Vietjet Aviation Joint Stock Company recently announced the Resolution of the Board of directors approving the capital contribution to establish a subsidiary whose main business is to provide intermediary payment services with charter capital of 50 billion dong. Earlier, in April 2020, the State Bank of Vietnam (SBV) issued a license to provide payment intermediary services to two companies, namely G Payment JSC (G PAY) and VIDIVA Technology JSC (VIDIVA). These are both relatively young companies. From 2018 up to now, many mergers and acquisitions (M&A) deals in the field of payment intermediaries have occurred such as Grab and Moca, MonPay acquired by Vingroup, Wechat Pay cooperating with Nextech (Vietnam)’s Vimo wallet, etc. A number of banks have also developed this service such as Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) with YOLO, Vi Viet applications of Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank), Tien Phong Commercial Joint Stock Bank (TPBank) with QuickPay, etc. Furthermore, intermediary payment service providers have also made great efforts to create the eco system for cashless payment.
It is not difficult to realise that the rapid development of smartphone technology along with the process of changing consumer habits has created favourable conditions for Fintech to easily bring new services closer to the target group of individual customers than corporate and organisation ones. Experts say that the competition between mobile banking services and other payment services will be fierce, and so will the intermediary payment market. Therefore, each type of e-wallet in Vietnam will also need a separate path towards the appropriate customer group.
Standard Chartered Bank pointed out that the Asean digital economy currently generated about $150 billion in annual revenue and was expected to become one of the world’s leading digital economies by 2025. This trend emphasized the increasing competition from e-wallets and other forms of digital payment that would replace traditional payment methods in the region. Although e-payment services in Vietnam had great potential for growth, there were still many barriers such as: cash payment habit of people, low coverage of banking, limited IT infrastructure, and incomplete legal corridor.
However, the innovation and creation of modern products and services will also creat a lot of relative costs for upgrading or changing infrastructure, complying with laws and measuring risks. According to experts, the change does not necessarily bring long-term benefits, so the task of the management agencies in general is to ensure that the areas of innovation are not detrimental to the financial markets, consumers, and the whole economy. The most important thing is that promoting the development of intermediaries must be accompanied by regulations on risk management.
Pham Tien Dung director of Payment Department emphasized that one of the highest principles of payment intermediaries was to ensure that they did not affect the deposits of people, even in the case that payment intermediaries was affected, in which the total balance of e-wallets was equal to or greater than the secured amount at the bank.
Although the recent policies from the regulatory agency for creating effective development corridors for new fields such as Fintech were appreciated, Phung Anh Tuan vice Chair and general Secretary of Vietnam Association of Financial Investors (VAFI) shared that there were still areas that needed further development and new services in Fintech. For example, there were many fast-changing electronic transactions today while various types of services were currently available on the market but not specified in any legal documents. Sandbox mechanism was a very suitable mechanism in the direction of encouraging young and new businesses to do things that were not prohibited by law. According to Tuan, “in terms of policy, we are now calling for more organisations and investors to join the market for Fintech in Vietnam to develop stronger. If it is only maintained at a peaceful and safe level as before, it may be difficult for significant grow and to keep up with other developed markets in Asean region”.
Agreeing with the above view, a financial and banking expert said that Fintech was a new field, so policy formulation should also favour the majority, not taking a few violations to limit the needs of the majority of users for legitimate purposes. In addition, it should also encourage Fintech to detect, monitor and provide information to the regulators to prevent violations if possible.
