Electronic Payment Incommensurate with Potential

Deputy Prime Minister Vu Duc Dam said, electronic payment accounts for 90 per cent of total payments in developed countries and this helps their GDP expand by 1 per cent. However, Vietnamese people are still familiar with using cash for payment activities.

 

Mr Nguyen Toan Thang, Deputy Governor of the State Bank of Vietnam (SBV), said electronic payment development based on information technology application are of major concerns of the SBV and commercial banks. This deployment process has brought in remarkable achievements, created seamless system-wide connectivity, provided many forms of modern electronic payment, facilitated non-cash payment, increased liquidity in the economy, and supported the exchange and distribution of goods and services.

 

Corporate tax payment is one of the first public services to be brought online. According to the Ministry of Finance, up to 90 per cent of companies operating in Vietnam have registered to pay taxes via electronic means but actual transactions are still below expectations.

 

Vietnam E-commerce Report 2014 released by the Ministry of Industry and Trade showed that online shopping grew very rapidly over time with B2C revenue of nearly US$3 billion in 2014. However, revenue from online payment accounted for only 5 per cent.

 

The financial sector has made efforts to create mechanisms and policies to support companies to pay taxes online and over 90 per cent of taxpayers have registered to use electronic tax service but the actual collection from this means is modest. Most individuals and business households are unable to declare and pay taxes electronically.

 

The Ministry of Industry and Trade said credit cards account for only 7 per cent of all online purchases and cash on delivery (COD) payment method is still the most popular, accounting for 64 per cent.

Mr Nguyen Toan Thang said that creating synchronous and uninterrupted connectivity among tax authorities, treasury agencies and banks to facilitate this process. Therefore, a close cooperation of these stakeholders is vital to support taxpayers to register electronic tax declaration and payment.

 

To promote electronic payment at points of sale (POS), the support of State agencies is essential, specifically the Ministry of Industry and Trade, the Ministry of Finance and the State Bank of Vietnam. To boost electronic payment at POS, Vietnam plans to build 250,000 POS by the end of 2015.

 

The Ministry of Industry and Trade is currently carrying out the national market development plan in a step to modernise the retail sector. Particularly, installing POS at markets will play an important role in reducing cash use in commercial transactions. Besides, implementing Decision No. 689 dated May 11, 2014 of the Prime Minister on approval of national e-commerce development programme in 2014-2020, the State Bank of Vietnam together with the Ministry of Industry and Trade and relevant agencies will continue to develop online payment practices. The ministry is also studying on the construction and development of the national e-commerce payment gateway to provide and support e-commerce transactions.

The Master Plan for Vietnam E-commerce Development in 2016 - 2020 is also being built, aimed to provide development road-maps for e-commercial payments in the next five years. In electronic payment field, building and developing e-commerce payment utilities and national e-commerce payment management system to widely use e-commerce models like business to consumer (B2C), business to business (B2B), government to citizens (G2C) and government to business (G2B) is one of important items to create a favourable foundation and infrastructure for extensive e-commerce development.

 

With a young population, Vietnamese consumers will be smart consumers in the digital age, who are ready to access and willing to learn new trends in the world. Besides, internet and electronic devices play an important role in consumer trends. This shows that traditional commercial methods need to be changed to adapt to new shopping trends today. Modern business methods, specifically online shopping or mobile shopping, are emerging as a new trend for young consumers in Vietnam.

 

With the above consumer trends, Vietnam’s retail sector in particular and trading sector in general need to have necessary changes to keep pace with new developments. However, to meet new consumer trends, we need to affirm the role of logistics system where electronic payment is importantly pioneering. Modern business methods and new consumer trends will be unable to prosper and promote their advantages if consumers still use cash for buying.

 

To date, 98 per cent of companies have registered to declare tax online and 90 per cent have registered to pay taxes via electronic means interconnected with commercial banks. This new method has reduced a lot of time for tax declaration and payment for domestic firms.

 

However, it is a long way to go from registration to actual payment because tax value paid via electronic media is still quite modest. To realise the objective of at least 90 per cent of companies paying taxes electronically, I think that we need solutions to remove obstacles in the common law system, and strengthen cooperation and coordination between tax authorities with supporting agents like banks, payment intermediaries and enterprises. The first and foremost is to build business confidence to make them not feel difficult and frustrated when they use noncash tax payment. The second is to promote information and communication to boost the understanding of taxpayers in tax policies and electronic tax procedures.

 

Banks and payment intermediaries must be interconnected to support electronic tax payment by businesses. For their part, businesses must improve their information technology levels to apply and use internal software, install digital signature system as well as electronic tax declaration and payment.

 

To create strong progress in electronic payment, the Vietnam Retailers Association proposes some ideas as follows:

 

Vietnam needs to raise the awareness of citizens/consumers and retailers about benefits of electronic payment; popularise this new method to restore consumer confidence in e-commerce and e-payment.

 

For its part, the Government needs to further improve e-payment development mechanisms and policies, encourage businesses, traders and consumers to adapt to new methods in lieu of cash. It should also apply incentives for e-payment, e.g. tax deduction or refund for e-payment transactions to stimulate card payment and e-payment; minimise fees on retailers to facilitate POS payment. E-payment is focused not only on modern retail system but also on traditional retail systems and rural retail markets.