Unified QR Codes and the promise of a cashless Myanmar

Photo Credit: Wikimedia Commons

Nets Group is helping Myanmar develop its own QR code system, based on the famous SGQR framework in Singapore. How will this impact the payment landscape in Myanmar?

By Preetam Kaushik

In September 2018, Singapore made history by introducing the world’s first ever universal QR code system for cashless payments. Called SGQR, it allows merchants and consumers to use a single national QR code system to access cashless payments through 27 different services.

Now, one of those 27 service providers, Nets, is linking up with Myanmar’s Payment Union to assist the Southeast Asian nation in building its own replica of the SGQR. For a nation that only opened its doors to international credit card giants like VISA and MasterCard in 2017, what impact will a QR code system have, if any?

QR codes offer the potential of a cashless society

With the rise of mobile payment solutions like WeChat Wallet and Alipay, China is leading the world in cashless payment solutions. Mobile QR code payments have been instrumental in pushing the cash-loving Chinese towards a digital payment economy.

Source: Worldpay

Multiple QR code systems complicate things, making it harder for merchants and consumers to adopt the new technology. A unified system like the SGQR provides a solution, and ASEAN nations like Malaysia are trying to follow the path the Singaporean government forged.

What can a unified QR code system do for Myanmar?

Myanmar has more mobile connections than citizens. Mobile penetration is well in excess of 80% of the population. Much of this mobile growth has occurred in the last decade.

But banking services lag behind. Less than 20% of citizens own a bank account of any sort. Despite the arrival of MasterCard and VISA in 2017, credit card adoption rates remain abysmally low. Cash is still the preferred mode for 99% of all transactions in the country.

With the volatile mix of high mobile connectivity and low levels of bank account access and card use, Myanmar in 2019 looks strikingly similar to China at the beginning of this decade. With proper planning and execution, Myanmar could replicate the Chinese model, but the onus will be on the government to do the heavy lifting.

Sources: Nielsen, Digital in Asia, Helgi, RB, Datareportal, The Asian Banker

One of the chief hurdles in the path towards a unified QR system is the existence of multiple competing codes. Cooperation between the payment providers is key, but this can be hard to achieve if they have all invested heavily in creating their own systems.

Fortunately for Myanmar, it represents a blank slate as far as innovative systems like QR code are concerned. Building a unified network from scratch should not pose a significant problem.

Besides, from a consumer perspective, QR codes are attractive because they are easier to access and use than credit cards and online banking. They are also more secure and safer than carrying bundles of cash around.  In the absence of viable alternatives, the government should find it easier to get consumers to adopt the system.

The merchants will be harder to convince

While most factors point towards a market that should be a fertile ground for QR code payments in Myanmar, it will not be an easy transition by any means.

Depending on the type of QR payment system used, merchants may still have to invest in a point of sale device for their shops. While this should be cheaper than the devices used for card payments, it could slow down adoption rates among merchants.

Merchants could also be put off by the prospect of paying a settle commission for each transaction processed. In Japan, banks and payment providers had to launch discount campaigns to encourage merchants to adopt the system. Similar campaigns will be necessary for Myanmar to kickstart merchant and consumer adoption. The aggressive ‘red envelope’ campaigns carried out by Chinese e-wallets and their partners in Southeast Asia might be a viable strategy here as well.

A step in the right direction

The conditions in Myanmar are ripe for the arrival of QR code payments. High mobile penetration and low levels of financial inclusion indicate that there is a real chance of meaningful change within a short span of time.

Holding a vice-like grip over 99% of transactions, cash remains king in Myanmar. There are still formidable economic, social, and logistical costs involved. But there is a real void in the payment space in Myanmar, and a unified QR code system feels like the perfect fit for it.