At 2019 Banking Vietnam Seminar with theme “Comprehensive finance in the trend of cashless economy development” coordinated by the State Bank of Vietnam (SBV) and International Data Group (IDG) organisation, Nghiem Thanh Son, deputy director of Payment Department of SBV said that the opening and use of personal accounts continued to increase. By the end of 2018, there were about 79.7 million personal accounts (up 15.3 percent compared to the end of 2017) and by the end of the first quarter of 2019, nearly 81.4 million accounts were reached.
Development of personal account services contributes to attracting idle capital from all users of the population and facilitating the expansion of cashless payment services.
In fact, Vietnam has favourable conditions to boost electronic payment via mobile phones due to the high rate of access to telecommunication services and mobile phone use.
Up to now, the number of mobile subscribers in Vietnam has generated more than 133 million accounts, of which 3G subscribers generate about 51.6 million accounts; that means about 1.4 subscribers per person and more than 0.5 subscribers using 3G per person.
“With the orientation of developing electronic payment, there are now 76 organisations providing payment services via the Internet and 41 organisations providing payment services via mobile phones.
In 2018, the number of transactions via Internet channel was more than 255 million transactions, with a value of about 16 quadrillion dong (up 33.6 percent and 19.5 percent respectively compared to 2017); The number of transactions via mobile phone channel was over 185 million transactions, with a value of about 1.86 quadrillion dong (up 41 percent and 169 percent respectively compared to 2017), ” Son said.
Also according to him, card payment services continue to be developed by banks. By the end of 2018, the country had 56 card issuers with the number of circulation cards reaching 97 million (an increase of 8.3 percent compared to the end of 2017), the number of issued cards is on an increasing trend.
Commercial banks have integrated more features into bank cards to use for payment of goods and services. At the same time, the quality of card services and safety in card payment are focused and improved by banks.
Notably, SBV has developed and implemented the effective the plan for developing bank card payment through card acceptance equipment in the period of 2017-2020.
By the end of 2018, payment intermediaries have cooperated with 34 banks to deploy payment gateway services. The total number of payment transactions in 2018 reached over 66 million items with transaction value of over 45 trillion dong (an increase of 242.18 percent in quantity and an increase of 212.38 percent in value compared to 2017)..
The total number of e-wallet of organisations is nearly nine million with the total amount on e-wallets is nearly 780 billion dong. The total number of e-wallet transactions reached over 200 million items with a total value of over 90 trillion dong (up 15.39 percent in volume and 4.04 percent in value compared to 2017).
“By the end of 2018, there were more than 3.5 million customers using support services for collection and payment at more than 7.7 thousand units accepting these services. In 2018, the number of transactions through support services for collection and payment reached more than 72 million items with a total value of nearly 65 trillion dong (up 315.14 percent in volume and up 203.18 percent in value compared to 2017)”, Son said.
Dr Nguyen Tri Hieu, an economist, commented: “The remarkable results of comprehensive finance and cashless payments in Vietnam will somehow boost the flow of money in an efficient and transparent way in the economy.”
In addition to the mentioned results, Nguyen Thi Hien, deputy director of the Banking Strategy Institute of SBV, said that the difficulties in promoting comprehensive finance and developing cashless payment in Vietnam still existed.
Accordingly, people in rural, remote and isolated areas have lower access rates than the overall rate of the whole economy (27 percent compared to 31 percentaccording to the World Bank); Small and medium enterprises face difficulties in accessing credit services compared to large enterprises.
In addition, the proportion of adults performing electronic payment transactions is still low compared to the region (Vietnam is 23 percent, much lower than 67.9 percent in China, 34, 6 percent in Indonesia, 70.4 percent in Malaysia, 38.9 percent in the Philippines, 79.8 percent in Thailand and 96.3 percent in Japan).
These restrictions, according to Hien, rooted from the financial ignorance and the habit of using cash by Vietnamese people.
According to the latest comments of the World Bank, by 2020, Vietnam has the lowest amount of cashless transactions per capita (number of cashless transaction per capita) in the region, reaching only 4.9 percent, meanwhile in China is 26.1 percent; Thailand is 59.7 percent and Malaysia is 89 percent.
Moreover, people, especially in rural, remote and isolated areas, have relatively low financial literacy capacity compared to other countries in the world and in the region. The survey by Standard & Poor’s 2014 shows that only one-fourth of the adult population has financial literacy capacity. The latest OECD and ADBI surveys in 2016 also show that Vietnam’s financial literacy index is lower than that of some selected regional and international countries.
“The lack of financial understanding makes people, especially people in rural and remote areas, reluctant to accept electronic payments, difficult to form a habit of not using cash, making the habit of consuming cash still popular in both urban and rural areas of Vietnam, “said Hien.
Besides, payment infrastructure and interconnection between payment systems are not high. The construction of an automated clearing house (ACH) for low-value retail transactions is slow, effectively reducing the handling of inter-bank retail payment transactions, making personal payment services and facilities not really convenient.
Payment infrastructure, such as POS/ ATM systems, has been developed and distributed unevenly, concentrating mainly in urban areas, not yet expanding in rural areas.
“Meanwhile, there are still issues of safety, security and confidentiality of customer data and information when providing payment card and electronic financial services. The current legal corridor still has many loopholes, “Hien admitted.
A proof of this is that the regulation of identifying customers (KYC) is still too tight. With the advanced application of biometric technology and the unique identification number of citizens (identification card number/ ID card), identify e-customers (eKYC) can help people in home using banking products and services without meeting directly with credit institutions to carry out KYC. However, the current legislation does not have any specific rules for eKYC to replace KYC in many possible cases.
Nguyen Kim Anh, deputy Governor of SBV expects Vietnam’s banking industry in general, as well as each credit institution in particular, will be aware of the importance of comprehensive finance and the development trend of the cashless economy to provide appropriate technology development strategies and directions.
“Make the best use of technology solutions to improve the governance model, as well as develop services, can provide to more and more customers with better quality, more convenient with much lower charges. This is an important foundation for the sustainable development of the banking system, bringing the best value to customers, credit institutions and the entire economy, “Deputy Governor Kim Anh stressed.
