Vietnam Ditches Cash: More Consumers Opt for Cashless Paymentsby Rebecca Oi February 28, 2023
Cashless payments in Vietnam have seen rapid growth in popularity as a growing number of Vietnamese consumers seek more efficient and secure ways to manage their finances.
From contactless card payments to mobile wallet transactions, the range of cashless options available in Vietnam is expanding, proving to be a game-changer in how people conduct their financial transactions.
A recent report from Visa reveals that 65 percent of consumers in Vietnam carry lesser physical cash, while 76 percent have adopted e-wallets. Additionally, the use of cards is even higher at 82 percent. Over 80 percent of consumers use card payments, QR code transactions, and e-wallets weekly.
According to the State Bank of Vietnam (SBV), the growth of non-cash payment transactions in 2022 was substantial, with an increase of 85 percent in volume and 31 percent in value.
The utilization of electronic transactions has seen a surge of 89 percent through the internet and even higher, triple-digit growth through mobile phones and QR code scanning. This suggests that the public is becoming more familiar with and embracing cashless payment methods.
Ease of payment for expatriates and tourists
Digital payments are a perfect solution for expatriates residing in Vietnam, especially given the challenges they face when managing their finances.
The process of opening a bank account in Vietnam can be complicated, making it difficult for them to use conventional payment methods such as checks or bank transfers.
Obtaining a credit card in Vietnam can also be a lengthy process that requires a Vietnamese residency permit. However, digital payments provide a quick and convenient alternative for those looking for a hassle-free way to manage their finances.
As the competition among payment providers continues to heat up, companies are working hard to offer the most secure and convenient digital payment options, especially for foreigners in Vietnam.
To meet this demand, banks such as Vietcom Bank, Shinhan Bank, and ANZ have begun to provide internet banking services and fully-functional English-language versions of their mobile apps, making digital payments much more manageable for expatriates.
In addition, using QR codes has become a popular trend in digital payments, and its reach has gone beyond borders. The National Payment Corporation of Vietnam (Napas) and Thailand’s National ITMX (NITMX) recently announced the successful connection of their retail payment systems through QR codes.
In the initial phase of this project, Thai tourists can now use VietQR codes to make payments at TPBank and BIDV payment acceptance units in Vietnam. On the other hand, Vietnamese tourists who are customers of TPBank and Sacombank can scan ThaiQR codes at over eight million payment points in Thailand.
To accommodate the increasing tourist demand in both countries, Napas will continue collaborating with NITMX to expand their member banks. This exciting new development in the payment industry provides greater convenience for tourists and will help to boost international trade.
This has further increased the country’s popularity and convenience of digital payment options.
Push for Cashless Payments in Rural Areas
The State Bank is actively promoting digital and cashless payment methods in rural areas to improve financial inclusion and reduce dependence on cash.
Mobile Money launched in early 2022 has significantly contributed to the development of Vietnam’s cashless payment system and offered various financial solutions to the country’s citizens.
As per the SBV report, there are now 72,000 POS locations nationwide, showcasing the remarkable expansion of this service.
A significant aspect of Mobile Money’s success is its widespread reach, with more than half of its POSs located in rural, remote, and isolated areas. This has helped bridge the financial divide and bring modern financial services to people in these areas who might have otherwise been left behind.
During the last nine months of 2022, the Mobile Money service has served an impressive 14 million customers, with a total transaction amount of US$7 billion. This is a testament to the growing popularity and trust in the service and highlights its crucial role in developing a cashless payment system in Vietnam.
While promoting cashless payment in Vietnam has numerous benefits, such as increased financial inclusion, reduced dependence on cash, and improved security, it also faces several challenges.
One of the significant challenges is the need for more infrastructure in remote areas, such as internet connectivity and POS terminals. This makes it difficult for rural populations to access digital payment services, exacerbating the digital divide and hindering financial inclusion.
Security and privacy concerns are also a challenge in adopting digital payments. People may be hesitant to use digital payment methods due to the fear of fraud and data breaches. The government and financial institutions must ensure the security of digital payment systems and educate the public about their security measures to mitigate these concerns.
Finally, competition among digital payment providers is also challenging in developing the cashless payment system in Vietnam. The market is highly fragmented, with numerous players offering similar services, confusing consumers and making it difficult for new entrants to gain a foothold.
E-wallets such as Momo, Moca, Google and ZaloPay are available in the country, which has increased significantly from just five e-wallets six years ago to more than 40 today, highlighting the highly fragmented nature of the market.
Despite these challenges, Vietnam’s government and financial institutions are working to overcome these obstacles and promote the widespread adoption of digital payments. By addressing these challenges, Vietnam can further develop its cashless payment system and achieve its goal of financial inclusion for all.