Popular mobile payment method in Vietnam

■ What is the status of Vietnam payment method?
● The proportion of cash payments is overwhelming
– In Vietnam, cash is still the main payment method. Most of our daily spending, such as buying food at a mart or pumping gas at a gas station, is made by cash payment, and most Vietnamese consumers are also quick to pay.
– According to Vietnamese government statistics, more than 65 % of all transactions are made in cash, and 79.1 % of the transactions were made in Vietnam's online Friday (Cash On Delivery) using COD (Late Cash Payment) method.
Percentage of Vietnamese payment method (%)

Note : The above statistics are based on the Vietnam Online Friday transaction in 2016.
Data Source : Vietnam Electronic Commerce Information Institute

■ Increased demand for convenience of payment through online shopping and the expansion of smartphone penetration
● Improved recognition on credit card transactions and online payments
– Vietnam economic growth and the consequent income growth lead to the growth of the Vietnamese retail distribution market, resulting in increased demand for payment convenience and improved awareness about card transactions.
– Not only Lazada, but also the rise of online shopping malls such as Yes 24.cfb, Tiki.cfb, AdayroI and others, and the growth of the online transaction market in Vietnam.
– As of 2016, the market for e-commerce in Vietnam grew by about 22.8 % year-on-year, and the Vietnamese government advised e-commerce companies to include online payments as one of their payment methods.

■ Major mobile payment services in Vietnam
● Mobile payment market starts to draw attention from online payments
– Thanks to Vietnam's high smartphone penetration rate (estimated at 55 %) and the high growth rate of online shopping malls, payments and payments via mobile devices have gained a lot of attention recently.
– Major mobile payment service in Vietnam is to take ① and pay through personal authentication, ② How to pay using electronic wallet application, ③ NFC method such as SamsungPay.

1) QR code payment
● Quick Response (QR code) payment is a method of scanning codes generated from a branch office or smartphone with a mobile phone.
– VietinBank, one of Vietnam's state-run banks, recently introduced a QR code payment method for its VietinBank iPay mobile application, and the local commercial bank TPBank, also known as TPBank, in October 2017.
– In addition, all major local banks, such as Vietcombank, VPBank, ACB, Sacombank, OCB, HDBank, MaritimeBank, have entered into partnership QR business with Moca.
– TPBank Ngeng CEO said, " The QR code payment method is more convenient and efficient than the POS payment method, and is always available at Vietnam Bank. "

2) Electronic wallet (E-wallet)
● Electronic wallet is one of Vietnam's most popular mobile payment methods.
– As competition between major companies has become more intense lately, the scope of business is expanding for a wider range of services and products, and traditional commercial banks are also working with electronic wallet companies to advance to the mobile payment market.
– Vietnam Electronic Commerce Association President Nguyen Thanh Hui said, " Over the past five years, about 20 new electronic wallet services have been created and many companies are still issuing licenses for Vietnam. "

● MoMo, leader in electronic wallet service in Vietnam
– The most popular mobile electronic wallet service in the country is Momo, which was developed by the local FinTech Company M Service in 2014, which stands for Mobile Money.
– In particular, the 2016 Global Investment Bank, Goldmark Sachs and British Standard Bank attracted investment worth $ 28 million, drawing attention from domestic and foreign media, and created a boom in growth of Vietnam's electronic payment market.
– After attracting a large amount of investment, Momo has been working on expanding payments to Vietnam by expanding the service area nationwide, strengthening service development and marketing activities, and providing 100 services.
– Vietnamese banks also develop related services or expand their cooperation with related companies in line with the trend of electronic wallet services.

3) Samsung Pay (Samsung Pay)
● Samsung Pay in Vietnam
– In September 2017, Samsung Pay, a mobile payment service for Samsung, started its service in Vietnam.
– Vietnam has a high rate of credit card penetration (over 100 million units issued) and smartphone transaction rate (about 55 %), making it a good choice for Samsung Pay service in major Vietnamese restaurants.

■ Major electronic payment policies of the Vietnamese government
● Master plan for non-cash payment system 2016-2020
– The Vietnamese government has announced a master plan for establishing a non-cash payment system in December 2016 (Decision 2545), judging that the introduction of infrastructure and technology for electronic payments is very effective for economic growth in Vietnam.
– According to the plan, Vietnam will establish relevant laws and policies, strengthen credit card payment service between retailers, strengthen electronic payment services, and comply with international standards for developing non-cash payment system and changing current cash payment habits.
– In particular, the Vietnamese government plans to increase non-cash payments to more than 80 % in the public sector such as water and electricity by 2020 (Decision No24 .-TTg, ' 18.2.23).
Plans to establish non-cash payment system in Vietnam from 2016 to 2020

Source : Decision 2545 / QD -- TTg

● In January 2017, the Bank of Vietnam announced an implementation plan to implement it quickly and effectively (Decision No. 637 .0-1.1.1).
– Vietnam Central Bank includes details to accelerate the deployment of non-cash payment systems, including a list of related agencies ' responsibilities, roadmap and time to achieve their goals.
– In addition to this, the Vietnamese government and related ministries have announced regulations for strengthening security, and regulations for the service of heavy and medium-firm dirt products.
Major Vietnamese statutes for non-cash payments
① Decision No.2545 QDX-TTg (' 16.12.30. 2016-2020
Plan to develop non-cash payments in Vietnam)
② Decision No. 637 QD- -NNNN (' 17.3.31.
Plan to implement non-cash settlement system)
③ Directive No.03CT - NHNN (' 17.1.10. Vietnamese card and electronic payment
Security enhancements)
④ Circular No. 49 / VBN - NHNN (' 16.11.9.
Service Related Rules)
⑤ Circular No.462014TTT-PONN-PONN (' 14.12.31. Non-cash payment.
Service Guidelines)
⑥ Decision No 241 / QD -- TTg (' 18.2.23. Non-cash payment in the public sector
Reinforcement plan)

■ Implications and points to be noted
● In fact, it is a step to increase interest in mobile payments such as MoMo and Alipay.
– Clearly, interest in mobile payments in Vietnam has increased in recent Vietnam financial industries such as the expansion of FinTech companies (represented by MoMo) and the development of electronic payments mobile applications.
– In particular, as China's top and second largest electronic payment platforms, AliPay and WeChat Pay, are reportedly planning to advance into the Vietnamese market, major commercial banks in Vietnam are competing against each other.
– They are secretly expecting the emergence of China's Alipay and WeChat Pay to serve as a catalyst for changing the cash payment habits of Vietnamese consumers.

● However, it is important to recognize that Vietnamese consumers are still resistant to mobile payments.
– It is difficult to know the exact size of the Vietnam mobile payment service transaction, and it is difficult to conclude that Vietnam's mobile payment market will be promising.
– The absolute weight of late payment (COD) in online and mobile shopping is evidence that Vietnamese consumers prefer cash payment, adding to security and stability concerns.

● Works with companies that already have the license
– – If you want to enter mobile payment services such as electronic wallets, the related license acquisition and procedures are very difficult, and therefore, you will be able to enter into partnership with a company that already has a license rather than investing directly.
– Electronic Payment Services are also actively working with offline commercial banks, knowing that their mobile platforms are limited.

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[Data source : KOTRA Ho Chi Minh Office]