A Wave Money agent in Yangon counts cash before handing it over to a customer in May. Agents are charging 10 percent or more for cash withdrawals, in violation of company policy. (Frontier)
A Wave Money agent in Yangon counts cash before handing it over to a customer in May. Agents are charging 10 percent or more for cash withdrawals, in violation of company policy. (Frontier)

Myanmar’s post-coup cash crunch creates a shadow money trade

Mobile money agents and informal brokers have been meeting the demand for cash at a time when banks are severely limiting withdrawals, but some accuse them of profiteering by charging steep fees.


When U San Lwin arrived at his local KBZ bank in Yangon’s Latha Township at 7:30 one recent morning, he gazed despondently at the long line of customers already waiting at the ATM.

Like so many others, lining up at ATMs has become a daily ritual for San Lwin. Since the February 1 coup he’s been desperately trying to withdraw money from his account because he fears that under a military regime he’ll end up losing everything. 

“It’s only getting worse,” he said of the difficulties accessing his own cash. “I’m so worried the banks will collapse before I can withdraw my savings. Everyone else is worried, too – that’s why we’re here every day.”

To prevent banks running out of cash, the Central Bank of Myanmar introduced withdrawal limits of K2 million a week for individuals, including a maximum of K500,000 a day from ATMs. But with the Central Bank unwilling to provide private banks with adequate liquidity, the banks have been forced to ration their reserves even further by putting daily caps on the number of customers and setting lower withdrawal limits. This has only increased the panic, however, and the length of the queues. 

At first San Lwin lined up to withdraw money from branches, but when that became too time-consuming – he had to line up one day for a token, and then another to withdraw money – he instead turned to ATMs. 

Now he queues up most of the day just to withdraw K200,000 – if he can find an ATM that still has cash in it.

For those without the time or patience to line up, or who need larger amounts of cash, there are other options. But these come at a price, ranging from the equivalent of a few dollars to possibly thousands on larger transactions.

Inside the cash hustle

For many like San Lwin, queuing for hours outside a bank or ATM at the height of the hot season is a hardship. But for those with time on their hands – and a willingness to rise early – it’s an opportunity to make some money.

Ma Pyae from Yangon’s Thingangyun Township quit her job at a bank late last year. In March she began offering a unique service, one that didn’t exist prior to the coup: she would line up for you at an ATM for a fee of K10,000. 

Ma Pyae would head out into the early morning darkness – in violation of the nightly curfew – to get a spot at the front of an ATM queue. By the time curfew ended, there would usually be anywhere from 70 to 100 people behind her. 

Once Ma Pyae was in line, a friend would post in several Facebook groups offering her help to withdraw cash. If the client trusted her, they would transfer the money directly to Ma Pyae’s account and she would withdraw it using her own card; otherwise, they would come to the ATM and transfer the money to her after she had already withdrawn the cash. 

But she described this enterprise as a “lottery”, because the banks do not usually announce which ATMs they will fill until 9am. “If this ATM doesn’t work, is there another one we can go to? We would ask our friends and get there as soon as possible,” she said.

Ma Pyae preferred to line up at CB Bank ATMs, because the bank has higher withdrawal limits – K300,000 a day, compared to K200,000 a day for rivals banks KBZ and AYA – and she knew from experience that if she wasn’t among the first 100 people then she was probably wasting her time. 

Ma Pyae is far from alone. On Facebook, there are hundreds of people offering to line up at ATMs in exchange for a K5,000 to K10,000 fee – or 1.66 percent to 5pc of the total withdrawal amount, depending on the bank.

Ma Thet, from South Okkalapa Township in Yangon, also prefers to line up at CB Bank ATMs. Like Ma Pyae, she rises before dawn each day, sometimes lining up together with friends so they can all exchange their spots for K10,000.

“It’s about trust,” she said. “Some people trust us and just transfer the money and then wait somewhere else. Once we take out the money, we just have to go and give it to them. Others who don’t trust us, they come and wait [by the ATM] until the cash is out.”

Recently, Ma Pyae decided to stop lining up ATMs. The final straw was an argument with a woman who took her spot when she went for lunch. “The bank staff didn’t help at all – they just said it wasn’t their responsibility,” she said. “That’s kind of true, but this mess is partly because they’re making it hard for us to withdraw cash.”

Instead, she now sells the tokens needed to get inside a branch to withdraw cash, charging K3,000 to K5,000 for each token. The fee is lower, she said, because she doesn’t have to get up early and queue for many hours. Instead, Ma Pyae calls one branch after another, from 9am to 3pm, to try and secure a token for an appointment. When she gets one, she advertises it in Facebook groups.

“Often the buyers are mobile money agents – those who work with Wave Money want appointments with Yoma Bank, while KPay agents buy tokens for KBZ,” she said.

Customers line up at a row of KBZ Bank ATMs inside Myanmar Plaza in Yangon. (Frontier)

Money in a hurry

These mobile money agents are another potential source of quick cash for those wanting to avoid queuing at ATMs or bank branches, but there’s a catch.   

“The fees are rising all the time,” complained San Lwin. “At the end of March, it was 2 percent. A month later it was 3pc. Then it was 4pc or 5pc. You have to pay money just to get your own money.”

The two largest mobile money providers, Wave Money and KBZPay (often referred to as KPay), allow their agents to charge cash withdrawal fees ranging from 3pc for K10,000 to 0.8pc for K500,000.

But since cash shortages began to bite, agents have started charging additional or higher fees. These started only slightly above the official rates but have gradually risen, in some cases hitting 15pc or more. 

Agents told Frontier they were facing the same difficulties as bank customers, and the higher fees reflect the time and money they spend trying to get cash to give to customers. 

“I’m an agent for Wave Money and KBZPay. They give us a small commission, which works well during normal times when there is money flowing in and out,” said agent Daw Nyunt Nyunt Than. “But since the coup, customers only want to withdraw money. That means your account at the bank fills up, but you have no cash in hand. You have to wait days to get it out of the bank and you can never get enough.”

Ko Hein Thwin Soe, a Wave Money agent from Yangon’s Sanchaung Township, said he’s charging a 10pc withdrawal fee because, similar to Nyunt Nyunt Than, it has been difficult for him to get cash out of his account at Yoma Bank.

“Most agents are doing the same,” he said. “We’re all facing the same problem.” 

A KBZ employee, who spoke on condition of anonymity, said the bank had opened a “KPay Centre” at its MICT Park branch in Yangon on April 9 to make it easier for customers to access their cash. They are able to withdraw up to K500,000 a week at the centre and are charged K4,000, or 0.8pc. However, the withdrawal limit has since been cut to K300,000 and access to the KPay Centre is also limited through a token system, with the bank issuing 250 digital tokens a day through the KPay app.

“Last week I was charging 10pc but now I’ve increased it to 12pc, like most agents,” Daw Myint Myint Khin, a KPay agent in Sanchaung, told Frontier on May 20, adding that this hadn’t hurt demand. “Even though the fee has gone up, there are still many people who want to withdraw money.”

Because money is only going one way – out of customers’ accounts – she’s only serving 20 customers a day, allowing them to withdraw up to K150,000 each.

“No one transfers or puts cash into their account anymore, so I’m always running out of money,” she said.

Even Wave Money customers willing to pay the extra commission have found it harder to withdraw cash from their mobile wallets in recent weeks, because of attempts by the company to rein in the fees.

On May 21, it issued a statement saying it was aware some agents were “overcharging” customers and was “investigating”. “[A]ppropriate actions will be taken against those proven to have engaged in corrupt practices,” it said. Since then, many Wave Money agents have simply stopped offering services, because they are unwilling to let customers cash out at the fee level set by the company.

Mr Brad Jones, chief executive officer of Wave Money, said the company had seen a significant drop in over-the-counter transactions – either cash transfers or withdrawals – but the company would stick to a “zero tolerance approach” to agents overcharging customers. 

“We are aware that many of our agents are facing challenges including [a] cash shortage. However, we don’t authorise any agent surcharge, condone overcharging in any way or other dishonest behaviour,” Jones said, adding that complaints had decreased since the company gave official warnings to some agents and suspended others.

But some are refusing to comply. Nyunt Nyunt Than said while she was aware of the announcement, she would only stop charging extra fees when access to cash returns to normal.

As of June 4, she was still charging 10pc for Wave Money and KPay withdrawals. Because of her limited cash reserves, she’s only serving 10 customers a day and limiting each withdrawal to K100,000.  

“I don’t want to charge extra,” she said. “But if we want to withdraw our money, we have to go to the bank and line up with everyone else, so we have to charge a small fee. 

“I think 10pc is still cheap for [customers] – I’ve heard that some agents take 20pc, while others won’t let you withdraw money at all. So I don’t feel guilty about it; I’m helping people as much as I can.”

A spokesperson for KBZ did not respond to a request for comment.

The big money game

There are other options for those wanting to access larger sums from a bank account. A market for deposits has emerged under which customers use internet banking to transfer their balance to a third party, who then gives them cash – again, for a fee. Similarly, some dealers will buy cheques at below face value, pocketing a percentage of the total.

Although some of these transactions are handled through existing money exchange and informal remittance networks, many seemingly ordinary people with cash in hand have been advertising their services on new Facebook groups created to link buyers and sellers. Back in March these dealers and agents were charging as little as 1pc, but the fee has risen steadily and hit around 13pc in early May. 

As online discussion of deposit transfers hit fever pitch, the Central Bank warned on April 15 that such dealings were “illegal” under section 99(b) of the Central Bank of Myanmar Law, which prohibits the trading of currency notes or coins for a profit without the permission of the CBM. It accused some businesses of piling up cash instead of depositing it in the banks so they could profit from these money transfers. Anyone involved could be sentenced to two years in prison, it warned.

This threat did little to stop the practice, but the rising fees eventually sparked a backlash, with some users expressing their frustration on the Facebook groups.

“Unless you need money for a life-saving situation, don’t take out money [from a broker]. The charges are far too high. 3pc is still reasonable, but most are just trying to take advantage of the situation … I am fed up with those engaged in profiteering,” wrote one user on May 14. 

Many users flocked to the comment section of the post to discourage others from transferring their deposits. Some alleged that “most of the brokers are bank staffers”, something that has not been proven. Others claimed that they’d been cheated by brokers who failed to give the cash after they had transferred their deposits.

Ma Pyae said those buying deposits in large quantities were using them to buy gold with electronic transactions, and then selling the gold for cash. 

“Gold shops demand cash from small buyers, but they were letting some buyers use electronic transactions for large amounts,” she said.

After gold hit a record local price on May 12, the authorities tried to tame the market. On May 17, the Yangon Gold Entrepreneurs Association said it was working with the Bureau of Special Investigation, the government’s economic crime-fighting force, “to stabilise the gold price”. The association added that it had instructed members to only accept cash for gold sales, and  at a meeting at the end of the month, members decided to stop selling gold to those “who purposely manipulate the market”. 

On May 20, meanwhile, police arrested a woman from Yangon’s North Okkalapa Township for allegedly offering illegal “door to door” remittance and withdrawal services. The arrest was only announced on May 31, with state media reporting that the woman, who also runs an online shop, had charged from 4pc to 8pc.

Vowing to crack down on brokers offering to buy deposits for cash, the police said the woman had been “taking advantage” of the “cash withdrawal situation” – a euphemistic reference to the banking crisis.

News of the arrest seemed to have an immediate effect, with many of the once-active Facebook groups now scrubbed of all their earlier posts in which users advertised their services and rates. 

The Bureau of Special Investigation has intervened to try and stabilise the gold price, which hit a local record on May 12. (Frontier)

Entrepreneurs or profiteers?

While those buying deposits for cash have been castigated as unscrupulous profiteers,  they have played an undeniably important role in providing businesses with the cash they need to pay staff, suppliers and other expenses.

Edmund Malesky, a professor of political science at Duke University in the United States who has studied Myanmar’s economy, said those willing to provide cash could be seen as “entrepreneurs taking risks to provide a valuable service that is keeping economic transactions moving forward”.

“They did not create the banking crisis, but they are finding ways to make cash available to those who believe they can best use it. The fees they are charging compensate them for their risks and the prices are likely driven upward by those who most need cash for their operations, and who believe they can still make profits at those higher prices,” he said.

He said he doubted that any “top-down regulation or punitive measure” would stop the practice of charging for cash amid the current scarcity. “A critical part of the banking crisis has to do with the fact that financial markets do not function well in climates of low trust and political uncertainty,” he said.

Malesky said the cash shortage was likely hurting not only customers unable to access their savings, but also the economy more broadly. When people have trouble accessing cash, it limits the number of transactions that are possible and reduces the “velocity of money”, which is an indicator of the health of an economy.

“When velocity is high, it means that people are making and selling goods and services, earning returns, which they use to buy other goods and services,” he said. “Artificial cash shortages interrupt this process and raise the cost of daily transactions, slowing economic activity and impeding growth.”

But for San Lwin, the fees are hard to stomach. “I’ve heard some KPay agents are charging as much as 20pc … I think they are just taking advantage of the bad political situation,” he said.

“A handful of capitalists are working with a lot of money and making a big profit from the fees,” San Lwin said, suggesting the public should follow his example by shunning the brokers and joining ATM queues.

“I want to encourage other people to line up to withdraw money rather than support the capitalists by paying these exorbitant fees.”

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