“More than 90% of payment transactions in Vietnam are cash payments and customers prefer COD than Online payment. However, changes in payment behavior of consumers and new policies, as well as the recent encouragement of government to increase non-cash transactions are factors which motivate e-payment service providers.”
In 2010, new Law of The State bank and Law on Credit Institutions in Vietnam added some updated regulations to satisfy the change in trend of payment behavior. Moreover, other relevant regulations such as Electronic Transaction Law, Prevention of Money laundering Law, etc also contribute to build a first phase legal system for secure and effective e-payment service.
In addition to traditional payment services such as bank transfers, checks, authorised to collect, services based on technological development such as Internet banking, mobile banking, e-wallet, SMS banking are more widely applied. The number of bank cards and transaction value via card has also increased rapidly. In 2005, there were only 234.000 bank cards issued by 20 banks in Vietnam.
However, in 2015 March, over 86 million of cards have been issued by around 40 commercial banks. Card transactions also increased continuously over the years. Moreover, banks have integrated more features into card and personal online banking account to pay bills, goods and services like payments for electricity, water, gas, insurance, or payments for purchased goods or services online like tickets, digital content, game, ads.
The banks also focus on the security and utility of card by using EMV chip and integrating multi-utility into a card like NFC technology or QR code-based payment services and nearly 30 banks give their customers mobile payment ability. Since 2012, the household bills such as water, gas, electricity, and internet can be paid directly and easily via Internet or mobile banking by many payment service providers.
According to the Vietnamese Bankcard Association, more than 99% value of card transaction in Vietnam is performed at ATM, and 83% of this value is cash withdrawal. Less than 17% of ATM card value is money transfer, and only 0.3% value is for POS payment. There are two reasons for this fact.
Firstly, it is consumer behaviour, as Vietnamese customers prefer to receive goods or services before making the payment, and the sellers also prefer cash payment. Secondly, the number of merchants who accept card payment is sill really low. At the end of 2014, there were only 192,000 POS, and the expected number for 2015 is 250,000 POS for over 90 million people in Vietnam.
In addition, in 2014, pilot implementation of e-wallet service has been approved by State bank. E-wallet has been officially permitted for use starting from March, 2015. Accordingly, the non-bank PSPs such as M-service, Peacesoft, VTC etc, in coordination with 37 commercial banks, would provide e-wallet product and serve payment transactions on ecommerce websites.
Data from State bank of Vietnam shows that, by the end of 2013, there were over 1.84 million electronic wallets with a total trading volume for the year of USD 1.1 billion. This figure is still very low in comparison with USD 12.3 billion total value of non-cash payment in Vietnam. In addition, now only 22% of Vietnams population have access to financial services and transactions via electronic channel, and only 6% make purchases through the application installed on the mobile phone. Therefore, electronic wallet service currently is still in the touch time and first stage to get in the market.
“In order to succeed with E-wallet service in Vietnam, the most difficult thing is to change habits and payment behaviour of people. It will take long-time and large amount of marketing and R&D costs. Thus, small providers would be really difficult in this competition.”
About Viet Tran Quang
Mr. Viet Tran Quang is the Director of E-payment Center (VTC Pay) - VTC Technology and Digital content Company - Vietnam Multimedia Corporation, with responsibility for the divisions of R&D, marketing and sales of VTC Pay e-wallet and payment gateway. He has been working in the e-payments sector for more than 10 years.
About: VTC Pay
VTC Pay is known as an e-payment centre of Vietnam Multimedia Corporation (VTC) - a state-owned corporation, which has been providing electronic payment and ecommerce services in Vietnam for nearly 7 years. Up to now, VTC Pay has achieved a lot of successes and provides four typical products and services including: e-wallet, payment gateway, payment service for digital content, VTC Account System and Billing.
VTC Pay has 21 million active customer accounts with over 8 million daily transactions and always guarantees quick service supply and support. VTC Pay has been working with optimum productivity and it is expected that VTC Pay’s revenue will be USD 75 million in 2015.
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