Finance & Banking

Last updated: Wednesday, February 20, 2019


Contactless Payment towards Digital Economy

Posted: Monday, July 30, 2018

Non-cash payment and contactless payment technologies and forms have become development megatrends in the Vietnamese banking industry amidst the robust evolution of the digital economy.

Major evolutions from digital economy
According to the State Bank of Vietnam (SBV), mobile financial transaction value and internet-based transaction value rose 81 per cent and 67 per cent in 2017, respectively. Vietnam now has 78 internet payment service providers and 41 mobile payment service providers. As of September 2017, mobile payment recorded over 90 million deals worth VND423 trillion (US$18 billion), respectively equal to 93 per cent and 139 per cent of the results in 2016. Non-cash payment technologies and methods have become increasingly diversified. Banks and fintech companies have researched, cooperated and applied new and modern mobile technologies.

Mr Vu Viet Ngoan, Chief Economic Advisor to the Prime Minister, said, the digital economy is making big changes that bring both opportunities and challenges for many countries if they fail to accept and keep up with the epochal trend. The World Bank and many experts estimated that this is an opportunity for countries, including Vietnam, to catch up with the chance to quickly integrate with developed economies, but otherwise facing the risk of lagging behind if they miss.

Mr Truong Van Phuoc, Acting Chairman of the National Financial Supervisory Commission of Vietnam, said that the rapid evolution of the Fourth Industrial Revolution has produced impacts on various economic fields, including the financial and banking sectors. Indeed, in recent years, the financial and banking system of Vietnam has intensively invested and developed digital applications to business operations, especially for contactless payment and non-cash payment.

In practice, contactless payment has been growing very strongly in Vietnam. More and more consumers are tending to limit their cash payment and opt for alternative payment options for convenience and time savings.
Mr Sean Preston, Visa Country Manager for Vietnam, Laos and Cambodia, stressed that contactless payment is typically swift, convenient, creative and secure. This payment method also paves the way for future enhancements and better user experiences.

Remarking on trends and habits of cardholders in Vietnam, the Visa representative said, eight out of 10 people will choose contactless payment instead of cash if this method is widely available. 79 per cent of users will choose contactless payment instead of cash if this method is available at all stores.

Consistent solutions needed
Attendants to the workshop pointed out that one of the major difficulties Vietnamese banks encounter in deploying the contactless payment system is this payment technology is still very novel. Unsynchronised infrastructure troubles the deployment. Besides, risk management, data management and online transaction security are also matters of concern. To facilitate contactless payment in Vietnam, there is a dire need for consistent solutions from authorities to banks themselves.

Mr Vu Viet Ngoan said that the Government plays a very important role in developing the digital economy in Vietnam. “The government must be the one that creates an ecosystem and environment that meets current trends; must be the sponsor of business development; and must be the pioneer who uses and applies new products and services,” he added.

Sharing the same view, Mr Dao Minh Tuan, Deputy General Director of Vietcombank and Chairman of the Vietnam Bank Card Association, affirmed that the Government must go ahead to set an example of applying non-cash payment in public sectors to raise public awareness and encourage its application in other areas.

The Government builds a legal framework for the development of new means of payment; imposes sanctions to coerce public units and business entities to accept card payment; adopts policies on compelling enterprises to pay wages into bank accounts; reduces taxes for sales units. Meanwhile, banks need to simplify procedures and compete with quality service.

Besides, as for technological solutions, banks necessarily synchronise the application of new payment support technologies and solutions to increase the convenience of using cards for users and improving payment security to encourage more users to adopt card payments.

They also need to simplify card issuance procedures, compete using service quality rather than service prices, reduce fees and simplify user experiences with card services.

Ha Vu

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