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Taking Stock: Myanmar fast gearing up for m-commerce, m-payment

Myanmar has been receivng a lot of attention in recent years, following the government’s move to start the process of opening up its economy. Today, even mobile commerce and mobile payments are showing signs of promise and may flourish sooner than expected.

Bimal Shah, Chief Executive Officer, Leo Tech Services Pte Ltd., said developing countries where M-payment schemes are gaining popularity some common characteristic: distances, largely unbanked populations, the impracticality and insecurity of carrying large amounts of stored value (cash, gold, etc.) and a telecoms network that can support the wider adoption of the system.

Leo Tech Services developed ConnectNPay, the umbrella brand encompassing technologies that seek to address various needs in today’s financial market, with a primary focus on Myanmar.

While lot is dependent on the rollout of comprehensive 3G across the country, which foreign network operators Ooredoo and Telenor are currently fighting to reach the targets given to them as conditions of their licenses, Shah believes they are going to get there due time.

He said the veteran telcos have pledged to Myanmar’s telecommunications scene through heavy investments of USD1 billion each, with the former aiming to bring such services to 70 percent of the population by end 2015, and up to 97 percent by 2020.

“Against that background, we’re looking at a flourishing community of Facebook-hosted stores, which have no unified way of accepting payments yet and are thus effectively just brochures as of now,” he said. “However, what’s interesting is that predictions made by our in-country partners are coming true – as networks expand and mobile phone ownership (once held back by tight government control of SIM cards) increases, people will embrace Android-based smartphones, eliminating an entire generation of SMS and WAP-based technology.”

While Leo Tech operates a mobile wallet in Myanmar, MYWALLET plus, specified by and developed for MCC Group in Myanmar, the oldest IT company in Myanmar, it also sees the need also had to build other products and technologies that can provide the infrastructure required for m-commerce and m-payments to flourish.

“We believe there is enormous potential for the rapid acceleration of non-cash payments in Myanmar, creating an economy unlike any other ecosystem. As such, it is also our intention to tap on such potential by opening these technologies up for collaborations with banks, vendors and even competing payment systems in the country,” he said.

Building the mobile pipeline

The Leo Tech executive cited M-Pesa in East Africa, which he said allowed people to transfer value across distance in the form of mobile airtime credits. The recipient could use these to make calls or transfer on to vendors in return for goods and services – meaning that villagers could buy airtime or swap it for groceries at the local store.

“This model, however, doesn’t always translate perfectly. Plenty of other m-commerce models support and require bank transfer, or allow people to deposit using alternative methods like top-up cards, ATM. Additionally, there may be fundamental differences across markets.

There are some places in Africa, for example, where support for large-scale agricultural purchases is key, making it vastly different from countries like Cambodia where the route to success lay in providing payroll applications and a wide variety of vendors through which employees could not only buy things, but also cash-out.

“Indeed, many have tried to replicate M-Pesa, only to find that simply transplanting the technology from one market to another is doomed if the environment is different in terms of regulation, mobile uptake, as well as local network operator and consumer priorities,” he said.

Currently, Leo Tech’s ConnectNPay comprises of three components that it said will likely help the company form collaborations that will shape the e-commerce landscape in both Myanmar and other emerging markets:

*Digitised record and systems: Shah said that the Yangon City Development Council, commissioned Leo Tech along with in-country partner, Global Wave, to move their systems away from paper ledgers and silo-ed departments when recording business and residential ownership data.

“The overlying objective was to coordinate billings for aspects such as land and sewage, among many others, and thus mitigate errors and fraud. We also created a system which now produces approximately 10 million bills per year, and reduces the billing cycle from 62 days to 6,” Shah cited.

*M-payments: While MYWALLET plus was licensed to the MCC Group, Leo Tech is currently looking at partners in other markets to deploy a variation on the underlying system.

Under the joint venture with MCC, Leo Tech manages the technology infrastructure of MYWALLET plus, while MCC handles the day-to-day operations. Shah said there are 170 franchise locations around the country responsible for the billing and collection of electricity payments in Myanmar.

MYWALLET plus allows Burmese customers to pay either via the Internet or their smartphone, instead of having to queue at the physical stores.

Over 50,000 transactions have been made by more than 5,000 Burmese so far – a number that is set to increase once the beta phase ends and MYWALLET plus becomes publicly available as of 28 February. With its first bank integration already in place, the same deal will shortly expand MYWALLET plus’ reach to over 100 vendors.

*Secure interface layer: Leo Tech created an ecosystem which allows other players to connect and collaborate, partly to support the expansion of MYWALLET plus. Recently, it announced an integration with Co-Operative Bank Ltd (CB bank) and over a hundred vendors to allow payment gateways (even other eWallets) to connect.

Additionally, it is also in talks to develop support for top-up cards, kiosks, ePOS, banks, and have our eyes on additional territories.

Internet adoption also rising

Similarly, Shah said Internet adoption has been surprisingly widespread in Myanmar, though it is often subject to bandwidth restrictions that tend to suffer visible reductions in speed during working hours.

“Perhaps as a means of countering this and catering to the local population’s paying power, certain mobile services offer access to only Facebook at infinitesimal fees of less than USD2 cents a day, or roughly 8 cents a week. In fact, instead of asking the Burmese audience if they can access the Internet via their phones, you will likely receive a larger response when asking if they have Facebook on their mobile phones,” he explained.

Thus, he predicts that later in the year, the market will see a number of mobile wallets coming in to rival services from mobile networks that see these offerings as a natural extension of their business model.

Taking Stock is Retail in Asia’s fortnightly column dedicated to showcasing opinions from experts in the retail industry.