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Banking & Finance

Mobile payments provide cashless convenience

Released at: 07:12, 01/05/2018

Mobile payments provide cashless convenience

Photo: Viet Tuan

Greater numbers of Vietnamese are turning towards mobile payment services and new apps are emerging to cater to needs.

by Ngoc Lan

Hundreds of people queued up for hours at mobile phone card agents on February 28; the last day mobile service providers such as Viettel, Vinaphone and MobiFone were able to offer bonuses of up to 50 per cent to pre-paid mobile subscribers. Many shops sold out. There was an easier way to go about it, however. Ms. Tran Thi Nga, a 27-year-old in Hanoi’s Ha Dong district, was eager to take advantage of the final day of 50 per cent bonuses, but rather than queuing up she simply used her mobile payment app MoMo e-wallet. “After just a few simple steps I topped-up my phone account without even leaving home,” she said.

With the emergence of smartphones, the way people interact has also changed, including the sale of items and making payments. Mobile payment solutions have become increasingly popular in many countries, including Vietnam.

Newcomers and good services

MoMo is the most popular app in Vietnam’s mobile payment market, with over 8 million users, providing customers with a one-touch payment experience and more than 200 convenient services, including money transfers, mobile phone top-ups, bill payments, and mobile commerce. 

In addition to the more than 500 utilities available on the MoMo app, customers are also able to use MoMo in person, at supermarkets and convenience stores such as Coopmart, Lotte Mart, and Circle K, taxis like Uber and Vinasun, food and beverage outlets like Gogi, Kichi, Coffee House, and Gongcha, and cinemas such as CGV, Galaxy, and BHD. 

It has a network of more than 5,000 transaction offices in 45 cities and provinces in the country, allowing more than 8 million users, of which more than 2 million are in remote areas - where banking and smartphone services are still not common - to gain access to modern financial services. MoMo also works with partners such as Uber, Shinhan Bank, and Bao Viet Insurance. “Convenience and ecosystem diversity are what differentiates MoMo in the mobile payment market,” MoMo’s Vice Chairman Mr. Nguyen Ba Diep told VET.

To help customers use their smartphones at retailers, Samsung launched its mobile payment service Samsung Pay in Vietnam in late 2017, in partnership with the National Payment Corporation of Vietnam. Smartphones with the Samsung Pay app act as a bank card, with users not having to swipe a card to make payments. Those with debit cards from six banks - Vietinbank, Vietcombank, BIDV, Sacombank, Shinhan Vietnam Bank, and ABBank - can use the Samsung Pay app to “tap and pay” around the country. 

Samsung leverages both Near Field Communication (NFC) and a new proprietary technology called Magnetic Secure Transmission (MST) to make mobile payments more accessible to retailers and consumers, giving it a competitive edge over other digital wallets. Users need only open the app, scan their fingerprints or enter a PIN code, then place their Samsung phone close to the POS (point of sale) machine. Samsung Pay is the most widely accepted payment method in Vietnam because it allows for payments on both types of POS machines: NFC and MST. “This is considered a strength in competing with other mobile payment apps,” Ms. Le Thi Hai Oanh, Head of the Samsung Pay Vietnam project, told VET.

According to figures from Samsung Pay, as of December, user numbers stood at more than 290,000, conducting some 360,000 transactions as of December. As a user of Samsung Pay for five months, Ms. Pham Ha Phuong, who works in marketing, spoke of its convenience, allowing her to pay for everything rather than carrying and paying by cash. 

Mobile payments are developing in Vietnam, with other available apps including Appota and Payoo. The market is also becoming more competitive. Among major groups, local mobile service provider Viettel has launched its BankPlus service, which allows customers to pay their water and electricity bills, purchase plane tickets, and conduct money transfers on their smartphones. The service is now connected to 16 local banks, and costs VND11,000 ($0.5) monthly.

Promoting non-cash payments

Deputy Prime Minister Vuong Dinh Hue told the Vietnam E-Payment Forum 2017 held in Hanoi in November that mobile payments are a key factor in promoting a cashless economy, creating new business models and helping users directly benefit from Industry 4.0. “Vietnam has devised a number of policies and projects to encourage non-cash payments in general and mobile payments in particular, to help people better benefit from the numerous emerging e-services,” he said. “We are preparing a national financial inclusion strategy, and mobile payments will be a crucial part of realizing its goals. The government is committed to creating favorable conditions to boost e-payments in Vietnam.”

Similarly, financial expert Dr. Can Van Luc told local media that mobile payments are opening up a global revolution in e-commerce and will play a key role in comprehensively boosting global finance. 

According to the latest report from VISA, nine out of ten Vietnamese consumers are willing to try new payment methods, with 88 per cent saying they will probably use smartphones to make payments, with 83 per cent of Vietnamese consumers saying they would choose non-cash payments. “These figures are a positive sign for Samsung Pay and for the government’s goal of promoting non-cash payments,” said Ms. Oanh.

On the management side, Deputy Governor of the State Bank of Vietnam Nguyen Kim Anh also told the Vietnam E-Payment Forum 2017 that completing the legal framework is necessary given the trend towards mobile payments. “We will quickly complete the legal corridor and promote the application of products during Industry 4.0,” she said.

Mr. Diep added that Vietnam’s young, dynamic population and high rates of mobile phone and internet use makes it a market of great potential for mobile payments. “The customer base for MoMo also has great potential for development,” he said. “Mobile payments not only create transparency in payments but also help to reduce costs for all.”

Investing in mobile payments in Vietnam, however, presents certain difficulties. In addition to the competition from existing providers, they must also connect with retailers, many of whom are developing their own mobile payment apps to retain customers through offering exclusive benefits, rewards, and other personalized services. As retailers develop better mobile payment apps, apps like Samsung Pay and Viettel’s BankPlus may have a tougher time gaining market share.

Dr. Luc, meanwhile, argued that most consumers still prefer paying by cash and the vast majority of Vietnam’s rural population don’t have bank accounts or the opportunity to access new payment technologies. This ongoing preference for cash, he believes, is a major obstacle for the development of payment solutions.

Existing technical solutions are also inconsistent. Mobile payment apps have their own systems for using QR codes, for example, and customers must download a variety of apps to access different services. 

Furthermore, though telecommunications companies have the potential to provide mobile payment services, they still lack the necessary functions, and many banks lack a technology platform. Though many users in Vietnam are keen to experience the new service, Ms. Oanh said, there are times when the card acceptance unit refuses transactions, as information from banks is outdated. “This causes confusion and uncertainty among customers, and many may just stay with cash payments,” she believes.

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