Jeff Pan, CEO, Flymya
Founded in 2016, Flymya is an online travel agency in Myanmar focused on capturing market share with domestic travelers in Southeast Asia.
One of Flymya's biggest hurdles is payments: Only 2% of the population has a credit or debit card, plus money can’t be transferred electronically between banks - meaning it must employ a dedicated team to physically take money to and from the bank, CEO Jeff Pan explains.
How did the idea to start a Myanmar-based online travel agency come about, and what were the main hurdles to getting it off the ground?
In 2010, Myanmar switched from a military to civilian government after nearly five decades of isolation. As the country experienced phenomenal growth in smartphone adoption and internet penetration (less than 1% of the population had access to internet seven years ago), there was tremendous foreign investment in industries that had previously never existed before.
Flymya was started in 2016 by a Burmese-Singaporean serial entrepreneur, Mike Than Tun Win, who also made investments in ride-sharing and food delivery. Mike also recently launched a travel startup that repurposes unwanted bike-sharing cycles for underprivileged kids in Myanmar.
The biggest difficulty of running an online travel agency in Myanmar is facilitating financial transactions. Only 2% of the population has a credit or debit card, so the majority of transactions still require the logistics of cash collection, similar to what Flipkart (India) and Ctrip (China) experienced in their early days.
In addition, it’s currently not possible to transfer money electronically between different banks. We have an entire team whose only job function is to go to the bank and physically take giant bags across the street to a different bank.
Where is Myanmar on mobile payments, and how popular are they for consumers?
Myanmar has completely leapfrogged traditional banks and immediately adopted mobile banking. Foreign banks have invested heavily in mobile banks, and we expect adoption to follow the same trend in other Southeast Asian markets.
How have consumers embraced paying for travel online, and what roadblocks still remain?
Domestic consumers have embraced booking flights online, but paying for travel online is still something that has yet to be embraced.
There are still significant roadblocks from both the customer (a combination of trust and consumer preference) and from technology (local credit card payment gateways generate significant amounts of false-positive declines).
How does Flymya’s payment structure work? Consumers make transactions online, then what happens?
We accept credit cards, but we also employ a fleet of drivers who physically collect cash from customers. It’s obviously something that I would obviously prefer didn’t exist, but we’ve run the unit economics on cash-on-delivery, and it somehow makes fiscal sense.
We’ve experimented with scaling a few different logistical operations, including teaming up with the bicycle couriers from the local food delivery service, yangond2d.com.
Who is in charge of bringing money to/from the bank? And what percentage of your workforce is charged with dealing with payments?
About 10% of our staff revolves around cash collection, from drivers (who physically transport cash to and from the bank) to administrative staff responsible for auditing and reconciliations.
I think people tend to forget that even a company like Booking.com was operating on reservations delivered via fax machines just a few years ago.
Jeff Pan - Flymya
One of the largest banks in Myanmar with thousands of employees has 60% (!) of their headcount dedicated purely to cash (transport, auditing and counting).
Then again, my mom still writes checks, so who am I to judge?
How do payments between Flymya and suppliers work?
Ugggggghhhhh (rolls eyes). We receive the majority of our payments from customers in cash in the local currency (Myanmar kyat), but the airlines require payment in USD, so we have to incur two sets of transactional costs - once to change the currency from MMK to USD with our bank, and another to physically transfer cash to the airline’s office.
Are there differences across categories - with how you work with airlines vs. bus operators, for example?
It’s fairly similar, as we have a deposit with each supplier that we need to continuously top up.
How do you handle payments for air tickets given requirements around IATA BSP?
It actually serves as a bit of an advantage for us at the moment, as it makes it difficult for international companies to operate in Myanmar. We have a direct relationship with the domestic airline, so we handle airline settlements directly with them. IATA has indicated that Myanmar will become a BSP market in a year or two.
If Flymya added hotel inventory, which often require deposits or reservations without money changing hands, how would that change your approach to payments?
Hotels are actually much less complicated than airlines. I think people tend to forget that even a company like Booking.com was operating on reservations delivered via fax machines just a few years ago.
We’re looking forward to launching our commercial hotel strategy in the coming months.
Is the slow uptake of online payments a wider reflection on what it’s like in Myanmar for digital travel?
Rod Cuthbert (Viator, Rome2rio) rolls his eyes at startups that show up at Phocuswright events screaming “travel is broken.” At the end of the day, everything here works - the planes get from point A to point B, and money (somehow) gets from the passengers to the airlines.
Could things be easier? Yes, of course. But the set of cards that I’m dealt is a level playing field between me, the local and regional competitors and the global OTAs. We’re all dealing with the same hamster wheel.
Are there regulatory or government restrictions on you being able to develop payments online further?
No, it’s mostly a result of technological advances by the local financial industry and consumer adoption that will inevitably happen.
What are the biggest payments-related challenges you face as an online company still largely operating in an offline world?
So the interesting part is that I actually don’t mind the cash ecosystem that much. It bothered me tremendously when I first took over six months ago, but I’ve come to realize that at the end of the day, it works. Money (somehow) gets from point A to point B, and we have a really great team of hacksters optimizing the process.
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So aside from the physical transport and logistical issues of offline payments, the interesting challenge that most people overlook is from the design perspective.
For example, what’s the best way to incorporate cash payments into the conversion funnel when you’re designing the checkout flow on the website? There’s all these quirky little puzzles that we have to solve each day that don’t exist in any other market.
And what are the biggest strides/accomplishments you’ve made around payments thus far?
Put the employees on stage at Phocuswright and hand them some kind of award, please.
When a customer clicks “book now” on our site, they really have no idea all the human elements that go into motion behind the scenes - the massive 24/7 call center operation, physical confirmations with airlines and a cash delivery network of people running around all over the country with bags of cash.
I’m ultimately incredibly proud of our engineering team. They’re 50% female, grew up without internet (penetration was only at 1% seven years ago) and were isolated from the rest of the world. Then, out of nowhere, some hyper New Yorker waltzes in and starts dreaming up high-powered production velocity.
Payment conversion is a pain point for every OTA, not just ours.
How far do you need to go until you’re on par with neighboring countries like Thailand or Malaysia?
Well, I told Tim Hughes (Agoda) that I’ll spare him the embarrassment of dominating him in his home market of Thailand, so we won’t be investing too heavily in expanding there.
However, we do see exciting parallels between Myanmar and underserved neighboring domestic markets.
We’re experimenting with a lot of new things, and while we fully expect a large percentage of them to fail, we’re optimistic that we’ll be able to come up with a formula that will prove to be different from what global OTAs are doing and scalable in emerging markets.
What needs to happen to bring payments fully online?
It took Myanmar just four years to go from 1% mobile internet penetration to 90%. By the time you finish reading this article, who knows … every Myanmar citizen might have an Amex?