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Cashless Payments Account for over 70% of 2021 Retail Transactions in Vietnam

The COVID-19 pandemic has greatly boosted the e-commerce market, with non-cash payments accounting for 70% of total retail transactions in Vietnam last year. According to a survey of 15,000 retailers, cashless payments in 2021 made up 72.8% of total transactions, up 9% year-on-year. Payments through bank accounts became the most popular method, accounting for 36.5% of total transactions at retail shops, restaurants, and cafés followed by cash (29.8%), e-wallets (14.8%), QR code (9.9%), bank cards (8.5%), and payment gateways (0.5%).

Notably, 89.3% of retailers have positive assessments on non-cash payments, considering them a trend at present and in the future. New cashless payment tools are expected to be launched in the time to come to reduce difficulties that retailers currently face. Telecommunications is not the booming industry it once was as the mobile market has become saturated over the past few years. This has forced telecom providers to look for “new spaces”, one of which is mobile money.

In early December, the State Bank of Vietnam officially licensed three carriers, VNPT, Mobifone, and Viettel, to pilot mobile money services. VNPT and Viettel are the only two that have so far put mobile money services into commercial use. According to a news report, mobile money is expected to be a push towards cashless payments in the country, where only 70% of the population have bank accounts. The biggest difference between mobile money and e-wallets is that customers can pay for services and goods of small value, without a bank account. Additionally, mobile money accounts can also be used on feature phones, which do not connect to the Internet.

Mobile money services will be easy-to-use in rural and remote areas, where bank branches and the Internet have not yet been strongly developed. Once mobile money services are licensed, in theory, any telecommunications subscriber can access the service. However, operators must ensure that subscribers have the correct identification information to provide services, as well as bring convenience and trust to customers, an official noted. The country’s telecom market currently has about 126.3 million subscribers, of which the three largest carriers and those licensed to pilot mobile money account for more than 97% of the market share.

Since the pandemic started, there has been a significant increase in the use of e-wallets, payments via smartphones and QR codes, and high demand for ‘instant credit’ solutions such as buy-now-pay-later, particularly among those segments of the population that remain unbanked or underbanked. Fintech and e-wallet penetration reached 56% in 2021 for Vietnam, a hike of 40 percentage points from 2017. This penetration level is higher than the average of Asia-Pacific (APAC) emerging markets (at 54%) and developed markets (43%).

Last year, Vietnamese people spent most of their time using social networks, texting, watching videos, shopping online, and emailing, OpenGov Asia reported.  The number of goods categories purchased by Vietnamese online shoppers went up 50% compared to 2020, while that of online stores in Vietnam also rose by 40% year-on-year, resulting in a 1.5-fold increase in total online retail sales nationwide. Some 49% of Vietnamese consumers switched to a new online marketplace, based on considerations of price incentives (45%), product quality (34%), and availability of goods (33%).

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