It was a rainy winter’s day and Ms. Trang Nguyen, a primary school teacher, headed to a Highlands Coffee shop, as she did every Saturday. After ordering, she paid with her Samsung Pay app rather than hand over cash. 

“Samsung Pay gives customers a voucher for VND30,000 ($1.31) every day,” she explained. “Using it is convenient, as there’s no need to carry around cash. I just pay for everything on my Samsung smartphone and there are many incentives to benefit from.”

Impressive changes

Ms. Trang is just one of many that have taken a liking to using technology to make payments. Ms. Dang May, a cashier at Highlands Coffee in Hanoi’s Hoang Quoc Viet Street, told VET that a large number of customers pay for their drinks using Samsung Pay because of the $1.31 voucher. 

Samsung Pay is one of the latest mobile payment services Samsung has offered, with an app installed on Samsung mobile devices. It uses Near Field Communication (NFC) and Magnetic Secure Transmission (MST) technology. 

According to Samsung, Samsung Pay enables customers to register their card information on the app then conduct transactions. The South Korean giant has linked with domestic cards from six banks: VietinBank, Vietcombank, Sacombank, BIDV, Shinhan Bank, and AB Bank.

Along with the trend towards non-cash payments in general, mobile payment services have become increasingly popular in Vietnam recently. 

According to Mr. Nguyen Huu Tuat, General Director of the MPOS Technology Vietnam JSC, a subsidiary of the NextTech Group, there are now three main forms of mobile payment: E-Wallet, Mobile Banking, and Mobile PoS (mPOS). 

Electronic wallets and mobile banking are used for e-commerce transactions, personal transfers, and utility services, while mPOS is used for retail transactions and are subject to 0 per cent interest. 

Card association data reveals that in the first six months of this year, card payments totaled over VND1.2 trillion ($52.78 million). 

As one of the first to deploy electronic payment models in Vietnam, NextTech has done so via nganluong.vn, the Vimo.vn e-wallet, and by Mobile POS at mpos.vn, which have all contributed significantly to promoting electronic payments in the country. 

“In the retail sector, MPOS is the only bank to provide card payment tools to retail outlets and retail systems like Sony Center and Macbook24h,” Mr. Tuat said. 

“MPOS is also the first and only partner at present in Vietnam implementing QR code payments under the international standards of Visa and MasterCard.”

New payment solutions have positively impacted on banks in Vietnam through Quick Response codes (QR codes), which are integrated into mobile banking apps. 

Users can download a bank’s mobile banking app or an electronic payment app that scans the QR code and associates it with a bank account. 

When making payments, customers only use their phone to scan the store’s QR code, enter the amount, and verify it to complete the transaction. 

The technology is being used by Sacombank, Vietcombank, VietinBank, BIDV, Agribank, NCB, SCB, ABBank and BankBank. In particular, QR Pay is integrated into mobile banking apps.

Mr. Tran Cong Quynh Lan, Deputy General Director of VietinBank and Director of the VietinBank Information Technology Center, said that the shift from internet banking to mobile banking was a breakthrough that helped banks take their products closer to customers. 

He told VET that QR code payments had grown 120 per cent this year as at September. The number of transaction units accepting QR code payments increased to nearly 5,000 units. By the end of 2018, the number is expected to reach 50,000 and there are now 12 banks offering QR code payments.

Obstacles to address

There’s no avoiding challenges when introducing new technology and mobile payments are no exception. Many experts in the field believe the biggest issue is fragmentation. Some customers say that mobile payments are still only available at just a few places, so only meet a fraction of demand. “Samsung Pay is mostly available in only Hanoi and Ho Chi Minh City,” said Mr. Phan Dang Hoang, an official in Ho Chi Minh City. “I stopped for a coffee at a Highlands Coffee shop in Binh Duong province but the cashier didn’t know how to use the Samsung Pay equipment.”

Mr. Lan said that in order develop QR codes to replace cash payments, it is first necessary to study and come up with a uniform standard for the codes. “This would lay the groundwork for making payments everywhere,” he said. 

“Banks and intermediaries should not develop separate QR codes, as this would present difficulties for vendors and customers.” 

Another difficulty stems from the habits of many customers. Most Vietnamese, especially those in their middle age, are simply used to paying in cash. 

In addition, according to Mr. Lan, the development of the internet and smartphones have been rapid but inconsistent, as some remote areas still lack internet access. And despite the number of accepting payment units increasing, they remain limited in number. 

“Most are restaurants, supermarkets, and coffee shops,” he said. “It is yet to be applied at markets or by street vendors.” Cooperation is needed to introduce an overall development solution.

Aggressive action

Recognizing the global trend, enterprises, financial institutions, and banks have adopted strategies to boost mobile payments into the future. Mr. Tuat said that MPOS has strategic partnerships with Visa, MasterCard, and JCB to expand the network of card acceptance points and encourage customers to use their cards instead of cash, such as offering discounts or other incentives. 

Mr. Lan said that VietinBank will engage with other banks and institutions to develop QR codes and also has plans to boost mobile banking. The number of transactions via mobile banking has already surpassed those by internet banking. 

Mr. Nguyen Dang Hung, Deputy General Director of the National Payment Corporation of Vietnam (Napas), said that each user only needs one or two QR codes. He and his colleagues have come up with a generic QR code that will avoid the current fragmentation. “Napas is developing a digitalization platform, tokenization, and

QR codes to increase the level of security in transactions made on the internet,” he said. “With a general and unified QR code, every user only needs one or two to pay.”

As one of the leaders in technological development in Vietnam, Samsung expects to expand intelligent payment solutions in the country. 

“Samsung is continuing to expand its cooperation with card issuing banks, including domestic and international cards, which are targeted to expand to at least 75 per cent of the card market next year,” said Ms. Le Thi Hai Oanh, Head of the Samsung Pay Vietnam Project. 

Samsung is now cooperating with banks, retail chains, and service points to develop training guides for cashiers on Samsung Pay’s services. For the new mobile payment solution to work effectively, there is a need for a harmonious ecosystem, including a central payment unit.

Approaching customers to increase the number of users is key. Samsung Pay has therefore developed a special program for card holders at VietinBank when making payments. For every transaction made using Samsung Pay, cardholders are refunded between VND100,000 ($4.40) and VND500,000 ($22), and this measure appears to be effective.

“By providing payment services with Samsung Pay, we want to further promote mobile utilities so that users can access banking services anytime, anywhere,” Mr. Lan said. “And this is part of our strategy to promote mobile banking at VietinBank.” 

The State Bank of Vietnam (SBV) is also monitoring this latest trend. SBV Deputy Governor Nguyen Kim Anh told the Vietnam E-payment Forum (VEPF) in Hanoi recently that building a digital banking system is an urgent task for the central bank in the time to come. 

“We will study and finalize a legal framework for card payment transactions, issuing standards for contactless payments, QR codes, mobile payments, and for FinTech operations,” he said.

Vietnam needs to take full advantage of mobile payments to stay abreast of global payment trends and Industry 4.0. Positive results in this regard would pave the way to a brighter future in the country’s technological development as well as economic growth.

VN Economic Times