Visa International, which entered Myanmar last year, expects that it will take about three to five years for the credit and debit card system to be fully established in the cash-based society.
Somboon Krobteeranon, manager for Myanmar and Thailand, said last week that one year was spent helping to lay the groundwork and educate its financial institution partners in the neighbouring country.
The company has eight commercial banks in Myanmar as local partners and licensed four of them to connect with Visa’s payment system. Visa card and Visa debit card holders can make withdrawals from these four banks’ ATMs.
"What we’re doing for this year is transferring know-how and licensing the remaining four partners," he said.
Visa and the four licensed bank partners have installed about 100 ATMs that foreigners can use to make withdrawals. Some merchants can accept Visa credit cards.
After helping local banks lay down the ATM and credit card acceptance infrastructure, Visa expects that within three to five years, local banks can issue Visa-branded credit cards and debit cards and credit cardholders can purchase goods from online channels. The number of merchants accepting credit cards will pass 5,000 in three to five years thanks to the Myanmar government’s allowing Norway’s Telenor and Qatar’s Ooredoo to launch telecommunications services in Myanmar. That could strengthen the electronic payment network.
The number of ATMs and point of sale readers is small because the fundamental system in Myanmar is not in place yet.
Local banks cannot issue international branded credit or debit cards. Most cardholders have ATM and debit cards. The number of debit cards is in the tens of thousands, which is still far behind Thailand, where 70 per cent of the 40 million plastic cards are debit cards.
In the Thai market, Visa might lose some revenue from local switching, which will take effect next month. Following local switching, local transactions via debit cards will not be sent to international card networks such as Visa and MasterCard. Merchants will have lower costs and they can offer lower prices to attract debit cardholders.
However, switching in Thailand would not make much of a dent in Visa’s revenue because payments through debit cards are smaller than credit cards, which will not be switching to the local system.
Payment by debit cards in Thailand and Southeast Asia is lower than 10 per cent, unlike the US and Western markets where about 60 per cent and 40 per cent prefer payment by debit cards.
Visa debit cardholders can still use their cards normally even though the country will apply the local switching system.
The international branded system remains essential for debit cardholders due to the safety and convenience for payments. However, Visa is interested in helping to develop the local switching system to ensure secure payments, he added.