Competition Heats up in Vietnam’s Mobile Payment Landscapeby Fintech News Vietnam March 9, 2021
Competition for Vietnam’s young, digitally savvy population is heating up in the mobile wallet and digital payment space. Over the past year, no less than 9 non-bank organization joined the sector and regulatory changes introduced in 2020 could very well open the door to mobile network operators, increasing competition in an already crowded space, top finance experts from RMIT University said.
Since our last update on February 17, 2020, the list of non-bank organizations licensed to provide payment intermediary services, including digital payment platforms and mobile wallets, grew from 32 to 41 entities as of January 29, 2021, a list maintained by the SBV shows.
Joining Vietnam’s mobile payment landscape are 9Pay, a fintech startup partnered with state-owned lender BIDV and Australia-based tech company SSLTrust; GPay, a member company of G-Group which closed a US$18.4 million Series A funding round in January 2021; and Appotapay, a subsidiary of Appota Group which inked a partnership with Nam Á Bank earlier this year.
These are entering an industry that’s so far been dominated by brands such as MoMo, VNPay, Moca and ZaloPay, which have accumulated a large pool of regular users and raised millions of dollars in investors’ money.
MoMo, operated by M_Service, is one of the oldest players with a huge customer base of over 20 million people. It is one of Vietnam’s most well-funded tech startups and has plans to become a “super app” with ambitions for an initial public offering (IPO) by 2025.
VNPay, a subsidiary of VNLife, is another major mobile wallet and digital payment services provider. Counting over 15 million monthly active customers, VNPay’s QR payment network is integrated in more than 30 mobile banking apps and available in nearly 100,000 stores across the country. VNPay reached unicorn status in 2020.
Meanwhile, Moca and ZaloPay have grown to become leading mobile wallets by leveraging their ecosystems. Moca sits in the Grab super app – the ride-hailing giant acquired the fintech startup back in 2018 –, while ZaloPay is built on top of Zalo, Vietnam’s most popular messaging app.
The boom of e-commerce in Vietnam has largely contributed to these platform’s strong growth, with brands like MoMo, ZaloPay, Airpay and eMonkey benefiting from their linkage with popular e-commerce platforms Tiki, Shopee and Lazada. In 2020, Vietnam’s e-commerce revenue reached US$11.8 billion, up 18% from the previous year, according to the Ministry of Industry and Trade’s Department of E-commerce and Digital Economy.
But the new SBV circular on intermediary payment services, which limits monthly e-wallet transaction value to VND 100 million (approx. US$4,290), could likely hinder these e-wallet providers’ ability to grow through the e-commerce avenue, Dr Doan Bao Huy from the RMIT said.
In addition to that, the Vietnamese government recently gave the green light to the Mobile Money pilot project, a move that could very well see the country’s big telcos, including VNPT, Viettel and Mobifone, stepping into the e-payment industry. These will enter the market with considerable advantages, including capital, infrastructure and customer awareness and trust, Dr Doan said.
Unlike an e-wallet which requires a user to link up a bank card to top up an account, mobile money only needs for the user to have a mobile phone and a cell number. Vietnam has 129 million mobile subscribers as of the end of 2019, making the reach of mobile money much broader right off the gate.
Not only that but Vietnamese banks themselves have been aggressively investing in digital capabilities and partnering up with fintechs to launch innovative products. Just last month, VPBank announced a collaboration with Be Group, the operator of Vietnamese ride-hailing app Be, to launch a digital banking offering. Called Cake, the digital banking service sits in the Be mobile app and allows users to open a checking account, make transfers, and more.
In this increasingly competitive landscape, mobile wallet providers must show clear advantages over traditional banks, and need to build extensive ecosystems, similarly to what Ant Group and Tencent have done in China, to attract and make users willing to pay for the services they provide, RMIT finance lecturers said.
“Most services offered by e-wallets such as fast money transfer or utilities and e-commerce payment are now included in mobile apps offered by traditional banks,” said Dr Pham Nguyen Anh Huy. “Bank apps might have to catch up with e-wallets on a number of other services, but this can be easily solved via mergers and acquisitions.”
For Dr Nguyen Thanh Binh, e-wallet providers shouldn’t rely on transaction fees to become profitable, but must instead focus on building up their ecosystems by adding value-added products and services.
“[E-wallets] need to develop more value-adding ecosystems that can attract and make users willing to pay for the services they provide,” said Dr Nguyen Thanh Binh. “Given the current strong competition of e-wallets offering cashless payments, it may be difficult for e-wallets to increase payment transaction fees while expanding their user base. Instead of focusing on charging fees to become profitable, e-wallets could morph into fintech companies and provide a wide range of financial services, such as lending, wealth management and insurance.”