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Anyone who's anyone wants to be in Myanmar. At least, that's what one would think after hearing about all the companies that are making or executing plans to get in there. But there's good reason for this.
After essentially being closed for business for decades, Myanmar, the southeast-Asian country formally known as Burma, is again wide open. They are offering 60 million practically new consumers to U.S. companies who can set up shop first, no matter what they're selling. Coca-Cola and PepsiCo are already off to the races in Myanmar, set to reignite the old cola wars for a whole new citizenry. And now, it's MasterCard's (NYSE: MA ) and Visa's (NYSE: V ) turn to go toe-to-toe.
MasterCard takes the lead for now
On September 5, MasterCard announced that it will become the first international payments network to license branded cards in Myanmar, following the signing of a breakthrough agreement with the country's Co-Operative Bank Limited. According to MasterCard, Co-Operative Bank Limited is one of Myanmar's most established commercial banks, and operates the country's largest ATM network. The agreement lets merchants in Myanmar accept MasterCard payments, giving them access to the company's entire global-payments system. According to MasterCard's Vicky Bindra, president of MasterCard Worldwide for the region:
Allowing the issuing and acceptance of MasterCard branded cards in the country is a huge step forward for Myanmar's banking sector, its merchants and for the country as a whole. 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.
This MasterCard agreement follows hard on the heels of a similar move by rival Visa, which recently began teaching local Myanmar banks the ins-and-outs of processing electronic payments. Visa sees this as a first step to signing a similar deal as MasterCard's.
Go forth and use credit cards
There's good reason for investors in both companies to be excited about the prospects of getting Myanmar onto the electronic payments processing grid. The Economist Intelligence Unit estimates that Myanmar's economy will grow 5.2% in 2012/2013 alone. Much of this is expected to be due to increased tourism, with international flight arrivals up by 63% in 2009/2010, and up another 32% in 2010/2011.
Wherever the money comes from, it seems there will be more of it and, hence, more of it moving through the electronic synapses of MasterCard's and Visa's global-payment systems.
Myanmar is one of southeast Asia's largest countries, but one of the least developed, mainly due to the fact that it was under control of a brutal military dictatorship until 2011. Democratic elections were finally held last year, however, and, as a result, longstanding U.S. sanctions are going away and the country is slowly starting to open up again for business. Just last Friday, in fact, Myanmar passed a foreign-investor law that, while at first glance overprotective of Myanmar businesses to the deficit of legitimate foreign investors, at least gives the world some confidence and solid footing in the fast-changing country.
Getting a piece of an ever-growing pie
If MasterCard and Visa are in Myanmar, you can bet that American Express (NYSE: AMEX ) and Discover (NYSE: DFS ) aren't far behind, though there's no word yet of any movement on their part. It's not often that companies get to mine the wealth of an uncharted economy. But, I suppose it's not surprising that MasterCard and Visa, being the two giants of industry, are in there first, ready to spend mightily, and lobby the government heartily, for the chance to do battle for the hearts and bank accounts of the people of Myanmar.
Be it the swipe of a debit or credit card, or the bump of a smartphone operating with near-field technology, the electronic payments processing sector is a good place for investors to be. It's a pie that, so far, keeps growing and growing. That's the best kind of pie.
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