Can Myanmar become a cashless society?

Cash is king, or so the saying goes, and this is especially true in Myanmar. Traditional financial institutions don’t have a strong hold on the market – an estimated 74% of Myanmar’s citizens don’t have a bank account – and fintech apps such as e-wallets are a relatively novel concept.

Long known to be Asia’s last frontier market, the country entered the tech race fairly late in the game compared to most of its Southeast Asian neighbors. It had its start in 2012, when Myanmar’s state telecom carrier and postal service announced its plans to privatize the local telecommunications industry.

“Myanmar went from no-G to suddenly 3G and 4G, and these multinational telecommunication companies – Ooredoo and Telenor – entered the market in 2014,” says James Faulkner, head of marketing at Myanmar-based mobile wallet startup Onepay.

In 2011, Myanmar had a mobile penetration rate of 2%, and only 0.23% of its population had access to the internet. Just three years after the telecommunication industry’s privatization, the country was named the third fastest-growing mobile market in the world, behind only India and China. Now, it boasts a mobile penetration rate of 126% and its internet penetration has shot up to 41%.

The dream for a cashless society

Myanmar’s growing tech-savvy population, coupled with a lack of access to formal financial services, puts the country in a unique position to leapfrog past traditional banking systems and straight into mobile payments.

According to Onepay’s Faulkner, recent innovations in the remittance sector is an example of how Myanmar’s entire financial industry could go digital. “Remittance was a big issue in the past [because of the lack of access to banking services], but some banks have begun moving from purely over-the-counter transactions to digitalizing the process by using fintech solutions like e-wallets,” he explains.

By leveraging technology, e-wallets can serve the unbanked population in Myanmar. Faulkner adds that while this leads to more people having access to financial services, companies providing digital payment services benefit as well because they’re able to grow their client base – a win-win situation that leads to a stronger local economy.

As a result, the government has been proactively encouraging the adoption of digital payment methods among its citizens. Early last year, Myanmar’s central bank announced that it planned to implement a national QR code payment system across the country.

Similar efforts have been taking place all over Southeast Asia. In 2018, Singapore’s government revealed its plans to reduce the use of cash and make the city-state check-free by 2025. That same year, the Bank of Thailand introduced its National e-Payment Master Plan to turn the country into a cashless economy.

A difficult road ahead

Despite these innovations, the path to becoming a cashless society isn’t an easy one. For an emerging market like Myanmar, one of the biggest challenges is the lack of existing infrastructure for a cashless society to work.

“The limitation [becomes evident] especially when trying to reach more rural areas,” says Faulkner. Investments in electricity, mobile connectivity, and the internet will need to be made in these areas before a truly cashless economy can be put in place, he adds.

Another issue: the population’s mistrust in financial institutions. In 2003, a banking crisis rocked the country, leading to the collapse of a number of private financial institutions and economic hardships for the people. The effects of the event, Faulkner says, linger to this day.

That said, the fintech scene in Myanmar has seen some success, he says, because users are more likely to trust e-wallets since such services don’t require users to open a bank account. At the end of 2019, for instance, the Yangon Bus Service replaced its largely cash-based fare system with a card scheme. The local government has also been encouraging online payments: The Myanmar Internal Revenue Department last year implemented an electronic tax administration system which enabled businesses to file their taxes online.

And with the Covid-19 pandemic forcing governments to enforce lockdown measures, it’s become another factor in accelerating fintech adoption in the country. For Onepay, this translated into “unprecedented growth” for its mobile app, which Faulkner says is the first fintech app in Myanmar to introduce mobile interbank services.

Baby steps

Myanmar has a long way to go before achieving its cashless society goal. It’s still behind other more developed markets in the region who themselves are far from going cashless any time soon.

However, for local fintech players like Onepay, Faulkner says there’s no point in waiting around for everything to fall into place.

“We need to keep innovating our current services and really tackling the pain points that the wider population has,” he urges. “Of course, we’ll need support from government initiatives and we’ll need better infrastructure and connectivity in rural areas. But as long as we continue to innovate, we can at least achieve the levels of adoption that we see in other developing markets.”

For Faulkner, Myanmar could reach the levels of fintech adoption and innovation that Vietnam or Indonesia has within the next five to 10 years. However, it’s much further from reaching the maturity of more established markets such as Singapore.

“Hopefully, we can get to the same stage as the rest of our ASEAN compatriots. But what’s for sure is that we’ll see positives coming to fruition along the way,” he says.

Onepay is Myanmar’s first integrated lifestyle and financial mobile app and the first to introduce mobile interbank services. It allows users to pay for everything, from daily essentials like bus tickets, bills and food orders to buying discount codes and donating to a charity. Onepay’s recent partnership with Thailand-based fintech firm TrueMoney allows its users easy and convenient access to their cash through any TrueMoney agent.

Find out more about Onepay and download its app on its website. It is also available for free on Apple’s App Store and the Google Play Store.

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Source : Techinasia

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