The network operators are facing unprecedented opportunities when they test to provide financial services in the near future.
Without going through a bank, people can use mobile phone accounts to transfer money to each other and pay for small value goods. This service will be tested by network operators in the near future, called the Mobile Money service on subscribers.
In fact, current transfers or payments can be used via e-wallets, but in essence, Mobile Money services and e-wallets are different. E-wallets require users to link to bank accounts, transactions go through accounts, while Mobile Money only needs to be linked to mobile phone numbers.
According to Nguyen Duc Trung, director of Telecommunications Department, this service is provided only for those who do not have bank accounts and the transactions are conducted via mobile devices. It also has physical transaction points and offers almost all traditional products, such as bank transfer, payment and money storage.
The concept of new Mobile Money has been raised in Vietnam recently, but it is not a new story in the world. This model is popular in the countries with undeveloped financial infrastructure, large population, low income and high demand for remittances. In particular, the lesson that is often mentioned is Kenya’s M-Pesa network.
Data from the Ministry of Information and Communications said that there were 90 countries in the world deploying Mobile Money services with 866 million accounts and 272 enterprises. There were $1.3 billion flowing through Mobile Money accounts every day. Last year, in Asia, there were 60 million new registrants, and the transaction value doubled compared to 2017. In Vietnam, data showed that by 2018, Mobile Money account numbers increased by 20 percent, while the average transaction value per account was more than $200 per month.
Managers are expecting this service to facilitate many people’s access to financial transactions, thanks to its wide coverage to remote areas, where banks cannot come because the cost is too large, or local people are not eligible to open a bank account. Currently only 40 percent of the population has a bank account, but there are 130 million mobile subscribers.
Although it sounds attractive, in fact, Mobile Money development has many limitations. According to Pham Tien Dung, Head of the Payment Department, the State Bank of Vietnam (SBV), not only legal activities still do not exist, there are many other issues such as transaction authentication, security risks, and safety. Moreover, there are too many junk mobile numbers.
Currently, the plan to use telecom accounts to pay for small-value services is being consulted by relevant agencies and ministries and has a testing mechanism for some operators. According to Trung, the Ministry of Information and Communication’s view is that management is based on risk assessment from piloting and dealing with specific problems.
For network operators, Mobile Money is an opportunity to enter payment intermediaries and other related potential fields. Previously, operators also had financial transaction services via text messages, but according to experts, this was actually linked to a bank account. From the beginning of the year until now, three big operators in Vietnam including VinaPhone, Viettel and MobiFone, have proposed to deploy new services.
Operators have the advantage of distribution channels, owning points to deposit, withdraw money at independent agents. In addition, mobile applications are also easy to load into SIM. “This is also an opportunity for network operators to get more customers, have more data and is also an incentive for network operators to keep existing customers,” Trung said. In fact, in addition to applying for Mobile Money, mobile operators are focusing on developing e-wallets. For example, Viettel has ViettelPay, while VNPT owns VNPT Pay.
Viettel is considered to be very active in finding the way to develop financial services for operators. The familiar and long-standing application of this network is BankPlus with a combination of many banks. However, recently ViettelPay e-wallet has been pushed more strongly, being named as “digital bank for Vietnamese people”. In addition to the usual services integrated in most e-wallets, ViettelPay focuses on promoting money transfers to the countryside with a network of 200,000 outlets nationwide. Money transfer “domestic remittance” was previously advertised by MoMo e-wallet. Now, the most used e-wallet in Vietnam is oriented to become a payment intermediary in all life activities.
Meanwhile, according to Nguyen Son Hai, deputy general director of VNPT Media, VNPT Pay is defined as a service in the ecosystem of VNPT. Customers using this e-wallet will be entitled to a variety of carrier promotions, and can automatically pay bills. VNPT is currently trying to integrate VNPT Pay digital payment ecosystem into the education, health and public administration ecosystem. Hai sets out to expect VNPT Pay to reach two million users soon.
It can be seen that there is a common point of all types of wallets that all endeavour to attach to their ecosystems. In fact, most companies, whether technology or banking, retail or e-commerce, tend to integrate payments to fill their ecosystems. A series of examples such as Apple, or recently, Facebook combined with big guys in many areas set out to create common cryptocurrency, pay for cross-border services.
In Vietnam, this trend is similar. E-wallet exploded everywhere, in every group and many different industries. However, among these operators, there is a special advantage, which is to own the amount of phone user data. However, the challenge for network operators is still great, especially the data warehouse accuracy, avoiding impersonation and the ability to identify customers as banks is a problem to be solved. Perhaps, the noisy story around photographing identity cards to authenticate phone numbers in the past is an important roadmap to prepare the networks to “live” with a central function.
