my card in most shopping malls and food shops,” she said. “I saw the MPU machines in some shops and restaurants, I tried to use my debit MPU card but it doesn’t work.”

MPU Chairman Zaw Lin Htut acknowledged that the card payment system required an upgrade to improve functionality, adding that Burma’s poorly developed telecom infrastructure also hampered the system’s performance.

“I can say it’s not perfect but the development is getting better, it’s better than last year,” he said, adding that MPU also planned to offer its services at City Mart “soon.”

Asked if local banks were losing ground to international card systems that have quickly rolled out their services in Burma, Zaw Lin Htut said, “I don’t think there will be a big impact on us … because if we look at the domestic user’s interest, you will see that our transaction cost is the lowest.”

In January 2014, MPU announced its members planned to turn it into a public company so that the union could improve its card payment system. Member banks would become shareholders and a board of directors would be staffed with managing directors of the banks.

Until now, discussions among member banks about the formation of a public company are ongoing, while the Central Bank of Myanmar is yet to provide its approval for the plan, bank representatives said.

MPU was founded in 2011; its members include 20 local banks, three of which are state-owned. MPU set up the first ATM card payment system in Burma, which was lacking because of decades of economic mismanagement and isolation under the former military regime.

The expansion of mobile and Internet access in Burma following the entry of two foreign telecom operators last year has improved telecom infrastructure required for electronic card payments.