January 28, 2021

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Vietnam explores economic digitalisation

With mobile phone subscriptions among the population exceeding 100% already, mobile money is expected to boost non-cash payments within the country.

Almost 99% of transactions below VN đ100,000 (US $4.3) are still carried out in cash, providing opportunities for mobile money initiatives.

Mobile money (electronic money or e-wallet) does not need to be linked with a bank account. The service will equip mobile phone users with the ability to transfer money or pay for goods and services.

As it promotes non-cash payment methods for citizens, it accelerates the country’s economic digitalisation, a press release has claimed.

Large portions of the population have not been protected by formal financial services. This includes the rural residents and those in remote and mountainous regions for whom mobile money will prove to be a convenient payment method.

They will be able to use their phones to pay for electricity/water bills or buy groceries locally.

This service is expected to help change the widespread habit of using cash.

According to economists, telecommunication service providers will play an integral role in the development of mobile payment. This has been evidenced by the popularisation of microfinance services by mobile carriers in some countries, the release said.

All three major carriers in Vietnam, namely VNPT, MobiFone, and Viettel, have expressed their readiness to provide mobile money services. The VNPT Chairman had stated that mobile money is a common global trend and a new way to boost digital transformation.

He mentioned that VNPT is fully equipped to launch mobile money services upon receiving the green signal.

MobiFone has also said that it is ready to roll out the services at tens of thousands of outlets throughout the country to support its customers. However, it first needs to review its subscribers’ data to ensure the information is accurate.

About 90 countries have established and developed mobile phone-based payment methods with a total user base of 900 million – this accounts for one-fifth of the global population. The total daily transaction volume by mobile money is estimated at US $1.3 billion, with an annual growth rate of 20%.

Although Vietnam is a latecomer, it can still learn from the experiences of the pioneering countries to quickly enable the services, the release added.

This, nevertheless, comes with its own significant changes, especially with regards to information security, unregulated SIM cards, money laundering, and illegal international money transfers. Thus, regularly updating and enhancing security and safety measures is a requirement for such payment services.

Under the regulations drafted by the Ministry of Information and Communications, though a user can possess more than one SIM card, they can only use one mobile money account.

Mobile banking transactions in Vietnam were expected to increase by 400% by 2025, according to a study on fintech and digital banking in the Asia Pacific.

As OpenGov reported, experts predict a 50% growth in new accounts by the top eight banks, using intelligent automation in account origination. In addition, 25% of banks in Vietnam would actively pursue modern digital core platforms.

Accelerating innovation through fintech partnerships is important; fintech partnerships, both locally and regionally, can add a competitive edge.

In a digital world, the bank is no longer the sole creator of value for its clients. Today, competitive strength comes from having good connections with other players and from adding or sharing value.

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