Towards a cashless society

	Lack of cooperation prevents spread of non-cash payments
	Vietnam leads cashless drive in Southeast Asia
	Developing the financial infrastructure for a cashless society

Deputy Prime Minister Vuong Dinh Hue and delegates visit the bank's cashless payment utility. Photo: Thu Hoa

Rapid growth

To promote cashless payment, besides completing the legal basis, the State Bank has implemented synchronous solutions and directed credit institutions to continue investing and developing payment infrastructure; strengthening security, ensuring customers' interests; as well as deploying the application of the achievements of the 4.0 Industrial Revolution in providing payment services. In addition, the State Bank has also promoted communication to disseminate knowledge, raise awareness, change behaviours and payment method of consumers, thereby improving access to banking products, encouraging the use of cashless payment methods.

As a result, in the first five months of 2019, total transaction value through the inter-bank electronic payment system exceeded 64,160 transactions, equivalent to nearly 35,728 trillion VND, up about 23% in the number of transactions and 17% in the transaction value compared to the same period in 2018. By the end of April 2019, there were more than 18,700 ATMs in the country, an increase of over 4% compared to the same period in 2018, the number of POS machines was 266,700.a

Along with that, the number and value of card transactions has also increased. By March 31, 2019, the number of domestic payment transactions via bank cards reached more than 65 million transactions (up 18% over the same period in 2018) with a total transaction value of over 171 trillion VND (up 19%). Electronic transactions via the internet also increased by 66% in volume and 13% in value, via mobile phones increased by 98% in volume and 232% in value.

New and modern technologies in payment such as fingerprint authentication, face recognition, QR Code, contactless payment and mPOS technology are being researched and applied by banks. In addition, payment for public services through banks is also promoted. About 50 banks have coordinated electronic tax collection with Taxation, Customs in 63 provinces and cities and 768 districts across the country.

Phung Nguyen Hai Yen, Deputy General Director of Vietcombank, said Vietcombank participated in coordinating domestic tax and import and export tax collection from the first days of implementing collection through banks and the bank was ready for payment expansion of public services, including modern payment methods such as QR Code and contactless payment. Over the past time, the unit implemented public administrative service payment for Quang Ninh province with more than 1,300 online public services and more than 8,000 fees of departments and branches. Specifically, Vietcombank posted the QR code in administrative offices in Quang Ninh so people and businesses could pay taxes and fees quickly and conveniently. Many banks and payment intermediate service providers have also been prepared for cashless payment.

But the proportion is still low

Despite such rapid growth, according to Deputy Prime Minister Vuong Dinh Hue, this result is only the first step. At the moment, cashless payment in Vietnam still accounts for only 14% of total payment means. It accounts for a high proportion of domestic tax collection and import and export collection. While most people still have the habit of using cash. Specifically, Nguyen Anh Duc, Acting General Director of Saigon Coop, said although Saigon Coop system updated the software and applications such as QR code scanning and e-wallet, only 5% of customers had a habit of cashless payment, the rest were worried about increasing costs, insecurity or they thought cashless payment was not convenient.

Tran Tuan Anh, Shopee’s CEO, also said that every day on Shopee's system, there were tens of thousands of cashless payment orders. However, considering the total number of orders, cashless payment still only accounted for a small proportion, and among the seven countries where Shopee was operating, the rate of cashless payment in Vietnam was the lowest. According to Tuan Anh, Shopee's customers are young people, many people use cashless payment abroad but cash in Vietnam. "It shows that the reason is not the habit but the cashless experience in Vietnam is not really favourable compared to using cash," he said. Typically, the process of using e-wallets still has many barriers. To successfully integrate an e-wallet in accordance with regulations, up to 18 steps are required. This is a challenge for customer patience.

Customers need speed, convenience and cheap prices

To change customers’ experience, thereby promoting cashless payment, according to Tran Son Hai, Deputy General Director of VNPT Media, the system needs to change from within. Accordingly, digitising the entire information technology system, billing system and sales channels are required. In addition, when making payment transactions, customers are only interested in speed, convenience and cheap price. Therefore, service providers must promote promotion and association with banks to offer promotions to attract users.

Regarding this issue, Deputy Prime Minister Vuong Dinh Hue said harmony was needed between banks, payment intermediaries, technology companies and users in the charge policy. “It is better to have a low fee rate but a high number of users, transaction volume, and total revenue. Do not think about profits from the beginning, they will come in the future and will increase exponentially," he stressed.

As one of the units that has achieved great success in implementing cashless payment, Tran Thi Thu Huong, Director of Strategic and Business Development of VIB stated, that every year, MyVIB application handled more than 6 million transactions and over 75% of VIB's transactions were via electronic banking and internet banking. To get the above results, the bank promoted the application of modern technologies such as QR codes, real time card management and a series of products with features and promotions for customers such as lifetime free interest rate credit cards and promotions when spending via card.

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For payment of public services, Yen also proposed some solutions to improve efficiency. Specifically, for public administrative units, there is a need for active participation and local responsibilities in the availability of databases and technical infrastructure connected to the bank's payment system. At the same time it’s important to start developing a clear roadmap to put the data list on 3 and 4 levels to implement cashless payment for public services. The units also need to promote communication for businesses and people to understand the utility of the service, be assured about the safety of the service, and clearly understand the implementation process, thereby encouraging people to have a habit of using cashless payment services. In addition, according to Yen, ministries should review and issue relevant documents to complete the legal corridor for payment of online public services through banks as customer identification and electronic invoices.