Make or break time for Vietnamese e-wallets

Twenty seven payment service providers had been licensed in Vietnam as of last March, with 20 of them offering digital wallets, according to the State Bank of Vietnam. Others provide services such as financial switching, electronic clearing and payment gateway.

There are many reasons why banks, tech companies and fintech companies are venturing into the world of electronic wallets, including the growing global trends of digital banking and setting up financial startups.

Besides, Vietnam has a large population of young people who are compulsive smart phone users and fond of technology but lack interest in traditional banking services.

"Consumers are increasingly living a modern lifestyle that is accompanied by digital services,” Tran Thanh Nam, founder and director of mobile payment player Moca Technology and Services Corporation, said.

“In addition to free social networks, they have begun to pay attention to incorporating electronic services for their daily needs. From ride hailing to food delivery, it comes with safe and convenient non-cash payments.”

Who are offering e-wallets?

Moca’s popular rivals included MoMo, Bankplus, Vi Viet, VTC Pay, WePay, Mobivi, and Vimo.

As of December 2017 MoMo had more than five million users and expects to see a two- to three-fold increase this year. Vi Viet has more than two million users and hopes to increase the number to 3.5 million this year.

Late last year Pham Tien Dung, head of the State Bank of Vietnam’s Payment Department, said only about five payment intermediaries earned profits. The rest of the market has been labeled "unstable".

Nguyen Dinh Thang, chairman of LienVietPostBank, which owns Vi Viet, said: "E-wallets need more time to develop to meet customer needs and market potential, and using cash cannot be changed in the blink of an eye. The market needs time to experience the utility and convenience of e-wallets."

Industry insiders said each e-wallet has its own development strategies and target customer segments.

But they admitted that the failure by many e-wallets to adapt to the financial ecosystem in Vietnam and the lack of widely accepted payment gateways are holding the industry back.

In 2017 MoMo garnered more customers by offering discounts and promotions and spending on advertising. Then, this year it decided to exploit the power of the ecosystem by signing a deal with ride hailing company Uber Vietnam. Unfortunately, Uber withdrew from Southeast Asia a few months later.

Zalo Pay was a latecomer but achieved great success at the beginning of this year by running a “lucky money” campaign during the Lunar New Year that enabled users to gift lucky money to their loved ones using the digital wallet.

This campaign was a huge hit also in China when WeChat and AliPay ran it.

Zalo has an advantage over other e-wallet rivals since it already has an enormous user database from its messaging application.

The competition is fierce

The most recent tie-up, and one that could be a game changer, is between Moca and Grab. The CEOs of both companies are ambitious about developing their electronic wallets. Their strategy is “if we grow, we grow together”.

More specifically, the deal indicates that those who partner with Moca e-wallets will benefit from the large number of Grab population of millions of drivers and passengers across the country.

Grab users will soon be able to choose from all payment services offered by Moca, including bill payments, phone credit recharging, and non-cash payment at retail stores and fast food chains like 7-Eleven and McDonalds.

A combination of Momo popularity, rising Zalo Pay and the Moca-Grab marriage are exerting great pressure on dozens of other e-wallet providers.

Traditional mobile payment services of Vietnamese banks are also intimidated by the competitors.

Responding to this challenge, TPBank has updated the flight ticket support service on its mobile application.

UOB Bank Vietnam now allows in-app opening of new accounts in 10 minutes, reducing the time spent opening one at the bank by 80 percent.

"In big cities like HCM City, four out of every five people have smart phones which can assist them in completing everyday tasks in a much faster and convenient way. We always want to develop and leverage technology so that banking services are much simpler, safer and smarter for our customers from the very first transaction," said Harry Loh, CEO of UOB Vietnam.