Stimulus to Consumer Demands, One Step toward Digital Economy

9:55:00 AM | 7/13/2022

The technical infrastructure for electronic payment has rapidly improved, helping businesses boost post-pandemic recovery and accelerate the transition to a cash-limited digital economy.

Cashless payment is increasingly popular

Noncash payment has very strongly developed in recent years, especially during and after the COVID-19 pandemic. According to a recent report released by the State Bank of Vietnam (SBV), as of April 2022, noncash payment transactions increased by 69.7% in quantity and 27.5% in value; internet transactions by 48.39% and 32.76% respectively; mobile transactions by 97.65% and 86.68%; and QR code payments by 56.52% and 111.62% from a year earlier. E-wallet activations rose 10.37% from the end of 2021.

Furthermore, according to research on consumer payment attitudes released in early June 2022 by VISA - the world's leading electronic payment technology company, Vietnamese consumers have quickly adopted digital payment methods and markedly changed their payment habits. 65% of Vietnamese consumers are carrying less cash in their wallets and 32% will stop using cash after the pandemic. Among them, nearly 76% of current consumers use e-wallets and 82% use bank cards.

Ms. Dang Tuyet Dung, Director of Visa Vietnam and Laos, said, cashless payments and e-commerce are reaching a larger scale in Vietnam. The above change marks a big turning point that overwhelms traditional forms of shopping and consumption, especially in the payment field.

Speaking at the Workshop on "Digital transformation toward a cashless society" within the framework of the "Cashless Day 2022", Mr. Le Anh Dung, Deputy Director of SBV Payment Department, said that consumer behaviors and expectations have changed drastically in the digital era. The all-embracing digitization of services and multi-dimensional impacts of the COVID-19 pandemic have made digital payment a broad trend in the economy and users' priorities.

The benefits of electronic payment are obvious: Convenience, safety and security. But, as the pandemic is being controlled, cashless payment is not only a trend but also a driving force for economic development, recovery and acceleration.

For businesses, electronic payment helps save time and cost of cash transaction management such as staff costs, monitoring costs and cash protection. For governments, an electronic payment system can assist governments in designing and implementing appropriate and effective monetary policies. Electronic payment helps reduce corruption and increase tax collection efficiency through transparent tracking of all financial transactions.

Booming payment services

Promoting noncash payments is an important policy to accelerate the National Financial Inclusion Strategy to 2025, with a vision to 2030. Accordingly, by 2025, at least 80% of adults will have transaction accounts at banks or other authorized institutions and noncash payment transactions will expand by 20-25% annually.

To accomplish this goal, the State Bank of Vietnam (SBV) has issued timely and appropriate regulatory documents to facilitate digital transformation such as account opening and electronic customer identification – eKYC (Electronic Know Your Customer), providing electronic banking services, applying technical standards (QR code and domestic chip cards) to strengthen standardization and interoperability in the banking industry and between the banking industry with other industries and fields.

Commercial banks also offer many modern, friendly and convenient products and services; deliver convenient experiences and benefits to customers; gradually build a centralized, standardized and integrated digital infrastructure to create a wide-ranging digital ecosystem such as a mobile banking ecosystem connected to public utility, finance, telecommunications, electricity, transportation and health services.

Accordingly, mobile banking applications and e-wallets are not only for transferring money but can also be used for a variety of utilities such as paying bills, promoting e-commerce, and buying movie tickets and plane tickets. In return, people can also indirectly use banking services through other product and service suppliers such as buying in installments and buying in advance - paying later.

In addition, many new services and payment methods such as account opening/card opening with eKYC, cardless ATM payment/withdrawal, contactless chip card payment, biometric authentication payment, card information encryption (tokenization), contactless mobile payment (Tap to Phone) and virtual prepaid cards have been integrated into banking products and services, thus helping improve convenience, safety and security as well as popularize non-cash payment to people.

Besides, the technical infrastructure for electronic payments has been rapidly improved. The network of devices and payment acceptance points has been expanded to cover the whole country with 20,552 ATMs, 347,374 POSes and more than 100,000 QR Code payment acceptance points.

According to SBV Governor Nguyen Thi Hong, in the coming time, the banking industry will strengthen security and safety in electronic payment; effectively deploy important payment systems and operate payment service intermediaries to ensure proper, smooth and safe operation, meet the payment needs of people and enterprises in digital economy development trends.

From the perspective of service providers, Ms. Dang Tuyet Dung, Director of Visa Vietnam and Laos, said, it is necessary to help consumers have a better understanding of and stronger confidence in e-payment, and see its long-term and sustainable values. She pointed out that it is necessary to make it simple but safe and convenient for consumers.

By Ha Linh, Vietnam Business Forum