While domestic banks focus on raising fees, the non-cash payment market, which is considered to be very “lucrative”, falls into the hand of foreign firms.
Under the plan of the government, by 2020, payment in cash will only account for about 10 percent of the total payment volume.
That is the reason why in several recent years, e-wallet payment and technology application has boomed. Only with a smartphone, users may download apps and quickly make payment for goods and services within seconds. Moreover, the low cost of using e-wallet is also a factor that attracts many users. This explains why transaction value via e-wallet has dramatically increased. In 2009, transaction value via e-wallet only reached five billion dong. Then, the growth in 2016 touched 53.109 trillion dong and there are more and more participants.
Last week, Grab announced to carry out payment via GrabPay Credits service. Customers will receive a discount of 30,000 dong via this form of payment. As such, apart from technology application for transportation sector, Grab has started to encroach into payment sector, technological finance; approaching the people who do not have accounts or have not accessed banks such as drivers and small businesses.
The giant MoMo has also consecutively launched promotional programmes for customers who make payment for train ticket, insurance, and shopping. For example, customers transferring money from Vietcombank account to MoMo wallet will immediately receive 200,000 dong.
Units that apply payment technology target at consumers’ habits. For example, during the last Lunar New Year, the two e-wallets including ZaloPay (owned by VNG) and Appota (owned by Appota) carried out the programme on offering “lucky money” via e-wallet instead of cash. Only within one month of implementation, ZaloPay reached more than 1.3 million receivers of lucky money. Meanwhile, Appota saw the new entrants to increase 61 percent only within 18 days.
The non-contact payment method (using telephones to scan through payment equipment or making direct payment on the phone) is also developing very rapidly. Samsung Group carries out Samsung Pay service on a number of high-end mobile phones so that users can make payment for goods, services via phones instead of using a card.
Ngo Trung Linh, CEO of Vietnamese Community Company (owner of Payoo brand) said previously, the payment by bank card via POS was a large turning point in payment sector, and then payment by QR Code on mobile phones will be the major trend in the near future. QR Code technology on mobile phone is expected to significantly reduce the cost of infrastructure development anywhere. Therefore, it will rapidly develop. Currently, 27 businesses have been allowed to provide immediate payment service such as Payoo, MoMo, BankPlus, 1Pay, M-Pay, Vimo, BaoKim, ZaloPay, Ngan luong, Mobivi, etc.
Noticeably, there are a growing number of payment units having foreign factor. Most immediate companies that have been officially licensed in Vietnam have foreign capital. For example, M_Service JSC (the owner of MoMo e-wallet) in 2016 received two investments from Standard Chartered Private Equity and Goldman Sacks with a total value of $28 million.
VNPT Epay JSC has 65 percent stake owned by South Korean investment fund (this is the payment gateway involved in the recently detected Ribvip online gambling case). Or, the Japanese NTT Data purchased 64 percent stake of Payoo, the largest e-payment company in Southeast Asia. The Malaysian MOL Global held 50 percent stake in Ngan Luong payment gateway.
Similarly, 90 percent stake of 1Pay JSC belonged to Thailand’s TrueMoney group and this unit also receives investment from China’s Alibaba. Alipay (payment service under Alibaba group owned by Chinese billionaire Jack Ma) officially signed strategic cooperation agreement late last year with Vietnam National Payment Joint Stock Company (NAPAS) to prepare for providing e-payment services to Chinese visitors to Vietnam. Such units as Bao Kim, ZaloPay have foreign investment in the development process.
Ngo Trung Linh said in terms of technology, there are not too much difference, but only businesses that have long-term capital can survive in the market because most intermediate payment businesses have to continue pouring money to encourage, creating habit for service users because payment in cash in Vietnam still accounts for the majority. “Like e-commerce sector, businesses that provide intermediate payment services still have to spend much money to promote to attract users”. Along with that is the development of payment accepting points by e-wallet, QR code, etc.,” said Linh.
Dr Bui Quang Tin, finance and banking expert analysed that the figure of 132 million cards that banks issued has not shown that they occupied payment market with the population of 90 million people. Domestic banks are still struggling with the fee collection while payment companies that open e-wallets accept no or low fee collection or to generate a large ecosystem to attract users.
“They have considerations when accepting losses in the first stage. Try to imagine that a customer puts on his/her e-wallet one million dong. If there are one million customers, the amount of money that a business has will reach one trillion dong. This is a very huge amount that the business can utilise instead of focusing on collecting fees. Payment sector is competing day-by-day. Especially, with the development of e-commerce, if banks do not change their way, they will lose market share right on their own playing field”, said Tin.
Some experts also expressed concerns that if foreign businesses master this entire market, what will happen is not expected. Right at this moment, there have had many loopholes that we cannot control. For example the case in which Ha Long City’s management agency discovered the transfer 200,000 Yuan (about 700 million dong) by a Chinese customer to the country to make payment for goods purchased at a kiosk in Bai Chay Tourism Centre via POS. The three POSs installed here are brought from China and do not register payment via Vietnam banking system according to regulations.
Therefore, the payment like this is illegal money transfer and there is the sign of tax evasion so that can be subject to criminal prosecution. Or in the gambling case worth trillions of dong via Ribvip, CEO of the payment gateway VNPT Epay Chau Nguyen Anh was prosecuted. VNPT Epay has two major shareholders including UTC Investment Group (South Korea) that owns 62.25 percent and VNPT that owns 35 percent. VNPT said they did not know about that violation because they did not involve in the regulation.
According to Bui Quang Tin, payment market is too lucrative to attract foreign businesses. Therefore, the inspection, supervision via intermediate payment gateways is extremely important so as similar stories as VNPT Epay or illegal money transfers abroad will not occur.
