YANGON, Myanmar — Myanmar’s cash-based economy may soon make another
inroad into global financial inclusion, with at least one private local
bank hoping to get approval to issue credit cards to local people by
year-end.
Cooperative Bank Ltd., known as CB Bank, says it wants to introduce
these cards for Myanmar citizens, allowing the bank’s customers to carry
Visa V +0.14% and Mastercard MA +0.60%-branded credit cards for both domestic and international transactions.
“Our systems are all ready,” said Oo Thein Myint, the bank’s
compliance officer and deputy general manager, speaking on the sidelines
of a two-day banking conference aimed at charting out solutions to
Myanmar’s backward financial sector.
Currently, no local bank is permitted to issue credit cards, held
back by regulation from the central bank. But CB Bank executives say
they are currently engaged in talks with regulators and hope to get
approval for the issuance of credit cards within the next few months.
Credit limits, Mr. Thein Myint said, will be decided by the central
bank as well, but could be up to five times an individual’s current
salary.
Issues of credit worth may continue to plague an economy in which
most people do not have bank accounts. Analysts estimate that less than
10% of the 60 million is currently banked, distrustful of a banking
system that was once controlled by the previous military government.
Most people carry wads of cash even to pay rent or other big
transactions.
CB and other private banks, including Kanbawza Bank, or KBZ Bank, have been operating ATMs that can accept foreign-issued Visa and Mastercards for months.
But many people are distrustful of the machines. Reliant on Myanmar’s
poor infrastructure, these machines sometimes fail to connect to foreign
banks and don’t issue cash as promised, or swallow foreign-issued
cards.
Credit cards issued to local people would give merchants across
Myanmar more incentive to install point-of-sale terminals, which could
spur large card purchases from more than tourists with foreign cards.
These terminals are still rare across the country despite soaring
tourist arrivals, but financial giants Visa and Mastercard — both rushing for a piece
of the promising economy — say that more than 500 restaurants,
retailers and hotels will be able to accept their cards by the end of
this year.
In the interim, CB Bank says it is working with the likes of Visa to
make prepaid debit cards available by year-end, what they hope will help
Myanmar’s people — even small business owners and farmers — slowly
start chipping away at their reliance on cash.
source: Wall Street Journal
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