Why Wave Money is banking on Myanmar moving on from cash

In a country where people pay for apartments with bags full to the brim with bills, Wave Money CEO Brad Jones explains how he hopes to wean people off cash payments

What is Wave Money?
We are a traditional mobile money business similar to other models around the world such as Easypaisa in Pakistan or Wing in Cambodia. We allow money transfers either over the counter from agent-to-agent or through mobiles.
How do you make money? 
We charge a transaction fee on every transaction and then we pay part of that out to the agent. We look to make money off the back of that. These businesses are very much scale businesses – they’re like Visa and MasterCard. When those corporations started out, the volume obviously took time to build. But once you’ve actually built the volume, they can be very profitable businesses because the marginal cost of providing a transaction is actually quite low.
How do you hope to compete with traditional remittance services and newcomers entering the market?
In Myanmar, it’s a little bit different to other markets in which I’ve worked because a lot of the money is transferred through banks here. It’s not people with bank accounts, it’s unbanked people going into bank branches and using the bank branch to transfer money. Firstly, I don’t think that’s an effective use of a bank’s infrastructure. I think the banks will actually use that real estate to sell mortgages and credit cards and all that sort of stuff. So, I think we’re well placed to work with banks who are wanting to move those customers into a channel that’s actually more convenient for the customers.
In terms of competition from other mobile operators coming in, I welcome it because I think what we see here is that cash is the competitor at the moment. There’s so much cash that is transferred around Myanmar – [it’s common to see] big sacks filled with money being moved around. We’re all going after the digitization of that cash. And for a period of time, I don’t see it as a market share battle, I see it more as the industry educating consumers as to why digital cash is better than physical cash.
Previously, fintech players seemed to be intent on disrupting the financial sector. Now, they seem much more likely to want to work with banks. How would you like to work with banks in the future?
Firstly, we want to work with anyone. One of the things I’d like to do is provide our customers with the ability to access their funds from a bank account. So, for example, we have a feature now – because we’re connected to Yoma bank and we have a relationship with them – which allows customers to move money from their Yoma bank account into their Wave account very easily. It’s a bit like moving money into a PayPal account from a debit card. So, I’d love to be able to do that with many banks and have customers basically link their source of funds to their Wave account.
What are some of the main challenges that Wave faces operating in Myanmar?
The biggest challenge for anyone in this business is the distribution network. Myanmar is such a big country. We’re now in about 70% of townships around the country – to get around and actually see where our outlets are, it’s a lot of travel. We are in some extremely remote places. We’re in Kachin state, we’re in Chin state, we’re in Rakhine State. Anyone can go and roll this out in Yangon and Mandalay, that’s easy. But pushing this out where the people really need the service – that’s not so easy. And even areas like Chin, we’re finding it very tough because of the terrain.
Secondly, trust is a big issue – predominantly because the Myanmar consumers have had such a bad experience with the banking system over the last 60 or 70 years. There’s been three demonetisations, the last monetisation was only in the 1980s. The last banking failure was in 2003. So, the average Myanmar person has vivid memories of losing their money. The trust level in the banking system is quite low, though we certainly don’t market ourselves as a bank – and legally, we’re not allowed to.
Moving away from Wave for a minute, what is your assessment of the startup ecosystem in Myanmar?
It’s a really interesting space here in Myanmar at the moment. An organisation called Phandeeyar was formed here a couple years ago. The founder, David Madden, did a fantastic job creating a narrative around the digital leapfrog that was happening in Myanmar, and provided hundreds of young Myanmar people with training on how to become an entrepreneur. That led to the establishment of an accelerator programme and the Founder Institute programme, which Wave has been a big part of.
There’s certainly lots of innovation and passion, but access to finance is a major challenge – the banking system does not allow for unsecured credit, so if you want to borrow money, you need to have collateral to base that on, so I think that makes it very hard for entrepreneurs who need funding.
What does the future hold for Wave?
I think this market here could support 30,000 or 40,000 agents for an average player relatively comfortably. We’re sitting at 8,500 so we’ve got a lot of growth to do. I think there’s going to be a lot more growth in the digital side. This will I think be a little different to say the way Wing operates in Cambodia, which is very much over-the-counter transfers. I think you’ll see a lot more on the app because of the digital penetration and the data usage in the country. The average Telenor data usage is about 3.5GB a month, which is higher than Thailand and Malaysia. So, this is leading us to think a lot more digitally than perhaps has been done in other mobile money implementations around the world.

A version of this article was published in the September edition of Southeast Asia Globe magazine. For full access, subscribe here.