Status of cashless payments in Vietnam

Vietnam’s burgeoning economy grew more than analysts had expected in Q1 2019, with the General Statistics Office reporting gross domestic product (GDP) to have expanded at 6.8% YoY, according to UOB Global Economics & Markets Research. Whilst this figure was below the 7.3% increase seen in Q4 2018, it was above the Bloomberg median forecast of 6.5%, says the Singapore Business Review.

As the Vietnamese economy continues to grow, consumption choices in the country have begun to change. A growing middle class and increased access to the internet has led to a flourishing digital economy with 54 percent of Vietnam’s population accessing the internet – a number expected to grow in the coming years.

In fact, in the next five years, e-payment transactions could number almost 40 million per annum, 40 times the current capacity of the local banking sector, according to Le Hong Minh, chairman of VNG, an online entertainment and social media platform considered as Vietnam’s first unicorn.

According to the Hanoi Times, the current internet and smartphone penetration as well as social media users in Vietnam are higher than the global average.  This has impacted on the percentage of consumers using mobile payments, increasing from 37% in 2018 to 61% in 2019, with the number of people making mobile payments in stores growing faster in Vietnam than elsewhere in Southeast Asia, according to a recent PwC report.

Status of cashless payments in Vietnam - Table 2

Cash usage

However, Vietnam still has the highest cash payments in the ASEAN region, according to Standard Chartered’s latest report. The report, titled “Cash digitization in ASEAN – What it means for the future corporate treasurers and consumers,” revealed that although there is a rise in alternative electronic means of payments in the region, cash payments still dominate transaction in the country.

According to the report, apart from Singapore that holds a ‘stand out’ position in the Digital Evolution Index 2017 by Tufts University and Mastercard, traditional means of banking and payments remain more popular for the rest of ASEAN. While the penetration of bank accounts has shown improving numbers in some countries, card penetration is relatively low with less than 50% of people adopting card payment.  

Cash usage accounts for more than 70% of transactions in the Philippines and Indonesia, and 43% in Singapore. Among six ASEAN countries under survey, Vietnam has the lowest penetration of bank accounts at 30.8%, and among the lowest in the rate of credit card and debit card ownership at 4.12% and 26.74%, respectively, although higher than Indonesia and the Philippines (see table below).

However, the Vietnam posted the highest rate of cash on delivery for internet purchase at 90.17%, significantly higher than the second ranked Indonesia of 65.30%.

Status of cashless payments in Vietnam - Table 1


e-payment apps

However, Vietnam is witnessing an increasing boom in mobile payments as more people use e-wallets to pay for goods and services without going through an intermediary like a bank, says the Hanoi Times.

This is reflected in the success of payment app Momo, one of the most popular e-wallets in Vietnam, which has increased its customer base by tenfold over the past two years, signing  up its 10 millionth customer in November 2018. The app provides services which facilitate bill payment, sending money or making purchases at more than 100,000 payment points throughout the country, including Circle K and Ministop shops, two Japanese-owned convenience store chains.
Momo has a strong history of attracting funding for its expansion, securing US$28 million from Goldman Sachs and Standard Chartered Private Equity in 2016. In January this year, it held a Series C funding round worth about US$100 million, led by global private equity firm Warburg Pincus.

Another Vietnamese mobile payments startup, ZaloPay, has grown rapidly since its launch in 2017, relying on a network of 100 million users registered with its parent company VNG.


e-payment boom

According to Statista, in 2017, the number of e-payments in the Vietnam grew by 22 percent from the previous year and was valued at US$6.1 billion. This figure is forecasted to grow to US$12.3 billion by 2022, reports the Asian Post.

Despite these impressive figures, the number of e-payments in Vietnam is miniscule compared to that of its neighbours. The World Bank revealed that Vietnam currently has the lowest number of non-cash transactions in the region at only 4.9 percent. The figure is much higher in Thailand at almost 60 percent, while in Malaysia it is close to 90 percent.

e-payments - Vietnam



However, despite the widespread use of cash, the prospects of noncash payments in Vietnam and the region remain positive, says the Hanoi Times.

This is supported by increasing internet adoption, evident by Vietnam’s 140 telecommunication subscribers per 100 people, and the nearly 60 million subscribers of 3G and 4G.  In fact, 99% of districts and wards have 4G coverage. As such, this number is expected to increase to 80 million subscribers in 2020.

The Deputy Prime Minister said this is an ideal environment to facilitate e-payment, as well as other financial and e-commerce services across the country, which brings benefits for enterprises and all Vietnamese, while facilitating the way for a cashless society.

With the massive benefits of e-payment for the consumer, the government has developed measures to facilitate cashless payment in general, and e-payment through smartphones in particular. Vietnam is also developing comprehensive strategy for national financing and e-payment via smartphone will be a part of this strategy.

The ASEAN Post reports that 60 % of the rural population in Vietnam is unbanked and face difficulties in accessing financial services. As such, providing access to mobile financial services will not only increase cashless transactions but allow this sector of the population to gain access to microfinancing and loans as tools to empower them.

In this light, a move towards a cashless society will be both a convenience for consumers while establishing a more efficient and empowered society.


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