The days of cash remaining king may soon be numbered. Card payments in Vietnam are set to grow at a compound annual growth rate (CAGR) of 17.8 per cent to hit 522.5 million transactions by 2023.
According to a report by GlobalData, the data and analytics company’s Vietnam Cards & Payments: Opportunities and Risks to 2023 report said the number of card payments increased more than fivefold in the last five years, from 56 million in 2015 to 271 million in 2019.
“While Vietnam remains a cash-based society, the government’s financial inclusion initiatives, the emergence of digital-only banks, improved payment infrastructure and the adoption of new payment card technologies have led to the growth of card-based payments,” Kartik Challa, payments analyst at GlobalData, said.
The report noted that the expansion of banking infrastructure and the licensing of non-bank companies to offer payment services in rural areas were also instrumental in driving the consumer shift towards electronic payments.
Recently, the government approved a scheme to encourage bank payments for public services, as part of overall aims to bring 70 per cent of the adult population under the formal banking system by 2020. World Bank figures from 2017 showed that only 30.8 per cent in Vietnam have bank accounts.
According to the State Bank of Vietnam (SBV), value of e-wallet transactions rose 64 per cent between 2016 and 2017 to exceed VND53 trillion (US$2.2 billion).
To further boost non-cash transactions, SBV has granted licenses to 30 non-bank companies as of July to provide payment services in the country, with most offering services through online and mobile channels.
GlobalData noted that banks are also expanding their services to both rural and urban locations in the form of new branches, mobile van branches and digital self-service branches. For example, Agribank now runs a fleet of over 60 mobile banking vans across the country to serve customers mainly in remote areas.
It also said digital-only banks have made inroads into Vietnam during the review period, tapping into the tech-savvy millennial customer base. This includes digital-only bank Timo and VPBank’s YOLO, which launched in 2016 and 2018 respectively, offering a digital account and a Mastercard debit card.
Mr Challa said: “The government’s increasing focus on achieving a ‘less-cash’ economy, the emergence of new payment card technologies such as EMV and contactless, the advent of digital-only banks, and a strong e-commerce market will support the growth of electronic payments during the forecast period.”