COVID-19 spurs cashless payment growth in Vietnam

It was time to pay the electricity and water bills, Do Thanh An, a 32-year-old office worker in the Vietnamese capital city of Hanoi, fetches her mobile phone and made a few clicks on an e-wallet platform. She developed this new norm after the COVID-19 epidemic began.

Already having got her e-wallet a few years ago, An, who spends around 1.5 million Vietnamese dong (65 U.S. dollars) for electricity, water, Internet, cable television and prepaid phone every month on average and goes to supermarkets for fresh food every two days, had only got used to online payment until recently.

Amid fear of COVID-19 in the country, hanging out, visiting crowded places and handling cash have become risky activities for many. Giving a heavy blow to many industries, the epidemic has, on the other hand, become an opportunity for online payment.

“The COVID-19 epidemic turned our lives upside down. I was even concerned with handling money as it might be a source of virus transmission. Sometimes I just let the shops keep small change so I didn’t have to handle too many notes at a time,” An said.

She thus began to resort to e-wallet for most of her transactions as an alternative, as the possibility of disease transmission still remained a big concern though she washes her hands every time after handling money.

An is one of the Vietnamese customers who favored this new payment method in order to limit physical contacts amid the COVID-19 pandemic, which has later become a habit due to its convenience.

Currently, An uses e-wallet services to pay for a range of services from electricity bills, prepaid phone cards to supermarkets, and has shifted from cash-upon-delivery to prepaid mobile payment when shopping online.

“It is simple, easy and safe to use. It just takes a few clicks to pay and it is free to top up or withdraw money from e-wallet to my bank accounts,” An said.

Not only consumers, businesses also started to favor and encourage online payments during this special period.

Vu Thi Nhung, a 27-year-old owner of a clothing shop in an outskirt town of Hanoi, encouraged customers to pay with credit cards or e-wallet.

“Though many people still rely on cash as the main payment method, I see that there is an increase in cashless payment. Online pay makes it easy and safe for us to control our money,” she said.

Many service providers and businesses have made online payment available for customers, with many incentive programs such as bonus points and refunds every month from various online payment services. Customers like An can earn a few U.S. dollars of refunds while paying for electricity and water bills online.

According to Truong Cam Thanh, director of Zalopay, a Vietnamese e-wallet service provider, the epidemic has shown that online payment would grow strongly and replace traditional payment methods in the near future.

The epidemic, while posing difficulties for the economy, also creates opportunities to push the growth of online payment. Those able to grab the opportunity can increase market share and improve their competitiveness in the future, she added.

Boosted amid the epidemic, online payment in Vietnam is expected to see further development under favorable policies and promoting measures by the country and the banks.

Non-cash payments have increased sharply in Vietnam, especially through mobile devices and the Internet, according to the State Bank of Vietnam (SBV).

As of the end of 2019, Vietnam had 88.5 million personal bank accounts, an 11-percent increase from 2018. It is expected that by the end of this year, 70 percent of Vietnamese adults will have bank accounts, according to the central bank.

Statistics from the bank also show that in the first four months of 2020, domestic payment via bank cards increased by 26.2 percent in volume and 15.7 percent in value. Payment via mobile phones increased by 189 percent in volume and 166.1 percent in value over the same period of last year.

According to a cashless payment development project for 2016-2020, Vietnam targeted that cash would account for 10 percent of the total money in circulation by the end of 2020.

Pham Tien Dung, director of the payment department under the SBV, said that the payment infrastructure has been improved and the electronic payment ecosystem has been formed in Vietnam, allowing customers to make online payment transactions on multiple occasions.

According to Nguyen Thanh Thao, a lecturer at the Academy of Finance, banks have applied new and modern technologies in payment including the application of fingerprint authentication, face recognition, QR code, contactless payment, and mPOS technology.

However, she also noted that cashless payment in Vietnam has yet to be developed to meet expectations. She cited statistics of International Data Group as saying that in 2019, nearly 40 percent of Vietnam’s population had bank accounts, but 80 percent still used cash in their daily payments and 98 percent used cash for payment under 100,000 Vietnamese dong (4.3 U.S. dollars).

The main reasons include the long-established habit, their reluctance to access to new payment technology, and concerns about the security and safety as well as fees when using online payment methods, Thao said.

She suggested that Vietnam should set up a modern retail payment infrastructure that operates efficiently, continuously and meets the quick, safe, convenient and reasonably priced payment demand of individuals and businesses.

The country should also improve the quality of e-payment activities, apply modern payment technologies and methods to enhance online payment’s convenience, reduce its costs and risks as well as ensure user information security, she added.