Optimism is abundant as Myanmar’s virtual and physical connectivity burgeons, especially for trailblazer MYPAY. The mobile app will be the first Social Media Payment service provider in Myanmar come August, when it plans to roll-out.
“We don’t want to do the same thing. We want to do something different. Something new. That is, we will use the social media area for payments. Sending money should be as easy as sending a message on Facebook, Viber, or Watsapp,” Tim Scheffmann, CEO of MYPAY, told Mizzima Weekly.
The environment in which MYPAY launches is unprecedented in its pace of change. In 2012, Myanmar’s international bandwidth – indicator of connectivity – was below 15 gigabits per seconds, or 0.3 kbps per capita, placing it on the bottom rung in South Asia. Connection skyrocketed since then, rising from around 10% in 2014 to over 50% by June 2015, according to the Ministry of Communications and Information Technology.
Ericsson’s report of 2015 Quarter 3 placed Myanmar as having the fourth largest net addition of mobile subscribers at 5 million, trailing after population giants USA, China, and India. Since mid-November 2014, 45 Internet Service Providers have applied for licenses, with more than 12 already being issued. There is no limit on the number of licenses being issued. Myanmar expects to launch its own Satellite within five years.
MYPAY is a social media remittance and payments provider for consumers and businesses to make mobile payments. Cash can be deposited from bank accounts or directly by cash to agents at service stations, or “cash points” into mobile wallets, secured by SIM card ID. The money deposited into the mobile wallet then can be sent to and received from friends, family and merchants.
“We are connecting the social media world with the existing financial world,” Scheffmann said, while acknowledging the challenges of the task. The existing financial world in Myanmar is still grappling with the aftermath of its decades of military misrule and economic incompetence.
People have little faith in the country’s financial sector. Many still prefer to store their wealth physically and in close proximity by purchasing gold and other valuables. A mere 4.8 percent of Myanmar people have bank accounts, while its neighbor Thailand has 75 percent with accounts. Some 62 percent of adults in Myanmar have no savings.
To have trust in mobile payments, “people need to experience it and try it out,” said Scheffmann, explaining the interpersonal, low-risk aspect of social media payments. “A transaction between people who know each other takes the hesitation away. People are being introduced to our product by acquaintances, which makes the barrier lower. The amount of transaction can be small when you are just trying it out so it’s not as big of a deal.”
While the paucity of banked population is partly due to people’s skepticism, it also reflects lack of accessibility to financial services for those who need it. The majority of the Myanmar population lives in rural areas, generating livelihood through farming: “People are being financially excluded because for a farmer to travel to the next bank branch it will cost him almost a day. And then he has to line up there and travel back the next day. We can cut this time down to seconds.”
The ease of mobile banking is a win-win game, according to Scheffmann, who said, “Everyone wins. For the customers, it’s very convenient, and the banks get to keep their business.” He believes mobile financial technology (fintech) will foster an enhanced, more equal access to financial resources for all, ultimately creating a more stable economy.
“We are not only enabling financial capital to flow into different areas, where money is needed, we are also helping people not to get into poverty. If a farmer has a problem and he needs to borrow money, he probably needs to borrow from a loan shark. But with this technology he can ask friends and other people who can provide money quickly and this will also help stabilize the economy.”
Neither does the technology need to be confined to peer-to-peer level. It can also be utilized on a multinational level once international financial transaction regulations in Myanmar come into place. On a national level, fintech can contribute to social welfare. He cited an example, “When a farmer is sick, for instance, he cannot ask someone else to do his work for him. Or when natural disaster hits, like last year, people are left with unstable income. Via technology, distribution of funds becomes easier.”
The stage is set for stellar rise of electronic money. However, there is a void to be filled: consumer protection, the law on liability for loss and damage, regulations on transactions, and anti-money laundering measures.
When regulations ensure ethical practice and sensible investment, the potential for growth is immense. Together with Boston Consulting Group, Telenor conducted a study on the correlation between development and mobile penetration, which noted that every 10% of mobile penetration can drive up the GDP by 1.2%. In emerging economies such as Myanmar, the report says, internet availability could lead to a 3 to 5% boost in GDP.
The CEO of MYPAY anticipates the worthwhile outcomes from venturing into uncharted territory. “If I can help not just a family of farmers but stabilize the economy and help 51 million people of Myanmar, that is something worth taking a big risk for,” he said.