The Central Bank of Myanmar has released regulations on mobile financial services, widening a market previously limited to banks to include non-banking financial institutions.
The Central Bank announced yesterday that it had issued rules on mobile financial services at the end of last month to build an enabling regulatory framework for efficient and secure mobile financial services in Myanmar.
For some, the country seems primed for these services. Few of its 51.4 million population have bank accounts, and distrust of the financial sector remains high.
“The majority of our population is either unbanked or under-banked, and many unfortunately are ‘un-bankable’ by traditional methods,” said U Thura Soe Paing, co-founder of mobile money solutions provider Frontier Technology Partners. “Mobile money changes all that, and makes financial services available to everyone. All they need is a mobile phone and an ID.”
Frontier Technology Partners’ myKyat service runs under a Central Bank licence given to First Private Bank, he said, which co-owns the product.
Meanwhile, rivals in the market also rely on banks, with 663 Mobile Money backed by Myanmar Citizens Bank and Myanmar Mobile Money affiliated with Innwa Bank.
Despite competition heating up in the market, not all players have been able to launch as Central Bank Governor U Kyaw Kyaw Maung has only just now ratified rules that clarify permitted practices for non-banking financial institutions offering mobile financial services.
Under the new regulations – which have been unofficially translated and made available on the Central Bank’s website – mobile financial service providers can offer a number of services including kyat-denominated cash-in, cash-out transactions, money transfers and domestic payments.
However, unlike in the draft regulation, they will not be able to complete the domestic side of international remittance transactions. Companies that want permission to offer mobile financial services must have at least K3 billion in their coffers and pay K300 million for the application.
A tie-up between Yoma Bank and Norwegian-owned operator Telenor Myanmar called Wave Money will be one of those lining up for a licence.
The new rules will allow the joint venture to have its own customers, rather than keeping them with a bank, according to Wave Money CEO Brad Jones.
“[We will be] regulated directly by the Central Bank as a non-banking financial institution,” he said.
“We look forward to submitting our application to the Central Bank and working with them to a satisfactory conclusion.”
Wave Money has been engaging in commercial testing, which at least one person has called out as unfair.
An unsigned letter delivered to editors at The Myanmar Times said Telenor has ignored the draft status of the mobile financial services directive in order to get an edge on competition.
“MyKyat, Myanmar Mobile Money, 663 Citizens Bank and True Money ... must not be discriminated against. Everybody should be treated equally,” the note said.
Meanwhile, Mr Jones said Wave Money was permitted to commercially test its system and that the company had not done any above-the-line marketing.
“All of that will allow us to provide a better product to the Myanmar customer,” he said.
“The competition is certainly going to be intense but we welcome it.”
And Wave Money will have it. Ooredoo CEO Rene Meza said yesterday that mobile money would be part of the company’s strategic approach in line with its targeting of Myanmar’s masses.
“[We’ll be] submitting the application in due course,” he said.
Meanwhile, industry players said that getting customers on board would represent a significant obstacle.
“The biggest challenge – or rather the tipping point – for the explosion of growth on mobile financial services is to get the trust of customers,” Mr Meza said, highlighting good customer service and a wide distribution network as important factors.
“Technology reliability is fundamental. You’re dealing with people’s money, here.”