In 2022, cashless payments continued to see increased usage in Vietnam, carrying on a trend that accelerated with the COVID-19 pandemic. This trend is emerging at the expense of cash usage which continued its decline last year.

In 2022, non-cash payment transactions, including card payments and e-wallets, increased by 85% in volume and 31% in value, data from to the State Bank of Vietnam (SBV) show. Online transactions grew by 89% in volume and even gained triple-digit growth via mobile phones and QR code scanning.

Looking at card payments, chip card transactions via the National Payment Corporation of Vietnam (NAPAS), Vietnam’s card network, nearly tripled, according to the government’s news agency. This was to the detriment of cash usage, where withdrawals processed through the NAPAS system decreased by half.

Growing usage in rural areas

Growing cashless payments usage can be in part explained by the increased adoption of these new payment methods in rural areas.

Dinh Quang Dan, vice director of Agribank’s customer service department, told Vietnam Plus in a recent interview that the number of customers opening new accounts and registering digital banking services in far-flung areas has been rising over the past three years.

The sentiment was shared by Truong Quang Viet, deputy general director of Viettel Digital, who told the publication that about 60% of its mobile money users were now located in rural or remote areas.

Viettel, the country’s largest mobile network operator, launched its digital financial ecosystem in December 2021. Called Viettel Money, the platform aims to address diverse needs of customers in trading, money transfer, investment and insurance, and targets consumers in remote and rural areas, in particular.

According to Pham Anh Tuan, director of the SBV’s payment department, nearly 14 million customers used cashless payment services in the first nine months of 2022, among which 37.5% located in rural areas. The figure is impressive, he said, and showcases how fast consumers are embracing digital transactions and how familiar people are getting with cashless payments.

Despite being one of the most dynamic emerging countries in East Asia region and having a fast-growing middle class, Vietnam’s population remains largely rural. In 2021, about 62% of the country’s population resided in rural areas, according to World Bank data, equaling to about 60 million people.

Vietnam’s digital transformation ambitions

Vietnam’s digital transformation has accelerated since 2020 when the prime minister approved the National Digital Transformation Programme by 2025. The plan aims to spur digital transformation through awareness, enterprise strategies, and incentives, and focuses on digitalizing businesses, administration, and production activities.

Some of its goals include having all national databases, including those for population, land, business registration, finance, and insurance, online and connected; having 50% of the population owning a digital checking account; and boosting the use of digital payments so that they make up for 70% of all transactions.

Several initiatives have been taken by both the public and private sector in recent years to push the usage of digital tools and increase connectivity, efforts that have so far proven fruitful: today, nearly all enterprises use e-invoices; e-commerce revenue represents 11.27% of all retail sales; and 66% of adults have payment accounts, according to the Ministry of Planning and Investment. Over 70% of the population own smartphones, and 71.75% of all households use broadband cable Internet.

In the fintech domain, the government has implemented a number of policies and programs to establish a favorable and enabling environment for companies in the sector, providing guidelines for activities including digital payments and e-wallets.

More initiatives are currently in the works, including a fintech regulatory sandbox, new rules tackling digital assets, as well as research on central bank digital currencies (CBDCs).

Increased bank fintech collaboration

Vietnam’s fintech industry has grown significantly over the past couple of years. According to Nguyen Dang Hung, head of the Fintech Club Vietnam under the Vietnam Banks Association, the country is now home to about 154 fintech companies, among which three fintech unicorns: MoMo, a mobile wallet application that clocks more than 30 million users; VNPay, a payment intermediary specializing in QR code payments; and ZaloPay, a mobile payment platform that runs on top of the popular Zalo messaging app.

According to him, the success of these industry leaders has largely been enabled by their close collaboration with the banking sector, a strategy that has allowed them to achieve scale and create synergies.

“These companies all have close cooperation with banks. For example, FE Credit cooperates with VPBank, and Vietcredit cooperates with Viet Capital Bank,” Nguyen told the Vietnamese news agency. “Fintech companies and banks cooperate among them to take advantage of banks’ capital, experience and technology from the fintech firms.

“There is a view that establishing fintech companies will create competition with the banking sector. Still, I think establishing fintech companies will create cooperation, not competition, with the banking industry.”

Featured image credit: edited from Pexels and Freepik

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