Mobile payment the next big thing

12:10 | 24/03/2018

State-of-the-art QR code payment methods and the mass adoption of smartphones are predicted to provide ample room for the development of mobile shopping in Vietnam.

mobile payment the next big thing
A number of campaigns are being launched by local commercial banks and their partners to promote the use of mobile payment in Vietnam, Photo: Le Toan

No cash and amazingly quick payment are the two major benefits brought by VNPAY’s QR code payment application that are drawing tech-savvy Nguyen Ngoc and her friends to use their smartphones to purchase numerous items on e-commerce platforms, like aeoneshop.com, yes24.vn, and galaxycine.vn.

Sales executive Nguyen Ngoc from Hanoi’s Ba Dinh district, aged 28, is one of millions of young users of QR code payment, and is happy with the new payment option. She said that too many times, she had to opt against additional goods she wanted at markets and shops for lack of cash. Ngoc spent an average of around VND3 million ($132) per month on mobile orders using the QR payment method.

“I can freely select and pay for my preferred goods through the QR code payment directly connected to my Vietcombank and Agribank accounts. The payments save time and are conducted with a high level of security. For instance, orders worth more than VND500,000 ($23) must be authorised with one-time password (OTP) from Agribank,” Ngoc told VIR.

The QR code payment app exemplifies how cutting-edge technology can aid local consumers.

“Cashless payments will take Vietnam by storm, as a large number of Vietnamese consumers are willing to adopt the global trend,” Dang Thuy Ha, head of consumer behaviour research at Nielsen Vietnam, told the 2018 Vietnam Online Business Forum held last week in Hanoi.

About 55 per cent of local consumers surveyed by Nielsen Vietnam confirmed their willingness to use IT devices to access online shopping. Smartphones occupy a dominant proportion of 91 per cent of total Vietnamese cellphones in use, even close to 80 per cent of cellphone users in rural areas have adopted smartphones.

In 2017, 53 million people in Vietnam frequently accessed the internet through personal computers, laptops, tablets, mobile phones, and other devices. The figure is expected to reach 59 million by 2020 – equivalent to 60 per cent of the Vietnamese population.

Favourable ICT elements have created a firm foundation for the development of Vietnam’s e-commerce sector, with an average annual growth rate of some 20 per cent.

The 2018 Vietnam E-business Index Report by Vietnam E-commerce Association (VECOM) mentioned mobile technology as a significant contributor to e-commerce growth.

According to the report, since 2015 – the year that marked the explosion of the mobile commerce trend – companies have further invested in business operations concerning this new trend, from upgrading websites to be compatible with mobile devices, to developing their own applications.

The demand to purchase on mobile platforms is high in Hanoi and Ho Chi Minh City. The proportion of enterprises owning a mobile app for sales was 15 per cent in 2017, equal to 2016’s figure. In 2017, up to 42 per cent of them allowed buyers to conduct all steps of the purchasing process, while 47 per cent accepted orders via mobile applications.

mobile payment the next big thing

Mobile shopping alliance

Mobile shopping in Vietnam will be accelerated by online payments, in addition to the above-mentioned factors.

A recent Visa survey on consumer attitude to new payment technologies shows that nine out of 10 Vietnamese consumers are willing to try new payment methods, with 88 per cent saying they would be very likely to use their smartphones to make payments

Sean Preston, Visa’s country director for Vietnam, Laos, and Cambodia, told VIR that Visa’s QR code payment technology brings the benefits of easy and secure digital commerce to the mobile phone, helping to accelerate the global migration from cash to electronic payments.

Ha from Nielsen Vietnam noted that online payment will soar in mobile and computer applications, not only because of e-commerce platforms, but also because up to 20 financial tech (fintech) companies as well as a wide range of traditional retailers and offline stores have started to push cashless payments. Meanwhile, local commercial banks and their partners continue to launch numerous promotional programmes for card payment and mobile payment.

Domestically-invested Vietnam Payment Solutions JSC (VNPAY) took the initiative by launching the VNPAY QR code payment tool on its own mobile banking application. In 2018, VNPAY is still rolling out the QR code payment system on leading e-commerce platforms in Vietnam, namely Lazada, Adayroi, Tiki, and Sendo, said Nguyen Anh Tuyet, VNPAY director of sales. The partnership in QR payments would bear fruits in the first half of 2018, expected to give a boost to mobile shopping.

VNPAY puts high hopes in the booming adoption of QR code payments in the Vietnamese market over the next three years. With the advent of giants like Alibaba, Amazon, and Shopee, VNPAY is willing to partner with these platforms to accelerate cashless payment in Vietnam, especially QR code payments.

VNPAY has already teamed up with more than 10 large commercial banks in Vietnam to enlarge its network of nearly nine million QR code users and more than 10,000 entities accepting QR payment. Tuyet asserted that there are similarities in the e-commerce markets of Vietnam and China, with the latter exemplifying the flourishing development of QR code payments. Thus, the mass adoption of QR code payments is possible in Vietnam, if stakeholders like state agencies, banks, payment intermediaries, and goods providers find a consensus.

Security is not a big problem for QR code payments, as it allows users to carry out payments without the point of sale requiring user information. In addition, the VNPAY mobile banking app only accepts QR codes in conformity with those developed by local commercial banks, adhering to the standards managed by EMVCo, LLC – a technical body facilitating the worldwide interoperability and acceptance of secure payment transactions. This helps minimise the risk of hacks.

Lazada, a leading e-commerce platform in Vietnam, is expecting mobile commerce to flourish in the country in 2018 and subsequent years, Lazada Vietnam’s CEO Alexandre Dardy told VIR. “With the wide adoption of smartphones, mobile commerce will help us to reach more and more people in rural areas that have never been exposed to online shopping before. During Lazada’s Online Revolution 2017 promotion campaign, we sold nearly 1.5 million items within three November days – and 70 per cent of them were ordered on mobile devices,” said Dardy.

Lazada is partnering with dozens of banks for online payment, especially mobile payment – which is becoming more and more popular in Vietnam, as many fintech companies are offering multiple convenient payment methods to consumers. Moreover, the government has announced its goal of building a cashless economy by 2020, the Lazada CEO stressed. For the Online Revolution 2017 campaign, the foreign-invested Lazada platform worked with more than 18 banks – such as Citibank, HSBC, VietinBank, and Sacombank – to offer exclusive promotions for customers.

Lazada, Shoppee, Aeon, Tiki, and many others have been successful with their mobile shopping applications, with the number of mobile orders steadily increasing.

According to the Ministry of Industry and Trade, in 2016, Vietnam’s retail e-commerce sales reached $5 billion. In 2017, the figure was estimated to soar by 25 per cent against 2016, marking the end of the establishment and universalisation phase. The 2017 growth is expected to remain steady in 2018 and over the next two years.

Hong Quang

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