Myanmar, a Real Frontier Market for Visa Payments

I suppose it's not quite on par with operating a payments system in North Korea, but this is as close as it gets in Southeast Asia as the American multinational corporation Visa is set to enter Myanmar. With many Western firms looking enter to re-enter the till recently off-limits nation due to American and European economic sanctions, Burma is regarded as something of a frontier market. But, keep in mind that it's not as if the Burmese are unfamiliar with Western companies. Rather, the opportunity lies in the capitalizing on the previous familiarity they've had with MNCs until many were forced to leave to comply with sanctions. Hence the attraction.

That said, years of isolation have understandably had their toll on the state of Myanmar's financial system. There are few banks. After all, savings were scarce since investment opportunities were likewise scarce. Nor did many citizens regard banks as safe, preferring to hide money under the proverbial mattress. How about handling international payments and foreign exchange for the consumer market? Get outta here! With few foreign visitors, who needed those? However, it's only natural as tourists flock back to Burma's many attractions and as Western firms seek their fortunes there that financial service firms alike Visa accompany them. With sanctions in the process of being lifted, first-mover advantages may accrue:

"We know from experience that there will be an urgent requirement to provide 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. "The sooner we deliver electronic payments, the sooner Myanmar will benefit from the increased spending."

While noting that credit-card payment machines and ATMs depend heavily on "technical infrastructure," he added that Visa expects visitors to be able to use their internationally issued cards "within a matter of months—not years."

Do not underestimate the challenges, either, as the likes of Visa will literally have to start from scratch. for instance, consider those exotic devices known as "automatic teller machines"...

Visa said it will partner with selected banks to establish training workshops aimed at upgrading banking facilities over the next few months, and has already held one two-day event. It hasn't revealed which banks it is working with, but says they were chosen for "their ability to provide a safe, reliable and quality service." Though Visa is not setting up an office in Yangon, and though infrastructure concerns mean that ATMs and full-fledged electronic-payment systems remain months away, analysts say the move marks a significant step toward the financial modernization of the once-reclusive country.

"It is a predictable move, but a significant one," said Sean Turnell, a Myanmar expert at Australia's Macquarie University, adding that Visa's market entry would have a "broader significance and heavy psychological effect" for keen investors looking to park their money in the nascent market. "The local banking sector is fairly primitive," he said. "Right now the first thing Western businessmen notice is that they can't bring their cards with them—it really makes them think that this is another world."

Moving from "bring wads of cash to pay for everything" to "for everything else there's MasterCard" will take some time. But, the ability of such firms to provide a payment handling service will help indicate how committed Myanmar is to development since it requires quite a lot of cooperation to make their domestic financial system accommodate international payments.