Many experts say that allowing electronic payment (e-payment) via telecom system will promote non-cash economy to grow faster, posing challenges for banks.
However, the advantages sometimes do not belong to banks or network providers, but may belong to Fintechs which are holding data with real user value.
Foundation advantage
Banks have extensive experiences in payment service market. The experiences seem to be advantages of banks, but in fact, there is a huge difference in advantages, which is also considered as a foundation for banks and telecom network providers compete in the race of the digital payment market.
Statistics of the State Bank of Vietnam (SBV) pointed out that the banking system owns a variety of non-cash payment forms, including 18,587 ATMs and 243,123 POS machines nationwide. As for cards, the number and value of card transactions of banks have increased continuously year by year. Domestic payment via bank cards in 2018 reached about 229.2 million times with a total transaction value of about 592 trillion dong.
So far, according to the SBV, about 76 organisations providing Internet payment services and 41 organisations providing mobile payment services. In 2018, Internet payment grew by 33.6 percent in the number of payment times and 19.5 percent in value compared to 2017. Payment via mobile phones recorded more impressive growth with 41.1 percent in the number of payment times and 169.5 percent in value compared to 2017.
If compared to the network mentioned in the above, network providers only have mobile subscribers and scratch cards. However, up to 98 percent of the population having mobile accounts, which almost covers the entire economy. Meanwhile, the access to banks’ consumer finance only reaches 30 percent of the population. Obviously, the advantage in terms of system currently belongs to network providers, if considering from the perspective of big data and available account information to deploy “one step to the destination” e-payment that Vietnam is targeting, which is mobile payment. Nevertheless, what makes network providers behind banks is that they are waiting for legal framework to develop mobile payment out of the familiar “coverage”.
Nevertheless, a banking expert said that even if owning big data of almost 100 percent of Vietnamese population the dream of every retail consumption business network providers cannot dominate banks in just one step to dominate banks in this payment race, at least in 2019 or the next one to two years.
The reason is that the big data owned by network providers are fairly primitive. They are mostly just basic information of users in the form of “biography” which do not show much personality or psychology, desires, needs, etc. Therefore, network providers must access and quickly promote data collection on user behaviours in order to actually take advantage of the big data.
Dang Tuyet Dung, Visa director in Vietnam and Laos said that the e-payment via telecom accounts will help people better access financial services, but it needs an open ecosystem to increase the connection between banks, Fintechs and payment types including e-wallets and mobile payment.
Although promoting an open ecosystem for network providers, banks and Fintechs to connect with each other is something everyone is talking about, it is obvious that the ecosystem and the ability to connect the parties have not been clearly verified. Once all goes towards the users, the advantages sometimes do not belong to banks or network providers but can belong to Fintechs, such as Grab Pay, etc.
Nguyen Le Ngoc Hoan a financial expert believed that the collection of fees from customers by banks as well as the collection of small fee but from large number of customers by network providers can be encroached in the future, if banks and network operators do not conduct expansion themselves, or complete the ecosystem, especially when Vietnam has Fintechs like Alibaba or Wechat.
