The Financial Technology (Fintech) market of Vietnam currently has five main branches, including Payment Solution, Blockchain, Big Data Management, Personal Finance and Group Mobilisation. However, payment solution is the segment with the strongest development.
According to research by Solidiance Consulting, the Vietnam’s fintech market in 2017 reached 4.4 billion US dollars and is expected to reach 7.8 billion US dollars by 2020. Fintech is the leading field of capital attraction of the year with eight deals and a total value of 117 million US dollars; followed by electronic commerce (e-commerce) with five deals and a total value of 104 million US dollars, tourism technology with eight deals and a total value of 64 million US dollars, and logistics and education technology with a total investment worth more than 50 million US dollars.
The World Bank (WB)’s statistics in July 2018 showed that Vietnam was the country with the lowest non-cash transaction in the region with only 4.9 percent, while it was 26.1 percent in China and 59.7 percent in Thailand. Recently, the government has asked to not use cash to pay electricity, water and tuition fees in urban areas, and for payments of living expenses before December 2019. E-payment is one of the measures promoted by the government to promote the transition of the economy to digital economy.
In addition, the e-payment market has growth advantages thanks to the young population structure, fast growing economy and an increasing middle class.
In the e-payment segment, e-wallets are considered potential and having many room to develop as 10 million e-wallet users are only equivalent to one fifth of the total number of people with bank accounts in Vietnam. The government requests the State Bank of Vietnam (SBV) before the third quarter of 2019 to report the plan to allow depositing cash into e-wallets without going through banks’ payment accounts; to determine the limit of deposit for e-wallets and monthly transaction value, and to require payment intermediaries to apply the QR Code.
“The infrastructure for payment is ready. Security is also better, so I think this is the right time and anyone who is hesitant will be late”, said representative of Grab Financial Group Vietnam to the Forbes in last October about the race of e-wallet development.
Foreseeing the potential, investment funds for many years have been cooperating and pouring capital into payment platforms that already have relationships with bank partners in the market. These include the investments of MOL Asset Portal Sdn.BHD (Malaysia) in Ngan Luong in 2013, of Standard Chartered and Goldman Sachs in MoMo in 2013, of NTT Data in Payoo since 2011, of SEA Group and Vietnam Esports in AirPay in 2015, of Vietnam Payment Solution Joint Stock Company in VnPay in 2017.
Most recently, Ascent Money (Thailand) invested in 1Pay in 2017 and Grab invested in Moca in 2018.
The e-wallet market promises to be more exiting and booming in the near future with drastic moves of the government in the recent time.
The puzzle pieces for a large ecosystem
In September 2018, Grab the Singapore-based provider of on-demand services (O2O) on mobile plartform announced the cooperation with Moca Vietnam-s payment intermediary service.
Moca was established in 2013, and licensed by the SBV to provide intermediary payment services in 2016. Grab said Moca has good products and relationships with many banks and partners such as 7-Eleven, McDonald’s and about 4,000 payment acceptance points, mainly in the fields of consumption, transporation, education, restaurants, and fashion, etc.
The biggest difficulty of Grab is to change the habit of using cash of its available group of customers to using Moca e-wallet on Grab application. In order to do this, Grab offered promotions and cheaper rates for this payment form than the other forms of payment, for customers to see that “money in the e-wallets is more advantageous than cash”. Another challenge for Grab is the technical malfunction in the transition process when customers have continuously complained about inconvenience or disappearance of the existing accounts after acquiring Moca. Grab had to apologise on Facebook about the inconvenience as well as promised to ensure the transition process to take place more smoothly.
After a period of cooperation with Moca, Grab is reaping success when it begins to expand into other ecosystem such as good ordering, delivery, and hotel reservations.
Grab is not the first foreign business to join the e-payment market of Vietnam. Earlier, Samsung introduced SamsungPay in September 2017, with 400,000 of registered users and 500,000 transactions after six months, according to Samsung’s announcement.
In addition, Singapore-based SEA Group has cooperated with Vietnam E-sport development joint stock company (VED) to deploy AirPay in Vietnam.
In addition to AirPay, Moca and SamsungPay, there are other payment services with foreign partnerships (after receiving investments of investment funds) such as MoMo, 1Pay, Payoo, Ngan Luong, and VnPay.
“E-wallets currently not only serve payment, they are the perfect puzzles for super-applications of businesses like Grab or SEA,” said Nguyen Khoa Hong Thanh, Managing director of Isobar advertising agency on Forbes in October 2018.
Super applications are simply understood as to incorporating multiple financial services into one application. According to Thanh, these applications, in addition to helping users access payment for services in the ecosystem, also help link close customers of the business.
