Photo: Viet Tuan
Online payments made some headway in Vietnam during 2016 but it remains in the initial stages of development.
It was 11pm at a bus stop on Hanoi’s Kim Ma Street, and Ms. Nguyen Thi Yen Linh, an English teacher, had run out of money on her phone and needed to call a friend to pick her up. There were no shops open that sold phonecards, but it wasn’t a problem because she has a MoMo e-wallet, which she used to transfer money to her phone account with just a few simple steps. “This is one of the best benefits of the e-wallet,” she smiled, “It was great to have it when my phone had no money and it’s convenient when I’m busy.”
The world of commerce is being transformed, with consumers using their mobile devices to conduct product research, look for deals or coupons, and, increasingly, purchase goods and services from virtually any store from nearly anywhere in the world. Based on shopping demand, Vietnamese enterprises have introduced various online payment apps recently, such as MoMo, Payoo, Timo, and PayHub.
Mr. Nguyen Ba Diep, Deputy Chairman of the Online Mobile Service JSC (M_Service), told VET that the main target of e-wallet providers is to support customers to easily access financial services. “With the popularity of smartphones and mobile internet, MoMo launched the first e-wallet app in Vietnam in June 2014,” he said. “It remains the only company that provides the service through two models: online (e-wallet) and point-of-sale.”
Ms. Nguyen Hoai Thu, Project Manager of Lifestyle Project Management at Timo, said Timo was developed from a combination of factors intersecting at the right time: the rising penetration of internet and smartphones and the absence of a strong digital/mobile banking product from banks. She describes Timo as a digital bank with no physical bank branches, just a single location for members to collect their Timo Debit Cards.
According to figures from M_Service, electronic payments in Vietnam are still not common. In 2015, along with the development of e-commerce and the popularity of debit and credit cards, the appearance of e-wallets helped the number of electronic payments increase, though they still only stood at about 10 per cent of all online shopping purchases. A driver of online payments has been the promotion of electronic payments for State administrative services, such as tax payments. Moreover, enterprises providing essential or popular services, like electricity, water, telecommunications, TV, air tickets, and tolls, have cut costs by boosting electronic payments and this has made them more common.
Cash remains King in Vietnam, however, with cash on delivery or bank transfers still the primary payment methods, with 91 per cent of buyers using cash on delivery at least once and 48 per cent using bank transfers. The rate of online shopping in Vietnam is low compared to other countries in the region and the world. The average value of online purchase per person reached $160 in 2015, with total B2C e-commerce sales standing at $4.07 billion, an increase of 37 per cent compared to 2014 and representing 2.8 per cent of all retail and consumer services revenue in Vietnam but only 0.26 per cent of the world’s.
Though Vietnam clearly has potential for online payments, the figures show it is still less than expectations. Dr. Can Van Luc, Senior Adviser to the Chairman at BIDV, said that the majority of Vietnamese still prefer using cash. They also prefer to go to bricks-and-mortar retailers than shopping online. IT platforms in Vietnam are still not what they could be, which causes problems for customers in the transaction process. Security is another pressing issue, with leaks of customer information and transaction details causing concern. “Compared to traditional payments, I worry about security in making online payments,” said Ms. Nguyen Nga from Hanoi. “All my transaction information is shown on my account, and if the data was hacked I think it would cause me trouble.”
Agreeing with Mr. Luc, Ms. Thu also spoke of the difficulties when Timo was launched. “Timo’s greatest challenge is building trust in a new digital bank,” she said. “While it is easy for us to access the younger generation, the older generation of shoppers is much more cautious and already bank elsewhere.”
Compared to paying by cash, online payments possess various strengths that match modern society and so are expected to develop significantly in the future. Simple, time saving and transparent are just some of its advantages, and if more people get into the habit of not paying cash when shopping it will boost the country’s e-commerce market. According to Mr. Le Ngoc Phuong, Managing Director of PayHub, which belongs to Appota Vietnam, online payments help customers buy goods anywhere. “It has greater security compared to cash payments,” he added. “Online payments involve providing personal information, which helps shops take care of customers and improve service quality.”
Though the online payment market is yet to develop significantly in Vietnam, the potential is there and insiders hope that 2017 will mark a turning point. The total number of credit cards in Vietnam is around 86 million, not including international payment cards. Commercial banks have added various functions to cards, for paying bills and buying services. Sixty-seven banks have launched payment services via internet banking and 37 provide mobile banking. Vietnam also recorded among the highest growth in smartphones regionally in 2014, which hold a market share of 52 per cent of phones in the country, with mobile subscribers reaching 120.6 million in 2015.
According to a report from the Virac JSC on online payments in Vietnam, 45.5 million people used the internet in 2015, for a penetration rate of 48 per cent. The country is the fifth-highest in Asia regarding user numbers, following China (354 million), Japan (114.9 million), Indonesia (73 million) and the Philippines (47.1 million). The internet penetration rate is higher than the average in Asia and the world, and the country has among the highest smartphone growth rate in the world, with over 35 million people using a smartphone, which represents potential for online payments.
Along with the development of online payments, a number of Vietnamese fintech startups have received backing from venture capital funds, including MoMo, which received $28 million from Standard Chartered and Goldman Sachs, and OnOnPay, which received $800,000 from Gobi Partners. There are now 30 fintech startups in the country, two-thirds of which are in online payment and the remainder in technology for digital payment via POS/MOS. “2017 is expected to see improvements in online payments but there will be fierce competition when tech giants such as FPT also invest in fintech and more foreign investors arrive in Vietnam,” Mr. Phuong said.
Building a development plan for the future, General Director of VietUnion, Mr. Ngo Trung Linh, said that Payoo is investing in training their human resources in security and in service improvements based on customer demand. Leaders at Timo also have detailed plans to boost its app in Vietnam. Timo plans to continue to innovate and offer unique digital products that will give customers full banking and financial control in an easy-to-use ecosystem.
■ “Online payments in Vietnam will certainly grow in the near future because information technology is flourishing, the fourth revolution in information technology in Vietnam and in world has been deployed, and, in particular, fintech has developed strongly and created competition with banks.”
■ “The rate of online payments in Vietnam in 2016 increased by 5 to 10 per cent. Online shopping and online payments give enterprise managers better control than with traditional payments. Online payments also curb the use of cash in Vietnam, ensuring safety for customers and convenience. In my opinion, online payments will flourish in 2017.”