Giants make inroads into Vietnam’s intermediary payment service

The market is open to giants with enormous financial resources to become the leaders. However, this competition itself, as well as e-commerce, is predicted to be cutthroat.

Giants make inroads into Vietnam’s intermediary payment service

The intermediary payment market is entering the next period of reshaping with a rising number of large businesses engaging in e-wallet and acquiring unprofitable startups and fintechs, VnExpress reported.

Thriving e-wallet market

VinID, an arm of Vietnam's largest private conglomerate Vingroup has completed the procedures to take over the share of People Care, which owns MonPay e-wallet, after replacing all members of its executive board in 2018.

In the same year, Grab Vietnam had representatives at the management board of Moca, an intermediary payment fintech. GrabPay then was renamed to GrabPay by Moca.

Actually, Moca or MonPay is just two among a number of fintechs which have welcomed a wave of new partners.

According to some experts, the moves may take the market to a more competitive stage.

“The joining of new players is a good signal as they can see potential of the intermediary payment market and the customers’ demand is on the rise”, VnExpress cited Momo’s Vice Chairman Nguyen Ba Diep as saying. MoMo was one of the first e-wallet service providers in Vietnam.

As of the end of 2018, Vietnam was home to 4.2 million e-wallets linked to bank accounts. Total transaction value rocketed to over VND9.1 trillion (US$3.9 billion), however, this number is quite humble compared to the market potential.

Both the firstborns namely Momo, Bankplus, Mobivi and Vimo and the newcomers including AirPay, ZaloPay, Vi Viet are fiercely competing to grasp the share in the intermediary payment market, in which only the bold spenders take the upper hand, no matter whether you are the first or second in joining the market.

Market share comes at a cost

According to Buzzmetrics’ research, users' interest mainly focused on four e-wallets namely Momo, Viettelpay, Zalopay and Airpay, which dominate more than 90% of the transactions.

However, the social media analyst revealed the main reason for using the e-wallets is attractive promotion programs.

The research showed that 25% of the respondents said they turned to e-wallets for big discounts offered by the providers’ promotion programs while others do it just as shopping online habits.

This explains why most of intermediary payment service providers in Vietnam are running at a loss.

 

Only 20% of them are able to make profits from transactions via e-wallets and earnings of the remaining are unstable, according to Director of the Payment Department under the State Bank of Vietnam Pham Tien Dung.

He also noted that the losses that startups and fintech businesses suffer are predictable, especially when they are willing to trade-off profit for market share.

For instance, Zion Limited Company, a member of VNG Corporation, was licensed to provide intermediary payment service from the beginning of 2016 with the ZaloPay e-wallet.

However, after two years of operation, the business is run unprofitably, with loss of over VND21 billion (US$901,000) in 2017 and over VND133 billion (US$5.7 million) in 2018.

Momo e-wallet, which leads the payment market in number of users, saw its accumulated loss of over VND1 trillion (US$43 million) by 2018 and its loss is increasing at a rate just approximately equal to that of revenues.

Opportunities for new players via M&A businesses

For large enterprises in the roadmap to develop their ecosystem, owning payment platforms is a matter of time.

In fact, most of the businesses investing in intermediary payment already have their own ecosystem. Grab, the first ride-hailing firm entering Vietnam in 2014, has expanded its business to other services including package and food delivery.

VinID, a service owned by Vingroup, is used to pay for products and services within the conglomerate’s ecosystem such as shopping, health care, education, entertainment, among others.

Another reason for joining a payment platform is the capacity of reshaping the market.

Due to the on-going small scale, the intermediary payment market is considered fragmented and there is not a chance a company can attract a majority of customers.

Therefore, each e-wallet is targeting a separated segment in the market. Momo conquers users with promotion programs, Viettelpay is usually used for banking transactions and Airpay for food delivery payment, according to Buzzmetrics.

The trend opens more opportunities for giants with enormous financial resources to become the leaders. However, this competition itself, as well as e-commerce, is predicted to be cutthroat. Hanoitimes

Ha An

 
 

Other News

.
Deputy Minister of Defense reviews VN’s defense strategy in the new situation
Deputy Minister of Defense reviews VN’s defense strategy in the new situation
FEATUREicon  25/12/2020 

Deputy Minister of Defense, Senior Lieutenant General Nguyen Chi Vinh reviews Vietnam’s military and defense hallmarks in 2020.

Prime Minister: "Digital technology enterprises must pioneer in innovation"
Prime Minister: "Digital technology enterprises must pioneer in innovation"
FEATUREicon  26/12/2020 

At the National Forum on Developing Digital Technology Businesses 2020, Deputy Minister of Information and Communications Phan Tam read a letter from Prime Minister Nguyen Xuan Phuc to the Vietnamese digital technology business community.

“Make in Vietnam” and "tell your Vietnamese story":  MIC Minister
“Make in Vietnam” and "tell your Vietnamese story": MIC Minister
FEATUREicon  25/12/2020 

Minister of Information and Communications (MIC) Nguyen Manh Hung has called on every Vietnamese citizen and enterprise to take part in “Make in Vietnam” and tell their own Vietnamese story.

Why Vietnam’s outlook for 2021 looks bright?
Why Vietnam’s outlook for 2021 looks bright?
FEATUREicon  25/12/2020 

The country is projected to grow 6.8% in 2021 on condition that the pandemic be contained.

Vietnam's top 10 science and technology events in 2020
Vietnam's top 10 science and technology events in 2020
FEATUREicon  25/12/2020 

The 10 events were voted on by 60 science and technology journalists at 25 media agencies throughout the country.

Outstanding events in Vietnam in 2020
Outstanding events in Vietnam in 2020
FEATUREicon  25/12/2020 

Here are outstanding events in Vietnam in 2020.

Outstanding economic events of Vietnam in 2020
Outstanding economic events of Vietnam in 2020
FEATUREicon  24/12/2020 

Vietnam among very few countries to post GDP growth rate of 2.5-3 percent, and the signing of RCEP agreement in 2020 when Vietnam assumes ASEAN Chairmanship are among the top 10 domestic economic events in the year.

Minister of Health says local scientists are carefully monitoring new mutant coronavirus strain
Minister of Health says local scientists are carefully monitoring new mutant coronavirus strain
FEATUREicon  25/12/2020 

The new mutant coronavirus strain found in the UK can spread more rapidly, raising concern about the effect of vaccines. Vietnam plans to implement gene sequencing of the virus sample.

Local technology enterprises must regain the market
Local technology enterprises must regain the market
FEATUREicon  24/12/2020 

"Vietnam's overall economic growth rate is below 10%. The growth target for digital technology enterprise should be set at 15-20% and even more," said Deputy PM Vu Duc Dam at the National Forum for Developing Technology Enterprises.

Silent, painful reforms of the tax sector show positive results
Silent, painful reforms of the tax sector show positive results
FEATUREicon  23/12/2020 

The tax sector’s painful, quiet reforms have helped increase Vietnam’s position in the global business climate report.

2020 – the year of Vietnam’s national digital transformation strategy
2020 – the year of Vietnam’s national digital transformation strategy
FEATUREicon  25/12/2020 

The government considers the development of telecommunication infrastructure and IT as one of its top priorities.

Textbook changes – a test of education reform
Textbook changes – a test of education reform
FEATUREicon  24/12/2020 

Minister of Education and Training Phung Xuan Nha noted before the National Assembly that the content of Canh Dieu (Kite), the textbook for first graders, is “not appropriate".

2020 - year of opening the door to the world
2020 - year of opening the door to the world
FEATUREicon  22/12/2020 

Vietnam's export growth this year has been impressive thanks to the signing and approving of many free trade agreements (FTAs), reflecting the success of the country's steady and flexible international integration process.

Do the Vietnamese still have a chance?
Do the Vietnamese still have a chance?
FEATUREicon  23/12/2020 

If you want to get over the rapids, you must first get off the boat. Will the next decade reach the goal of industrialization without success?

Unfinished dream to become a 'dragon'
Unfinished dream to become a 'dragon'
FEATUREicon  22/12/2020 

Vietnam’s industries, especially the processing and manufacturing industry, are developing. 

Vietnamese spend $10 billion on illegal football betting
Vietnamese spend $10 billion on illegal football betting
FEATUREicon  21/12/2020 

Ladbrokes, a British betting and gambling company, estimates that Vietnamese illegal football betting in Vietnam is worth 3-5 percent GDP (gross domestic product), or $10 billion a year.

2020: eventful year for drivers
2020: eventful year for drivers
FEATUREicon  22/12/2020 

New regulations have had a big impact on car and motorbike drivers this year.

Key transport projects kick off in 2020
Key transport projects kick off in 2020
FEATUREicon  22/12/2020 

Construction of several national key projects, including the North-South Expressway and Long Thanh International Airports, have started.

E-hailing drivers disillusioned as income falls
E-hailing drivers disillusioned as income falls
FEATUREicon  19/12/2020 

Ride-hailing drivers have seen their incomes fall dramatically because of policy changes.

Japanese, Thai retailers compete in $200 billion retail market
Japanese, Thai retailers compete in $200 billion retail market
FEATUREicon  21/12/2020 

After the lockdown this year, shopping malls began to be busy again in the 'new normal' situation caused by the COVID-19 pandemic.

 
 
 
Leave your comment on an article

OR QUICK LOGIN