The Myanmar Payment Union (MPU) allows holders of the cards with 17 local banks to pay for goods at around a dozen businesses signed up to the scheme in Yangon, Mandalay and Naypyidaw.

Decades of junta-rule left Myanmar with a rudimentary banking system, leaving people little option but to pay in cash.

But the scheme "opens a new chapter of payment system", said Maung Maung Win, MPU chairman and deputy governor of the Central Bank of Myanmar, heralding the step towards a less cash-reliant economy.

"An efficient payment system is needed for the development of the country," Minister of Finance and Revenue, Win Shein, added.

"We have tried to launch the MPU card system inside the country to use international payment systems for small and medium payments and to reduce cash payments."

The inability to pay for goods with debit or credit cards is a symptom of years of tough international sanctions against the former military dictatorship, which gave way to a quasi-civilian regime last year.

There are currently only an estimated 80 ATMs across the country.

People are obliged to carry all their money in wads of cash -- a particular challenge for tourists and foreign businesses -- with even upmarket hotels only sporadically able to accept credit card payments.

International payment cards such as Visa and Mastercard will be phased in next and Myanmar hopes its own bank cards will eventually be accepted overseas, Win Shein added.

Last week MasterCard said it had signed a deal with a Myanmar bank that it hopes will pave the way for electronic payments with its own cards, following on from rival Visa which in August said it was preparing to enter the market.

The influx of international visitors following the easing of some international sanctions on Myanmar has created new business opportunities and demand for customers who may not wish to carry cash, the company said.