Consistent Policy, Synchronous Infrastructure Needed to Boost Cashless Payment

2:18:53 PM | 10/9/2020

After four years of carrying out Decision 2545/QD-TTg ratifying cashless payment development projects in Vietnam in 2016-2020, as of now, electronic payment and electronic payment ecosystem have made positive progress, especially amid the COVID-19 epidemic breakout. However, many difficulties in practice disappoint cashless payment outcomes.

Strong growth

Dr. Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said, after nearly four years of implementation, cashless payment continued to develop positively. Payment infrastructure and technology has been intensively invested to improve quality and efficiency. The inter-bank electronic payment system works stably, safely to meet interbank payment demands across the country. Security and safety of cashless payment systems is strengthened.

Electronic payment services and instruments are strongly developed and diversified. Payment products and instruments, mostly new and modern, are researched and deployed in Vietnam, especially payment via mobile devices that has achieved strong growth.

According to Mr. Le Anh Dung, Deputy Director of the Payment Department under the State Bank of Vietnam (SBV), driven by strong evolution of information technology - telecommunications and the popularity of internet-connected smart mobile devices, many new products and services such as 24/7 online money transfer via mobile banking, bill payment, shopping and service booking via mobile banking applications, e-wallet and QR code are increasingly popular in the market to create a new development step in cashless payment, meet increasing requirements of consumers and bring benefits to consumers and businesses.

The opening and adoption of personal accounts has kept rising. By the end of June 2020, approximately 93.7 million personal accounts were activated (11.6% more than the same period of 2019). Developing personal service accounts has helped draw unemployed cash from the public and facilitated the expansion of cashless payment services.

Up to now, 75 payment service providers (PSPs) are providing payment services over the Internet and 45 PSPs provide services via mobile phones. In the first six months of 2020, internet-based transactions reached more than 200 million, valued about VND12,900 trillion (36% higher in value over the same period in 2019) and mobile-based transactions reached more than 472 million, valued about VND4,900 trillion (178% and 177% higher than a year earlier, respectively).

Payment services continue to be developed by banks. By the end of June 2020, a total of 106 million cards are in circulation (about 14.5% more than a year earlier). Card-based transactions totaled over 171 million, valued at about VND399 trillion in the first six months of 2020 (up 20.9% and 9.1% year on year, respectively). Banks have integrated more functions into their cards for payment for goods and services while enhancing the quality and security of card services.

However, according to VCCI President Loc, despite remarkable development, Vietnam has yet to reach the expected target of high cashless payment. Data released by the International Data Group (IDG) in 2019 showed that nearly 40% of the Vietnamese population has bank accounts but 80% of daily transactions are made in cash. From a business perspective, cashless payment has become an essential requirement in Vietnam but it has not really been considered properly.

At present, financial institutions (including banks, payment intermediaries and e-wallets) have built their own payment equipment system, a wasteful option because they do not use a common infrastructure. New payment methods such as QR code and biometrics started to develop but are yet to be planned and assessed for widespread deployment.

Regarding the legal environment, according to Dr. Loc, although there is certain progress on building a legal corridor for payment services, certain hindrances are still found in current legal papers and procedures. This makes cashless payment in Vietnam insufficiently quick and easy for clients keen on convenience, particularly corporate customers. Shortcomings include nonconformity of regulations on electronic vouchers and electronic documents. User privacy is still not guaranteed.

Authorities must go first

To promote cashless payment, Vietnam needs to make new efforts at the policy level and create infrastructure for the proliferation of cashless payment in Vietnam in general and in enterprises in particular, he said.

According to Mr. Tran Van Trong, Director of the Administration Office of the Vietnam E-commerce Association (Vecom), to further foster cashless payment, authorities must have enabling policies for enterprises to deploy. At the same time, they must show how cashless payment is better and more convenient than traditional payment methods to the community: From service registration to application stage, security and cost. They must go first in applying cashless payment to public services. They must introduce practical policies for cashless payment.

For their part, payment service providers (PSPs) or payment intermediaries need to work together to make it easy for users, both personal and corporate, to use conveniently. Besides, there should be some new payment technology solutions (Smart POS and NFC), he added.

For corporate service users, payment intermediaries are too many but they lack interconnectivity, resulting in waste in market expansion and confusing consumers amid so many payment channels. Therefore, payment intermediaries should synchronously integrate with each other to save resources to cover the market for services, he added.

Mr. Le Anh Dung said that, in the coming time, the SBV will direct customer-centered payment to improve service quality, increase competitiveness and utilize advanced Industry 4.0 to create breakthrough development.

In particular, the central bank will continue to study and issue new regulations and amend and supplement new ones to create an open, favorable legal corridor for cashless payment and electronic payment, urgently submit a decree on cashless payment in place of decree 101 to the Government for approval.

The SBV will focus on fostering the development of a new-generation automatic clearing house (ACH) network, which functions as an open and secure digital payment platform; complete the plan of converting magnetic cards to chip cards in Vietnam; and widely deploy the QR Code Facility Standard.

At the same time, the SBV will urgently issue a circular on amendments and supplements to Circular 23/2014 on opening and using payment accounts, which contains guidelines on opening electronic personal payment accounts (e-KYC), allowing people, especially in rural, remote and isolated areas, to easily open accounts, access payment services via digital channels, without having to go to physical addresses; develop new cashless payment and payment solutions for rural areas; and carry out the National Strategy for Comprehensive Finance.

Source: Vietnam Business Forum