The Vietnam government’s state-owned Vietnam Posts and Telecommunications Group (VNPT), one of Vietnam’s biggest telecom providers, plans to roll out 100,000 service points for mobile money services in 2020 if the government approves a mobile money pilot program by the end of this year.
Telecom providers have been lobbying hard for this to compete with the growing number of e-wallet providers in the country that have attracted a lot of attention and funding in the ongoing fintech boom.
Vietnam has134 million mobile subscribers and telecom providers believe they can reach people in rural areas more efficiently than other financial services providers and that rural residents are more familiar with and have high trust levels for the telecom providers.
Vietnam’s cash transaction rate is around 90% and the government wants citizens and companies to embrace digital money and transactions as the country expands it digital economy efforts.
Telco executives point out that their systems should have much higher usage than e-wallets, which have to be linked to bank accounts. Since half of the population does not have access to bank accounts, e-wallets have limited appeal to rural citizens.
Nguyen Nam Thang, Deputy Director of VNPT Fintech, spoke at a recent event on the digital economy and said that mobile money can open the door to many e-commerce players to capitalize on Vietnam’s population in the rural and provincial areas.
Hanoi and Ho Chi Minh City account for 70% of e-commerce transactions and Nguyen said that it's a smart business strategy to target rural consumers who have limited access to many products and goods, but that to engage these people payment systems have to expanded.