VietNamNet Bridge - The PM has approved a pilot program on using telecommunication accounts for payments for digital content services and small-scale e-commerce transactions. 

This is expected to pave the way for mobile network operators to become fintechs.

After the internet-based multi-billion dong gambling ring of CNC Company was discovered, the Ministry of Information and Communication (MIC) in April 2018 tightened control over payments for digital content services with scratch cards.

The decision faced opposition from telcos and digital content service providers which reported that their turnover had dropped by 40-90 percent.

Viettel, VNPT and MobiFone, the three largest mobile network operators, at a working session with PM Nguyen Xuan Phuc in September, asked for permission to resume payments for digital content services with scratch cards.

On January 15, the PM stated the government agreed to the proposal.

New policy on non-cash payments

About 40 percent of Vietnamese have a bank account, but 90 percent still pay cash for products and services and 99 percent pay cash for the products valued unfer VND100,000, a report says.

Telcos attribute the slow development of non-cash payments to the low number of bank accounts, the prerequisite  for non-cash payment. Only 30-40 percent of people have bank accounts, and not all bank account holders can make payments online. It is estimated that 70-80 percent of population still cannot access e-payments via smartphones.

In such conditions, making non-cash payments with telecom accounts, or mobile money, is the most feasible solution, especially for small expense items.

Tran Trong Tuyen, CEO of Sapo, a technology firm, cited a report from the World Bank as saying that Vietnam has the lowest proportion of non-cash transactions in the region, 4.9 percent, which is lower than China’s 26.1 percent, Thailand’s 59.7 percent and Malaysia’s 89 percent.

The PM’s decision is expected to give telcos golden opportunities to jump into the fintech field. Analysts say that with the coverage of telecom networks, which is larger than bank cards or other non-cash payment modes, telcos will have great advantages. 

Vietnam’s telcos, which have capabilities in technology, finance, infrastructure and large sale networks, will be able to develop e-payments.

Ngo Trung Linh, CEO of Vietunion, the owner of Payoo,  said mobile network operators have greater advantages than banks or intermediate payment service providers. However, he said that e-payment services must obey many regulations on money laundering and other illegal transactions.

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