The Hanoitimes - The Vietnamese mobile payment market has heated up recently with the presence of many big foreign players, causing the competition for local companies as well as banks.
Samsung recently introduced Samsung Pay payment method with smart Gear S3. A smart watch can be waved in front of a POS to make payments for cinema tickets, coffee and goods.
Samsung Pay had 400,000 registered users, while 500,000 transactions worth VND350 billion (US$15 million) were made, the group announced in mid-May.
China’s two largest e-wallets, Alipay and WeChat Pay, have been so far also present in Vietnam.
Samsung Pay has some 400,000 registered users
After the visit of Alibaba’s owner Jack Ma to Vietnam late last year, the Chinese group signed a strategic cooperation contract with Vietnam’s NAPAS to bring Alipay e-wallet to Vietnam. With cooperation among NAPAS, banks and Alipay, sellers in Vietnam have accepted payment in Alipay wallet made by Chinese visitors for goods and services in Vietnam.
WeChat Pay also announced a plan with Vietnam’s VIMO e-wallet to accept payment of Chinese travelers.
Earlier, many of the world’s big players had also joined the Vietnamese payment market, such as Standard Chartered Private Equity and Goldman Sachs pouring US$28 million into MoMo and Thailand’s TrueMoney acquiring 90% of 1Pay stake.
Great potential market
There are now about 20 e-wallet service providers in Vietnam, including well-known names such as Momo, Ngan Luong, VTC Pay and Payoo. However, there is no official report from the State Bank of Vietnam about the number of Vietnamese e-wallet users. Service providers estimate that 10 million wallets are in use in Vietnam, which is a modest figure compared with the great potential of the market, analysts said.
Vietnam’s online payment market holds high potential as the government is striving to reduce the non-cash payment proportion to less than 10% by 2020. Industry insiders expect that Vietnam is close to the non-cash economy thanks to many factors, including the bustling e-commerce and retail market, and the explosive number of internet and mobile users.
A report of the mobile platform provider Appota showed that Vietnam now has 50 million smartphone subscribers and 53% of population using internet, which both helped Vietnam’s e-commerce grow by 40-50% in 2017, far exceeding Google’s predictions.
According to the Vietnam E-commerce Index report, e-commerce grew by 25% in 2017. The high growth rate can be maintained in 2018-2020, while the e-commerce revenue is expected to increase even more sharply thanks to the technology boom and new shopping habits.
Ngo Trung Linh, CEO of Payoo, said there is no big gap in technology used by Vietnamese and foreign wallets. The competitive edge of payment service providers lies in their financial capability.
Linh said that firms with large long-term capital will be able to thrive. Payment companies have to spend big money to familiarize Vietnamese with e-payment methods.
“Like e-commerce firms, payment companies still have to spend to lure more users. They also have to spend money to expand their networks,” Linh said.
Meanwhile, anxious about the number of foreign firms entering the payment service market, Bui Quang Tin, a banking expert, said the 132 million cards issued by banks does not mean banks can control the market. To date, 25 non-bank institutions have been providing intermediary payment services.
He said that while Vietnamese banks are still busy collecting fees, payment companies are not, because they strive for a long-term business strategy.
“They have calculated thoroughly when accepting losses in the first phase of operation,” he said.
If payment companies can attract more users, they will have huge capital to use which can bring bigger benefits than the fees they collect from services.
“The competition in the payment market is getting fierce. If banks don’t change their strategy, they will lose their share in the home market,” Tin said.