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Vietnamese mobile money pilot project submitted to PM for approval

Image credit: Ministry of Information and Communications

A mobile money pilot project has been submitted to the Prime Minister for approval, a step for the development of payments using telecommunication accounts in the country.

The Governor of the State Bank of Vietnam said that the central bank was also hastening procedures to propose the issuance of amendments to Decree No 101 on accelerating cashless payments.

Mobile money allows mobile subscribers to use their telecommunication accounts to make payments up to a limited value.

Last year, three of the country’s biggest telecommunications service providers – Viettel, MobiFone and VNPT – registered to added payment intermediary to their business lines, participating in the mobile money market.

According to a press release, in Decree No 11/CT-TTg, about solutions to remove difficulties for production and business to cope with the COVID-19 pandemic, the PM asked the central bank to propose the mobile money pilot project for approval.

The use of mobile phone accounts to pay for goods and services initially got the PM’s approval in January 2019.

The Minister of Information and Communication previously said that mobile money created a 0.5% economic growth for countries which allowed it.

According to a report of the BIDV Training and Research Institute, mobile money was present in 90 countries with nearly 870 million registered accounts, 272 apps and a daily transaction revenue averaging US$1.3 billion.

It is necessary to develop a proper framework and enhance security for mobile money.

Vietnam has around 129.5 million mobile subscribers, around half using 3G and 4G, and 43.7 million or 45% of the country’s population using smartphones.

Several advanced technologies are developed and implemented, such as biometric authentication, QR Code, and tokenisation with the development of a population database for electronic know-your-customer (e-KYC).

There was also significant room for mobile money in Vietnam with around 63% of adults having bank accounts, the institute cited the central bank’s latest statistics from November. Mobile money would also help promote financial inclusion.

The release also noted the government’s aim to reduce the ratio of cash payments to less than 10% by the end of this year, from 11.33% in 2019.

Mobile money would significantly contribute to accelerating cashless payments. Cash in circulation still accounts for 20% of the country’s gross domestic product (GDP).

Mobile transactions are expected to increase by 400% by 2025, according to Fintech and Digital Banking Asia Pacific.

The report also predicted 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.

The top two priorities among the eight biggest banks of Vietnam to 2025 would be core banking and payments systems, the report pointed out.

According to an industry analyst, Vietnamese banks are investing heavily in digital platforms to promote growth but smaller banks looked to succeed first.

The country is strengthening the development of fintech companies as well as digital banking, evident in the rise of fintech companies from 40 to 150, in the past four years.

The country is also focusing on developing cashless payments and providing new services, which targeted the group of customers who had no or little access to traditional banking services.

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