As Myanmar opens up after five decades of military rule, a country run on cash is finding a new alternative: plastic.
Private banks in Myanmar have begun rolling out automated teller machines in recent weeks, revolutionary in a country where people often haul sacks and suitcases of cash to banks.
And more ambitious plans are in the works.
"It's fantastic, so convenient," Naing Lin Oo, a 26-year-old computer engineer, said after withdrawing about 120,000 kyat ($143) one recent afternoon.
"It would be good to see more of these," he added, pointing to a two-month-old blue-and-yellow ATM run by Co-Operative Bank, one of Myanmar's 13 private banks.
That's about to happen: the central bank is preparing to launch a new nationwide ATM network within two months and is in talks with Visa International's Plus and MasterCard International's Cirrus to introduce international banking within six months to a year, part of sweeping reforms in the former British colony, also known as Burma.
Myanmar's banking system is among the world's most antiquated, crippled by years of sanctions and disastrous socialist policies. Moving funds abroad often requires help from ancient "hawala" underground money-transfer agents.
Over the past two months, however, private banks have introduced basic electronic banking - with limits. ATM machines, for instance, cannot be shared between rival banks, and many are offline. Although U.S. and European sanctions have been suspended, local banks still cannot connect internationally.
"Our payment system is still quite simple. It's mostly based on cash," Maung Maung Win, one of two Central Bank of Myanmar deputy governors, said in an interview in the commercial capital Yangon. "Even some of the big companies or our government departments like to use cash."
Within two months, he said, a new department within the central bank, the Myanmar Payment Union, will introduce a new debit-card network allowing banks to share ATM machines and offer a wider array of services, among the biggest changes in the financial sector since the managed float of the kyat on April 2.
That will be followed by a second phase of international services by the middle of next year, or possibly as soon as six months, he added. The timing depends on the execution of Washington's decision this month to suspend sanctions.
Frozen out of global banking
Since 1988, when the former military junta violently cracked down on student protesters, the United States has imposed what it calls "a web of overlapping sanctions". This was done through five laws and four presidential documents.
On May 17, the Obama administration announced it would ease those restrictions, allowing U.S. investments and financial services in Myanmar for the first time in decades. This was in recognition of dramatic political changes.
But Washington only "suspended" sanctions, instead of lifting them, to ensure no backtracking on human rights. The laws remain on the books.
U.S. businesses wanting to do business in Myanmar, including banks, must apply to Washington for a "general license", a step that Myanmar's central bank expects could take weeks or even months.
"We're waiting," said Maung Maung Win.
As a result, Western financial services are still non-existent in Myanmar and international credit and debit cards remain off limits - a frequent source of irritation for tourists and business executives now descending on the country.
The restrictions also prohibit local banks from moving money to U.S. and European bank networks — effectively freezing Myanmar out of global banking.
Anticipating changes, Myanmar's central bank has opened discussions with MasterCard and Visa, said Maung Maung Win.
"From our side we are willing to start as soon as possible," he said, adding the central bank wanted to connect to the international network ahead of the 2013 Southeast Asian Games, due to open late next year in Myanmar's capital, Naypyitaw.
MasterCard is looking at opportunities in Myanmar, said Matthew Driver, division president for Southeast Asia at MasterCard Worldwide.
"Electronic payments will be crucial in helping Myanmar connect to the global economy, facilitating business activity, and creating a better life for its citizens through financial inclusion," he said in a statement emailed to Reuters.
'Need to see more of these'
Local banking was not always so fraught.
Dozens of local and foreign banks thrived in the 1950s, but the industry withered after a 1962 military coup introduced a disastrous "Burmese Way to Socialism" and sweeping nationalization.
In 1988, the country's former military rulers re-introduced a market economy. Soon after, in 1992, private banks were allowed. Foreign banks began opening representative offices, poised for a day when they could do business in the resource-rich country of about 60 million people.
In 2003, shady money-lending practices caught up with the banking sector, sparking a crisis exacerbated by inept decision-making. Three banks collapsed.
Accusations of money laundering have since begun to fade but other problems are entrenched, including restrictions that prevent foreign banks from doing little more than research at representative offices. Currently, 17 foreign banks maintain such offices, said the central bank.
In the late 1990s and early 2000s, that number peaked at around 40. In recent weeks, it has started to rise again.
Asked which banks were most keen to enter Myanmar, Maung Maung Win said Japanese banks led the pack, including Bank of Tokyo Mitsubishi UFJ Ltd and Sumitomo Corp, followed by Singapore's United Overseas Bank Ltd, DBS Group Holdings Ltd and Oversea-Chinese Banking Corp Ltd, and then Malaysia's CIMB Group Holdings Bhd. Banks from Vietnam, China and the United States also expressed strong interest, he added.
He said foreign banks might be allowed to open joint ventures or subsidiaries as early as next year and no later than 2015, pending new foreign direct investment laws and the outcome of deliberations at Myanmar's Finance Ministry, which oversees the central bank.
In the meantime, domestic banks are rushing to roll out services ahead of foreign competition.
Irrawaddy Bank, owned by local tycoon Zaw Zaw's Max Myanmar conglomerate, is less than two years old but aims to double in size to 45 branches and 1,500 staff next year from about 20 branches and 970 staff now, Zaw Zaw said in an interview.
Some have started online bill payments and domestic remittances, adding to the thrill for card-holders such as Naing Lin Oo, who uses ATMs about twice a month.
"It is far easier than using cash," he said outside Yangon's second-largest shopping plaza, itself a new phenomenon, open for just two months. "But we really need to see more of these," he said.