Fintech firms and banks will have to compete with telecom services providers who have recently received green light from the government to take part in the country’s e-payment market.


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The government has agreed to pilot the use of mobile phone accounts to pay for goods and services and transfer money in order to boost e-payment services and stimulate economic growth in the country.

According to Nguyen Manh Hung, minister of Information and Communications, the telecommunication infrastructure is not only for communications, but has also become the infrastructure of the digital economy, digital society and of the Fourth Industrial Revolution.

The move was made after telecom providers, including Viettel, VNPT and Mobifone, asked for the government’s permission allow them to launch e-payment services.

According to the providers, the advantage of the telecom firms when conducting electronic payment is the almost 100%  population coverage of mobile phone services while banks only reach 30-40 percent.

Telecom firms are also powerful in technology, infrastructure, and sales channels. The mobile phone accounts are also being used to pay for telecommunication services. Therefore, telecom companies can realize the objective of 100%  e-banking coverage, they said.

Pham Duc Long, VNPT’s general director, said non-cash payments have become popular around the world. However, e-payment services in Vietnam have been implemented slowly as they require users to have bank accounts, making it difficult for everyone to access such services.

Meanwhile, telecom firms have a wide reach which means it is more convenient to use telecom accounts to pay for some services online.

As telecom providers are allowed to join the e-payment market, fintech firms and banks will have big rivals as two telecom firms - Viettel and VNPT – alone have nearly 100 million mobile subscribers in the country.

Lucrative market

It is understandable why telecom providers want to join the e-payment market. According to a recent survey conducted by audit, tax and consulting services provider PwC, Vietnam’s e-payment market is growing impressively as the number of Vietnamese people making mobile payments in stores this year has grown the fastest globally by 24 percent.

Under the survey, 37 percent of the respondents making mobile payments in 2018, but it went to 61 percent this year, placing Vietnam the fourth below China at 86 percent, Thailand at 67 percent and Hong Kong at 64 percent.

Experts said there are many favorable conditions for e-payment to make a leap in the country: the retail market and e-commerce are thriving, while smartphones are more popular.

Data showed that over half of Vietnam's population is online and the potential for the electronic payment sector is huge due to the expanding middle class and improved communications infrastructure.

According to Harmander Mahal, head of retail banking at Standard Chartered Bank Vietnam, the enlargement of e-commerce in Vietnam is paving the way for development of e-payments. E-commerce is the biggest engine of growth for electronic payments in Vietnam, driven by very high smartphone and mobile device penetration and one of the highest per capita time spend on social media in Southeast Asia.

In addition, the government’s policies are also encouraging the development of e-payment in the country. According to the government’s plan, the country will reduce cash payments to below 10 percent of the total payment transaction by 2020.

"Mobile payment is becoming a new trend with the rise of technologies such as QR codes, contactless payments, and the tokenization of card information," said Nghiem Thanh Son, deputy director of the State Bank of Vietnam’s Payment Department.

With the favorable conditions, market research firm Statista forecast the amount of e-payments in Vietnam will double that of 2017 to US$12.33 billion in 2022.

Hanoitimes