Cash payments would undoubtedly continue for a long time. However, with the development of electronic payment and its benefits, in recent days, such as lower and lower cost and high security, digital banks would be more popular among users in the future.
More new payment solutions appear in Vietnam
At a recent seminar on Digital Banking, Nguyen Quang Minhdeputy general director of Vietnam National Payment Corporation of Vietnam (NAPAS) said that with the relatively late development of magnetic card technology and chip cards compared to the region, Vietnam became a ‘low-lying’ country of cybersecurity crimes from China, Eastern Europe and neighbouring countries with many risks of data theft. In that complexity, the internal chip card standard built for the entire Vietnamese market was based on the best current security standards, compatible with international EMV (Europay, Mastercard, Visa) standards.
Last May, Napas cooperated with the Bank Card Association of Vietnam (VBCA) to launch domestic chip card products at the first seven banks. Compared with the past, making payment cards at point of sale (POS) required many operations, then, with small transactions (less than 1 million dong), users only need to touch the card to the device for a few seconds to complete it.
Making a payment by card was much more convenient than paying with cash. The common benefit to the society could be mentioned as consumers would not need to carry too much money in them, the sales units would also save money on cash management, cash flow would be faster.
The application of chip cards in practice did not only stop at the traditional payment field through ATM or POS machines but also could be extended to the payment of other services, such as public transport. It was expected that coming year, Napas would test this service for bus systems, metro lines and elevated railway lines in Hanoi.
For transactions using QR codes, based on the instructions of the State Bank of Vietnam (SBV), Napas had drafted a standard framework for QR codes to ensure uniformity in the market. As support for banks and payment intermediaries, Napas did not make applications directly to users, but made switches in these transactions, building a system of interconnections between independent payments system. On that basis, units could share the national payment network to meet the needs of their customers better.
In 2017, Napas also signed an agreement with Singapore’s switching organisation (NETS) and had successfully tested Blockchain application model in cross-border money transfer service. However, all were still in the form of a pilot, requiring a specific legal corridor as well as relevant regulations on the management and assurance of safe and secure payment operations to be widely implemented in future.
Fintech companies’ rapid growth was both an opportunity and a challenge for banks
Commercial banks were forced to change, or else they would lose at the market of providing financial services. It was necessary to have such pressures, which would be the motivation for banks to improve and deploy better services to customers, Minh said. However, Fintech companies did not always compete with banks, but they also supported and complemented banking activities to develop together. Because each side had its strengths and unique approaches in their own directions.
For each bank itself, in the trend of digital transformation, it was essential to first focus on diversifying products and services. The strength of Fintech companies was to approach and catch the trend quickly and flexibly. Thus, banks were required to diversify in terms of product types, distribution channels, and means of access. Next, it was also vital to focus on improving the user experience, which was very important, deciding whether or not the market would accept the product or service.
Do e-wallets hinder the operation of banks?
The existence of E-wallet needed a complete ecosystem of separate applications. Therefore, at present, when there were no breakthrough features and no promotions from e-wallet, when businesses stopped burning money, no one would use it anymore. Because the current electronic bank also met what electronic wallets could do, such as top-up phone cards, pay bills, and so on.
Regarding the security of e-wallet services, Minh said that Napas was only involved in controlling deposit or withdrawal via the system to banks. For other activities of e-wallets that were not through Napas system, payment service providers would have to provide information to SBV to manage those activities.
Talking more about e-wallets, at the seminar, Vu Van Long, deputy general director of the Deposit Insurance of Vietnam (DIV), said that at present, DIV had not implemented insurance for e-wallets because these were payment deposits or deposits of unstable nature. However, DIV was also researching to deploy appropriate insurance activities as current electronic wallets appeared more and more.
Obviously, cash payments would undoubtedly continue for a long time. However, with the development of electronic payment and its benefits, in recent days, such as lower and lower cost and high security, digital banks would be more popular among users in the future.
