The government has been promoting mobile money to reduce social contact and cash circulation.
Soon after COVID-19 broke out in Vietnam, the government urged appropriate agencies to work on a project to popularise mobile money, a method of using telecommunication accounts to make payments for small-value transactions.
In early March, the Prime Minister requested that the State Bank of Vietnam (SBV) submit a pilot plan on using mobile money. At the regular government meeting in April, he assigned the Ministry of Information and Communication (MIC) to join forces with SBV to put mobile money into use to reduce cash circulation.
According to the Global System for Mobile Communications (GSMA), mobile money was present in 90 countries by 2018 and 95 countries by the end of 2019 with 1.04 billion registered accounts, an increase of 10% over the year before.
A press release noted that in Vietnam, mobile money has great potential to develop in the future. As of the end of 2019, Vietnam had 129.5 million mobile subscribers, according to the General Statistics Office (GSO), including 61.3 million 3G and 4G subscribers.
With 43.7 million smartphone users, accounting for 45% of the population, Vietnam is at the region’s average level; higher than India, the Philippines, Indonesia, and Thailand.
Further, with 68.5 million users, or 70.3%, Vietnam is among the countries with the highest percentage of internet users.
Mobile money would significantly contribute to accelerating cashless payments. Cash in circulation still accounts for 20% of the country’s gross domestic product (GDP).
Mobile transactions are expected to increase by 400% by 2025, as OpenGov reported earlier. The country expects to see a 50% growth in new accounts by the top eight banks, using intelligent automation in account origination. Also, 25% of banks in Vietnam would actively pursue modern digital core platforms.
The top two priorities among the eight biggest banks of Vietnam to 2025 would be core banking and payments systems, the report pointed out.
There is still a lot of room to develop non-cash payment modes in Vietnam. Only 63% of Vietnamese adults (over 15 years old) have bank accounts, lower than the 80% in China and 70% in the Asia Pacific, the press release said.
The government wants to cut cash payment proportions to 10% by the end of 2020 from 11.3% last year.
In the context of the high ratio of cash in circulation to GDP, at 20%, much higher than other regional countries, mobile money is believed to be one of the most popular solutions to non-cash payment.
People are getting used to online transactions which have outstanding advantages, including convenience, transparency, and low risks.
However, industry analysts have said that there are risks when putting mobile money into use. Mobile money accounts can be identified with mobile phone subscription numbers at telecoms.
Meanwhile, the existence of rubbish SIM cards may turn this into a ‘money washing’ channel if it cannot be controlled strictly, the release added. A rubbish SIM card refers to SIM cards that are thrown away after one-time use because the users do not intend to keep the subscriber numbers.