Mastercard positions for growth, competition in Myanmar

Mastercard is positioning itself to be a key contributor in Myanmar’s push to enable its economy to function without the need for cash. “With people now having moved towards a digital-first mindset, we expect to see reduced usage of cash and higher dependency on online commerce for the long term,” Safdar Khan, Mastercard’s Division President of Emerging Markets in Southeast Asia, told the Myanmar Times.

The Myanmar e-commerce sector has been growing fast, expanding at an average rate of 30 percent annually between 2013 and 2018, according to Mastercard data.By the end of this year, a total of US$951 million worth of trade is expected to have been conducted online without the need for cash, it said.

Mastercard is aiming to capture a share of that cashless ecosystem. In August, the company announced the opening of its local office in Yangon to demonstrate its “long-term commitment to advancing Myanmar’s national digital agenda and reflecting the company’s continued confidence in the market,” Mr Khan said.

Mastercard has actually been active in Myanmar since 2012, when it became the first international payments network to issue a license to local bank Co-Operative Bank Ltd (CB Bank), five years before the bank issued the first local credit cards in the country.

This year, with the need to reduce physical cash transactions amid COVID-19, the company quickly expanded its presence in the country by partnering with Myanmar Apex Bank and Yoma Bank to roll out new card payment offerings. It recently also announced a three-way card partnership with CB Bank and telecommunications provider Mytel.

In Myanmar, Mastercard’s competition is already cut out for it. Last year, Visa announced a similar three-way collaboration with CB Bank and Telenor Myanmar, which it said is the first such the partnership between a bank and telco in the country.

Like Mastercard, Visa first entered Myanmar in 2012 and opened its office in Yangon in 2015, getting a head start in the market as local supermarkets and hotels began to accept internationally issued Visa card payments by tourists, expatriates and repatriates.

Building a QR standard

Mastercard is in conversations with key industry players and government stakeholders on how a globally enabled QR code can be included in Myanmar’s digital payments ecosystem.

The company in 2017 announced that it is working with EMVCo to build QR codes that can be scanned by either consumers or merchants under a common set of global standards that ensure consistency in QR codes both generated and captured on a consumer’s mobile phone.

“We’ve already standardized QR codes for payments for Bharat QR, the world’s first interoperable QR code acceptance solution, in India, and also in Thailand,” said Mr Khan.

The use of QR codes in certain markets can provide merchants of all sizes – from international chains to individual shop owners and street vendors – a fast, secure and inexpensive way to accept
payments.

QR codes provide people with any type of mobile phone the ability to safely make in-person purchases without a plastic card. A consumer scans a QR code displayed at the merchant’s checkout on their smartphone or by entering a text code into their phone. The company’s consumer-presented solution will allow the merchant to scan a QR code from a smartphone and process the payment through the card provider’s network.

Mastercard is now trying to establish standards, systems and operations requirements for the EMVCo global QR to be launched in Myanmar. “In many countries, EMVCo QR is enabled by an established long-running payments infrastructure as well as readiness and infrastructure by the industry, such as availability of apps by banks that support QR scanning. Here in Myanmar, many of the foundational pieces are being built simultaneously. The full rollout of QR codes will take time but when it does, Myanmar is well-poised to leapfrog into the digital payments era,” Mr Khan
said.

Supporting the central bank

For the longer term, Mastercard is supporting the development of the country’s cashless infrastructure. “We want to enable a future where money keeps pace with the way we live, work, and do business. To do this, we are working with industry players to expand the scope and reach of cashless payments in Myanmar,” Mr. Khan said.

This includes supporting the Central Bank of Myanmar (CBM), which is implementing a national plan to digitize the country’s banking infrastructure. “This would imply digitizing payments for people to pay without cash anywhere, anytime, and for any transaction value, whether it is for shopping or eating in a café, conducting e-commerce or accessing government services,” he said.

“Our efforts would also include supporting initiatives that are aimed at enabling more people to pay through their card or their smartphone, Mr. Khan added. In September, Mastercard launched a central bank digital currency (CBDCs) testing platform for the CBM, allowing it to assess and explore the viability of a centralised, national digital currency in Myanmar. The platform enables the CBM to simulate the issuance, distribution and exchange of CBDCs between banks, financial service providers and consumers. Central banks, commercial banks, and tech and advisory firms were invited to partner with Mastercard to assess the use of CBDCs in the country and evaluate its inter-operability with existing payment methods.

While CBDCs have yet to be rolled out globally, a rising number of central banks and governments across the world are nevertheless exploring CBDCs, having a testing platform in Myanmar will enable the CBM to be better prepared for its potential roll-out in the future. – Translated

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Source: Myanamr Times

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