Dr Bui Quang Tin (HCM City Banking University) said that the wave of money pouring into cashless payment technology has not yet been profitable but this trend will continue, because businesses are competing for market share.
According to the prime minister’s Decision No. 2545/ QD-TTg on cashless payment, the goal is that by 2020, Vietnam will strive for 100 percent of supermarkets, shopping centres and 70 percent of service providers of electricity, water, telecommunications and communication services; 50 percent of individuals and households in big cities use cashless payment instruments. At the same time, the percentage of people aged 15 and older with bank accounts will be increased to 70 percent by the end of 2020.
Meanwhile, the statistics show that our country has more than 40 million internet users, nearly 50 million subscribers use smartphones. The annual growth rate of cashless payments is up to 30 percent -50 percent.
Thus, cashless payment is an extremely large market for domestic and foreign enterprises to invest in the field of e-commerce, car-hailing services, goods delivery, e-wallets, and financial and banking products.
However, because this “piece of cake” is too attractive, the level of competition is extremely fierce. Every business is racing to reduce prices, promotions and refunds to consumers, resulting in operating losses.
Forecasting losses but why do businesses still accept pouring money into the market? In fact, many businesses suffer losses but they still call for foreign investment. With this source of capital, the strength and value of businesses will increase, opening up the prospect of attracting a large number of customers, which can make the revenue and profits of businesses surge suddenly in the future. So, despite losses, businesses continue to pour money into the cashless payment market to diversify, cross-sell products to consumers.
For example, the Grab Company used to spend heavily on promotions for large numbers of its customers. So, where does Grab get money to offset part of the cost? Solving this problem, they cooperated with banks, creating GrabPay by Moca e-wallet to make payment intermediaries. At that time, in addition to the service fee, if each e-wallet always exists 200,000 dong with countless customers available, Grab would make a huge profit when this money is deposited into the bank with an interest rate of 0.1 percent -0.5 percent per year. Next, Grab cooperates with stores developing Grabfood service with an additional 10 percent -20 percent commission.
This explains why domestic and foreign investors are still pouring money into technology enterprises. Because, one of the many reasons for investors to decide to contribute capital is to look at the prospects, cash flow, model, field of operations of potential businesses. Even, many foreign investors also require businesses to have plans to make money “evaporate” quickly to the market so that products and services that businesses are deploying are identified. Since then, businesses can build brands, attract a large number of customers, compete with other businesses to gain market share in cashless payments, online shopping, ordering cars, ordering food, delivery and book room. At that time, the scale of operation, the value of businesses is increasingly large, meeting one of the future goals of investors is to make a profit when selling shares.
Thus, when technology enterprises continue to pour money into e-commerce exchanges, invest in intermediary payment services, compete to dominate market share, consumers will get more utilities and payment services. No cash at best cost. Most obviously, some banks have begun to dramatically reduce service fees for their customers. On the other hand, the growing game of many technology giants not only attracts more foreign investment, but also receives technology resources 4.0, connecting global market chains to develop cashless payment.
