The State Bank of Viet Nam (SBV) plans to lower the foreign ownership rate in the payment intermediary service sector to 49% per cent instead of leaving it unrestricted to avoid manipulation by foreign investors in the field.
According to the SBV's Payment Department, the new regulation would help avoid manipulation by foreign investors, ensuring security and safety for banking and financial activities. At the same time, it will also create conditions that will allow domestic enterprises to have more investment opportunities in the sector.
Across the Southeast Asia region, most countries have limits on the amount that foreign companies can own. In both China and Indonesia the ratio of foreign ownership can’t exceed 20%, while in Malaysia the ratio is 30%
According to the SBV, as of November, Vietnam has 30+ payment intermediary service providers that have been licensed by the SBV. These include: Airpay, MoMo, Moca, Payoo, SenPay, Zalopay, VNPay, ViettelPay and Wepay, among others.
Currently, 90% of 1Pay's capital is owned by Thailand’s True Money; Japan’s NTT Data Group has bought 64% of Payoo; South Korean investors Global Payment Service and UTC Investment Co Ltd hold 65% in VNPT EPAY; and foreign funds Warburg Pincus, Goldman Sachs and Standard Chartered Private Equity hold about% in MoMo.
Nguyen Hoa Binh, Chairman of Vietnamese e-commerce start-up NextTech Group, which runs several payment intermediary companies in Vietnam, said it was time for a restriction on foreign ownership in the sector. In recent years, flourishing cashless payment services had paved the way for a sudden flood of foreign capital flowing into the market and many foreign investors had already grasped the major shares of domestic payment intermediary companies, he said.
Nguyen Thuy Duong, Deputy Director at consulting firm Ernst & Young Vietnam, said that in many countries, during the early stages of development, payment intermediary companies were allowed to freely raise capital. But now the market had grown to a certain size, market regulators would need to tighten control over the operation of businesses to ensure the security and safety of the country’s payment system.
Nguyen said that the development of technology had made it easier than ever to transfer money through payment intermediary channels, including cross-border money transfers. She also notes, along with other experts, that if it was not strictly controlled, there would be the risk of tax evasion, money laundering and illegal cross-border money transfers.
The SBV said in its statement that the management of cross-border electronic payment transactions in Vietnam has faced many difficulties due to the fact that most transactions were conducted via international payment gateways and handled by international card-issuing organisations.
While direct investment may be limited, financial experts said that foreign investors could indirectly expand their ownership in Vietnam’s payment intermediary companies by pouring capital into local investment funds and that the SBV should monitor this “indirect investment” and re-evaluate its policies and regulations on a yearly basis.