Government’s Support Needed To Develop Digital Payment System in Myanmar

The Government’s support is necessary to develop the local digital payment system, U Zaw Lin Htut, CEO of Myanmar Payment Union-MPU told the Myanmar Times.
The MPU has been founded as the government-private partnership since 2012 then it has been converted into a private firm in 2015. The advent of digital payment system in Myanmar with the MPU has been five years.

There were 3.7 million of MPU users by 2016-17 fiscal year and has increased up to 4.5 million in 2017-18 fiscal year. Under the data, the UPU users have increased but the user rate is still very low if compared to the country’s population.

“To develop further quickly, we still need a lot of support from the Government,” U Zaw Lin Htut said.

Based on the forecasts, the number of MPU card users in 2018-19 fiscal year would reach 5 million, or around 9 percent of the Myanmar’s total population.

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Despite other countries use the payments for purchases or transactions made by card, in Myanmar; card system is mainly used for cash withdrawals rather than for making other payments.
Even governmental departments use the cash for payments. These factors can slow down the development of digital payment system.

“In other countries, there is a calibrated approach to reduce the cash system. For example, when you buy a product, the commercial tax rate is 5 percent for the cash payment and 3 percent for the card payment. This system support to reduce the cash payment,” he said.

In Myanmar, the cards users mainly use the cards for cash withdrawals rather than for making other payments. To improve digital payment system, more education and government’s support is necessary, according to the experts.

Of the 4.5 million existing MPU card users, only 100,000 use their cards for the payments at the shopping centers.
At present, MPU cards are ready for e-commerce.

The card users want to use online payment service then they need to register at the bank at which the online payment service is provided. A one-time-password (OTP) is sent to them, U Zaw Lin Htut said.

Meanwhile, mobile money transfer services like OK Dollar, WaveMoney and M Money are emerging fast and consumers have begun to leapfrog the card payment system in Myanmar.
However, these services are only for withdrawals of certain cash amounts. Therefore, it cannot mean it is a competition of digital payment system.

With increasing demand for mobile money transfer services, the Government needs to allow service providers to use cards widely, U Zaw Lin Htut said.

If the card systems are used in mobile money services, the use of cash payment system will fall quickly in favor of digital payments. Therefore, the digital payment system will become widely accepted.

Credit: The Myanmar Times
Translated by: iMyanmarHouse.com