ASEAN KEY DESTINATIONS
Visa plans on re-entering Myanmar
The global payments technology company Visa has further detailed its plans for re-entering the Myanmar market after departing a decade ago.
In a presentation to Myanmar journalists by Visa director of corporate relations Gary Hamilton-Walker, the company announced on September 21 that it is in the process of reviewing 17 private banks for partnerships, and expects to re-establish its presence within the country by early 2013.
Mr Hamilton-Walker also said that Fundamo, a vendor of mobile financial services for the unbanked and under-banked, which is owned by Visa, would arrive in Myanmar in the next six to nine months.
Visa’s arrival has been slowed by financial sanctions imposed on Myanmar by the United States.
Potential partner institutions, including its officials, must not appear on the Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List of targeted sanctions.
“We have to fully comply to the US State Department, they are the ones who give us the guidelines, which party and company that Visa can get with in Myanmar,” said Somboon Krobteeranon, Visa country manager for Myanmar and Thailand.
At least two well-known banks will fall foul of these sanctions: Asia Green Development Bank, which is owned by flamboyant tycoon U Tay Za, and Ayeyarwady Bank, owned U Zaw Zaw, who holds stakes in lucrative mining projects and serves as chairman of the Myanmar Football Federation.
Both U Tay Za and U Zaw Zaw appear on the US blacklist.
Initially, Visa plans to target the influx of tourists that Myanmar is already beginning to receive International flight arrivals jumped 63pc in 2009-2010 and an additional 32pc in 2010-2011. At present tourists find themselves needing to carry large sums of cash, as the country has no ATMs that accept foreign bankcards.
“We know from experience that there will be an urgent requirement to provide a basic ATM network and point-of-sale terminals for international visitors arriving in Myanmar for business and pleasure – and that is where we will focus first,” said Peter Maher, Visa group country manager for Southeast Asia and Australasia.
At a few of Yangon’s upscale hotels, including the Parkroyal and Traders, it is possible to pay with Visa through a third party account at a Visa partner bank outside the country.
The banks are mainly in Thailand or Singapore. Transactions completed in this manner often carry a substantial fee.
According to Mr Hamilton-Walker, once Visa is able to work with a local partner institution, these types of “informal” transactions will no longer take place.
Visa is also confident that its technology that connects individuals, financial institutions and governments in over 200 countries can spur economic development in financially underdeveloped Myanmar.
A 2010 study by Moody’s Analytics chief economist Mark Zandi, The Impact of Electronic Payments on Economic Growth, found that the switch from paying in cash to using electronic payment forms had greatly increased economic growth.
Electronic payment methods in 51 countries, that together made up 93pc of the world’s gross domestic product (GDP), added US$1.1 trillion in real dollars to private consumption and GDP between 2003 and 2008, the study found.
Without card payments, real GDP growth would have been on average 0.2 pc less, down from 3.2pc to 3pc.
Myanmar’s lack of infrastructure, particularly outside of Yangon, Nay Pyi Taw and Mandalay, could allow Visa to leapfrog traditional electronic payment methods like cards and move straight into the mobile banking model in rural areas.
Fundamo will be a “major player”, in this area, said Mr Hamilton-Walker. Fundamo was started in South Africa in 2000 and acquired by Visa in 2011 for about $110 million.
The company is hoping that trust will be built through a combination of the pre-existing Visa brand name, consumer confidence bolstered through choosing the correct local bank and a large scale educational outreach program.
“We also do a lot of educational materials. What is a debit card? What is a prepaid card? What is a credit card? How it affects you? How to manage it properly?” said Mr Hamilton-Walker.
“In an ideal world we would be talking with the central government, perhaps even as we start to introduce electronic payment into Myanmar, government consumer awareness programs. Show them what an electronic payment is. Show them how it is good for you. Show it is good for your family. How it is good for your community. How it is good for the country,” he said.
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