Financial Crime World

Electronic Payment Systems in Myanmar: Progress and Challenges

Introduction

Myanmar’s banking sector has undergone significant transformations in recent years. Despite facing several challenges, the country has made notable progress in implementing electronic payment systems.

Historical Context

Until recently, bank transfers within the same bank or between different banks involved physically transporting cash from one location to another. This manual process was inefficient and prone to errors.

Reform and Progress

To address these issues, the government implemented an automated clearance system called CBM-Net for the Central Bank of Myanmar (CBM). CBM-Net facilitates large transactions in real-time, streamlining the process and reducing the risk of errors.

Expansion Plans

The use of CBM-Net is set to expand to:

  • Interbank Foreign Exchange Auctions: This will enable faster and more efficient foreign exchange transactions between banks.
  • Trading Government Bonds: The integration of CBM-Net with government bond trading platforms will promote transparency and efficiency in the bond market.

Banking Sector Participation

While three-quarters of Myanmar banks have joined the global SWIFT messaging system, not all banks have implemented electronic payments. About a quarter of banks do not have a SWIFT code, limiting their ability to participate in international transactions.

Retail Side Advancements

The retail side of electronic payment systems has also seen significant growth:

  • ATMs: The number of ATMs has grown from several hundred in 2013 to nearly 1,700 by early 2016.
  • Point-of-Sale (POS) Terminals: The number of POS terminals has quadrupled, from about 700 in 2014 to over 2,800 in 2016.
  • Debit and Credit Cards: The Myanmar Payment Union (MPU) has spearheaded the expanded use of debit and credit cards. MPU members issued 1.1 million debit cards between 2012 and 2015.

Challenges Ahead

While there have been significant advancements in electronic payment systems, Myanmar still faces challenges related to banking sector development:

  • Limited Access to Bank Accounts: Many citizens do not have access to bank accounts.
  • Absence of a Credit Bureau: A credit bureau would help banks assess creditworthiness and provide more accurate risk assessments.