Cashless Payment Strongly Promoted

Digital transformation for a cashless society is an inevitable development trend amid strong impacts of the COVID-19 pandemic and the Fourth Industrial Revolution 4.0, creating a double effect on economic recovery and growth, as well as support for achieving financial inclusion goals.

Many cashless payment promotion policies

The Prime Minister has issued Decision 1813 approving the cashless payment development project in Vietnam in 2021-2015. The project aims to make non-cash payment habitual for urban people, gradually develop it in rural, remote and isolated areas; vigorously apply Industry 4.0 technology; and upgrade and develop payment service infrastructure to realize specific goals like bringing cashless payment value to 25 times of GDP and 80% of people aged 15 and over having trading accounts.

The project targets the average growth of cashless payment value and volume at 20-25% a year; the average annual growth of 50-80% in the transaction and 80-100% in value via mobile platforms; the average growth of 35-40% in transaction value and volume via the Internet channel; and 40% of individuals and organizations using an electronic non-cash payment means.

According to statistics, 95% of credit institutions already have, or plan to have, digital transformation strategies. About 80 banks have internet banking services, 44 banks provide mobile banking services and 45 institutions offer intermediary payment services in addition to more than 90,000 QR payment points and nearly 298,000 points of sales that accept banking services.

In 2016-2020, payment volume and value via internet channels increased by 262.5% and 353%, respectively. The respective figures via mobile platforms were 1,000% and 3,000%.

According to the Payment Department under the State Bank of Vietnam (SBV), as many economic activities were affected by social distancing, non-cash payment expanded more strongly than last year. In the first nine months of 2021, transaction volume and value via interbank electronic payment system grew by 1.88% and 42.58% year on year. Payments via internet channels witnessed growth of 51% in volume and 29% in value. Payments via mobile phone channels rose by 76% in volume and 88.3% in value. Payments via the QR code channel leaped 64% in volume and 128% in value.

By the end of September 2021, individual payment accounts reached 110.92 million, 15.4% more than the same period of 2020. Particularly, from March to the end of September, 20 banks reported having officially launched the electronic eKYC payment account opening procedure for more than 1.8 million payment accounts. More than 4.6 million items were transacted.

In addition, over the past time, the banking industry exempted and reduced payment service fees to timely support people and businesses: a 50% reduction of interbank electronic payment system fees; a 70-100% cut in electronic clearing and switching fees; and substantial reduction in other service fees. The fee reduction policy also helped push up cashless payments. Reduced fees in interbank electronic payment and the electronic clearing switch amounted to VND1,557 billion in 2020 and over VND2,000 billion in 2021.

Growing but safe, transparent and convenient

According to SBV Governor Nguyen Thi Hong, to facilitate non-cash payments, over the past time, the SBV has actively researched and developed legal regulations to enable technologically based payment services. In addition, payment service providers and payment intermediaries have researched and invested a lot in technology infrastructure, technical solutions, and integration with other services in the economy; established a digital ecosystem; provided safe and convenient payment products and services, and improved customer experience and satisfaction.

To boost "secure, transparent and convenient" cashless payment, according to Deputy Prime Minister Le Minh Khai, the SBV should closely coordinate with relevant ministries and sectors to further study and complete the legal framework to facilitate digital transformation and foster cashless payments to meet practical requirements, especially when new service delivery models based on new technology platforms are launched.

Accordingly, it is necessary to design a policy system to ensure that the following components such as service providers, service beneficiaries and macroeconomic systems work safely.

In particular, the SBV must effectively carry out the Project on Cashless Payment Development in Vietnam in 2021-2025 approved by the Prime Minister; closely coordinate with relevant ministries and branches to research and develop mechanisms and policies, ensure security and safety, and protect the legitimate rights and interests of customers.

At the same time, the SBV needs to continue to actively inform, communicate and educate people and businesses about finance to provide necessary knowledge and skills for them and make them feel secure when using secure cashless payment services.

Notably, cashless transactions are concentrated in cities while people in rural areas account for 70% of the population. If the rural market can be expanded and farmer customers are a focus, cashless payments will quickly reach more people.

Therefore, Pham Tien Nam, Vice President of the Central Committee of the Vietnam Farmers' Association, said that in the coming time, relevant bodies need to inform people of the benefits of this means of payment and, more importantly, match from policy to infrastructure to enable modern payment methods to be used more widely in rural areas.

By Quynh Anh, Vietnam Business Forum