“Turning point” in the payment intermediary market

With more than 50 licensed payment intermediaries now operating in the country, the ecosystem is at a critical juncture, facing both exciting opportunities and significant challenges.

The current landscape

The Vietnamese payment sector has seen remarkable development, with 48 large domestic and regional e-wallet service providers and three telecommunications companies piloting Mobile-Money services. As of June 30, 2024, over 34 million e-wallets are active, representing 59% of the 58 million activated e-wallets in the country.

This growth is supported by an evolving legal framework. The Government's Decree No. 52/2024/ND-CP and the State Bank of Vietnam's Circular 40/2024/TT-NHNN have created a more conducive environment for cashless payments and payment intermediary services.

Impressive growth in numbers

The statistics paint a picture of rapid adoption:

• 9.13 million Mobile-Money accounts

• 11,885 established business points

• 275,575 accepting units for payment

• 128 million transactions worth 4,782 billion VND in the first half of 2024

QR Code payments have seen explosive growth, with a 104.23% increase in volume and a 99.57% increase in value compared to the same period in 2023.

A turning point

Le Anh Dung, Deputy Director of the Payment Department of the State Bank of Vietnam, describes the current state as a "turning point." The market is characterized by:

1. Real-time payment systems

2. Widespread adoption of QR Codes

3. Rise of cross-border e-commerce

4. Increasing digital platform businesses

5. Digitization of traditional services

While these developments present significant opportunities, they also bring challenges. The global economic climate, intensifying competition in financial technology, and the constant evolution of fraud and scams pose substantial hurdles for payment intermediaries.

Market performance in 2023

The National Payment Corporation of Vietnam (Napas) reported impressive figures for 2023:

• 3.5 billion cashless payment transactions

• Total transaction value exceeding 66 million billion VND

• 183 million QR Code transactions (170% growth from 2022)

• 210 million online payment transactions (15% growth from 2022)

• 145.79 million cards in circulation

Interestingly, while card payment turnover increased over recent years, it saw a decrease in 2023. The value of withdrawal transactions still exceeds payment transactions, but this gap is narrowing, indicating a shift towards more cashless transactions.

Regulatory changes and future outlook

Recent regulatory changes, particularly Decree 52, have opened up possibilities for licensing additional organizations to provide financial switching and electronic clearing services. These new entrants must meet stringent requirements, including:

• Agreements with at least 50 banks and 20 payment intermediary service providers

• Information infrastructure meeting level 4 security requirements

• Server systems capable of processing 10 million payment transactions per day

For international financial switching services, providers must have additional qualifications and adhere to specific regulations.

Challenges and opportunities ahead

While the Vietnamese payment intermediary market shows immense promise, it faces several challenges:

1. Keeping pace with rapid technological advancements

2. Balancing innovation with regulatory compliance

3. Addressing the growing threat of fraud and scams

4. Meeting the increasing demand for cross-border payment solutions

5. Educating consumers and businesses about the benefits of cashless payments

However, these challenges also present opportunities for growth and innovation. The continued digitization of services, the expansion of e-commerce, and the increasing adoption of mobile payments all point to a bright future for the sector.

Conclusion

Vietnam's payment intermediary market stands at a crucial turning point. The rapid growth and development seen in recent years have set the stage for a transformative period in the country's financial landscape. As the market continues to evolve, collaboration between regulators, financial institutions, and technology companies will be key to unlocking the full potential of digital payments in Vietnam.

For businesses and investors, this presents a unique opportunity to be part of a dynamic and rapidly growing sector. As Vietnam continues its journey towards a cashless society, the payment intermediary market will undoubtedly play a pivotal role in shaping the country's economic future.

Resource: congthuong.vn