YANGON -- Credit cards are gaining traction in Myanmar, where cash has long been king, with foreign players such as China UnionPay and Japan's JCB lured by rising consumer incomes and an increasingly robust financial infrastructure.
JCB, in conjunction with Myanmar Payment Union and Ayeyarwady Bank, also known as Aya Bank, debuted a credit card Tuesday as representatives from the three companies attended a launch ceremony here.
"Myanmar is an important market," said Kimihisa Imada, deputy president of JCB International, noting the country's strong economic growth.
The co-branded cards are accepted by both JCB's international network and domestic merchants in the MPU network, and they serve as Aya Bank ATM cards as well. The companies also will issue combined debit and ATM cards.
"We want to spread card culture to Myanmar's consumers," said Yuji Matsushita, JCB's country manager for Myanmar.
The number of domestically issued credit cards is expected to reach 1.5 million by the end of 2018.
Filling a vacuum
Myanmar was considered the last frontier in Asia's credit card market. Major U.S. players such as Visa and MasterCard were slow to enter the nation after the junta assumed power in 1988, owing to American and European sanctions. And in response to a financial crisis in 2003, the government barred domestic banks from offering credit cards. As a result, cash was by far the most common payment method in the country, with few people having any experience with plastic.
Visa and MasterCard began offering payment services in 2012 after Myanmar started its transition to democracy. But these are used largely by tourists carrying cards from abroad. Regulations imposed by the country's central bank have kept the pair from offering normal credit cards.
MPU has stepped up to spearhead the cultivation of credit card culture. The organization was formed in 2011 by the central bank and 17 local banks with the goal of developing Myanmar's payment processing infrastructure. The payment union rolled out debit cards with ATM access in 2012, and it teamed with local banks to issue the first MPU-branded credit cards last year. MPU cards are accepted at some 6,000 stores, 20-40% more than the two big American players, thanks to attractive processing fees of around 1%.
MPU also announced in June the launch of Myanmar's first internationally accepted credit card, a UnionPay card offered through a partnership with the Chinese company and Myanmar's Co-operative Bank.
Changing consumer culture
MPU has issued some 1.8 million cards, including debit cards, to date -- equivalent to less than 4% of Myanmar's population.
"Our goal is to transition from a cash-dependent society to a cashless society," MPU chief executive Zaw Lin Htut said Tuesday. "Today marks a milestone in achieving that goal."
Consumers have welcomed the shift to plastic. "I won't have to get cards made overseas anymore," a jeweler said. Since the credit cards previously available in Myanmar were unusable outside the country and carried low credit limits, the 47-year-old had used a Visa card from a Thai bank.
"I want to enjoy shopping for expensive things like foreign clothing brands," the jeweler said.
Credit cards have steadily gained ground in Southeast Asia. About 69 million cards had been issued in six major countries in the region as of last year, a 35% increase from 2010, data from British research firm Euromonitor International shows. The figure is expected to reach roughly 87 million in 2020. With adoption rates still low in many countries, the region has abundant room for growth. Visa and MasterCard likely aim to issue cards in Myanmar eventually.
The country is believed to have fewer than 7,000 credit card terminals, mostly in hotels and restaurants. Bringing them to a wider range of merchants, such as retail chains, will be a challenge. The rapid proliferation of smartphones is expected to bolster Myanmar's nascent e-retail market, which could give credit cards a shot in the arm.