E-payment is taking off in Vietnam thanks to a boom of e-commerce as well as a spread of mobile devices and foreign investors are scrambling to cash in on the country’s thriving fintech.
Warburg Pincus, which is a leading global private equity firm and the largest private equity investor in Vietnam, has recently become the latest investor to make a bet on the Vietnamese market, with an investment in Series C fundraising round of Vietnamese e-wallet and e-payment app MoMo.
The new funding, of which the value hasn’t been released, has equipped MoMo with more resources to significantly expand the company’s footprint and realise its ambition to develop millions of payment points across the country.
Nguyen Manh Tuong, MoMo’s executive vice chair, said Vietnam is entering its next stage of growth which will require a robust and inclusive financial services ecosystem. MoMo will realise that vision by accelerating the adoption of digital payments and enable equal opportunities for all Vietnamese to benefit from the digital economy.
Before Warburg Pincus, MoMo, which was named in 2018 as a top fintech company and the only Vietnamese firm in both KPMG’s Fintech100 and IFC’s Financial Inclusion in Digital Age, also received investments worth a total of $28 million from other foreign big funds Standard Chartered Private Equity and Goldman Sachs.
Besides MoMo, many other foreign investors have also entered the Vietnamese e-payment market sector through the acquisition of local companies as they see huge growth potential in the market.
Most of the country’s 27 intermediary payment service providers now have foreign investments, such as South Korea’s UTC Investment holding a 65 percent stake in VNPT Epay, NTT Data owning 64 percent in Payoo, Hong Kong’s Champion Crest keeping 51 percent of Amigo Technologies JSC, Thailand’s True Money possessing 90 per cent of 1Pay while 50 percent of Ngan Luong belongs to MOL Accessportal.
A boom on the cards
Experts said there are many favourable conditions for e-payment to make a leap in the country: the retail market and e-commerce are thriving, while bank cards and smartphones are more widespread.
According to Harmander Mahal, head of retail banking at Standard Chartered Bank Vietnam, the enlargement of e-commerce in Vietnam is paving the way for development of e-payments. E-commerce is the biggest engine of growth for electronic payments in Vietnam, driven by very high smartphone and mobile device penetration and one of the highest per-capita time spend on social media in Southeast Asia.
In addition, the government’s policies are also encouraging the development of e-payment in the country. According to the government’s plan, the country will reduce cash payments to below 10 percent of the total payment transaction by 2020.
According to Sean Preston, Visa country manager for Vietnam, Cambodia, and Laos, the development of e-commerce and e-payment on the horizon can provide a great deal of benefits for the country, with potentially a reduced reliance on cash.
Meanwhile, with the foreign investment capital, most e-payment providers currently offer free or low-cost e-wallets in order to attract users. This explains why the transaction value via e-wallets has increased sharply in the recent time.
Though there is no official report from the SBV about the number of Vietnamese e-wallet users, service providers estimate that 10 million people in Vietnam are using e-wallets, which is a modest figure compared with the great potential of the market.
With the favourable conditions, local market research firm Statista forecast the amount of e-payments in Vietnam will double that of 2017 to $12.33 billion in 2022.
