The fear of cash during the epidemic is an opportunity for e-wallets and fintechs to expand their influence. However, changing user habits will still be a big challenge for fintechs when the ecosystem.
Online payment sharply rises.
A recent study of Nielsen and Infocus Mekong Mobile Panel showed that the Covid-19 is having a strong impact on people’s consumption behaviour. About 50 percent of respondents said they have reduced the frequency of going to supermarkets and groceries, more than 60 percent of them have lowered the times of going to traditional markets, and 25 percent of them said they have increased online shopping and lessened direct shopping.
Many retailers such as VinMart, Soi Bien, etc. said that the number of online transactions during this outbreak has increased by three to five times compared to normal. Along with the number of online transaction orders, the firms of online payment by QR code, e-wallets, bank transfer, etc. have also strongly risen.
According to data from commercial banks, online transactions have increased by three to four times compared to the period before the Lunar New Year holiday. By the end of the first quarter of 2020, the trading value through digital channels of VPBank went up by 25 percent and the number of transactions increased by 50 percent over the same period.
Representative of VNPAY-QR said that the data for March 2020 has not been updated, but February’s data showed that transactions made via QR code grew by up to 600 percent over the same period of 2019. Meanwhile, Nguyen Ba Diep, vice Chair, co-founder of MoMo e-wallet said that payment via e-wallets doubled after Tet.
However, not all e-wallets have taken advantage of the opportunities during the epidemic. Representative of an e-wallet associated with an online trading platform said that although online shopping has increased sharply, it only focused on essential goods, while the purchasing power of other items has dropped sharply. We have thousands of partners, and more than 70 percent of them recorded revenue decline, causing out revenue to go down as well.”
Taking advantage of the power of digital economy
Not only Vietnam, in many countries in the world, the concern about cash being a disease-spreading agent is changing consumer habits. In the UK, the use of coins for payment has been reduced by up to 50%. In Switzerland, according to data of deVere Group, the number of customers using the group’s fintechs have increased by 72%. Certainly, the above figures do not fully reflect the reality, but partly show that the disease is an opportunity for the digital economy, including digital payment, to develop.
According to banking experts, although non-cash payment increases sharply, in the current context, Covid-19 is not enough to make e-payment to boom in Vietnam, due to the limited coverage of banks. E-wallets are more flexible, but they operate fairly sporadically, not yet associated with a full ecosystem.
In addition, the proportion of the Vietnamese population having a bank account remains low and is concentrated mainly in urban areas. In rural areas, where there are 70 percent of the population, the percentage of people with a bank account is very low, while under current regulations, an e-wallet account holder must link to a bank account.
To change user habits and take advantage of the opportunity brought by the disease and opportunity of the digital economy, experts believe that new factors are needed in the market, and one of that is Mobile money. According to BIDV Research and Training Institute, Mobile money has many benefits such as convenience, low transaction fees, financial accounting promotion, etc. Developing Mobile money will promote non-cash payment.
General director of Viettel Services Corporation said that with a large number of customers and convenience, right after being licensed, payment via Mobile money will grow very fast, leading to the development of e-payment industry.
However, the most important thing for online payment to boom in Vietnam is the legal framework. This is also the reason why the government has repeatedly asked the State Bank of Vietnam (SBV), ministries and industries to soon complete the legal framework on Mobile money as well as Sandbox to promote digital economy.
