Why Vietnamese prefer cash payment?

11-Nov-2017 Intellasia | Phap Luat TP HCM | 6:00 AM Print This Post

The report on payment trends published by JP Morgan Chase in 2017 confirmed that electronic wallets (e-wallets) and mobile payments will be the inevitable development of the world. Mobile payments are opening up a global revolution in commercial transactions.

Major technological corporations around the world and a network of fintech companies are racing to invest in technology and develop e-wallets and mobile payments.

The number of people using mobile payments is estimated at 1,476 million in 2017 and will increase by 47 percent by 2019, in which Asian and Australian regions account for the majority.

However, in Vietnam, there are still many obstacles for cashless payment goal. A survey by the World Bank pointed out that 65 percent of adults depositing and receiving money via informal system or pay tuition and bills in cash.

Some notable barriers can be named as 6.2 million adults not having access to financial services due to far distance, 2.2 million people finding these services too expensive to use, 2.3 million people finding it hard in terms of paper works when opening accounts, and 1.1 million people no having confidence in financial system.

According to 2014 Global Findex, only one third of adults traded with an official financial provider, lower than the regional average level of 69 percent.

Perhaps that is why Vietnam is behind many countries in electronic transactions. According to statistics of the World Bank, the number of cashless payments per capita in Vietnam is 4.9, much lower compared to Thailand (59.7), Malaysia (89), or China (26.1).

However, Vietnam is having many opportunities for a stronger development of mobile payments as the retail market is recording impressive growth, and bank cards and smartphones are becoming increasingly popular. Specifically, regarding retail market, Vietnam is in the top three destinations for investors who are interested in retail market in Asia. In 2016, Vietnam’s retail market was valued at over 118 billion USD, equivalent to a 10 percent growth (according to survey results published at the Conference introducing Retail Prospects in 2017 held in May 2017).

Regarding bank cards, by the end of February 2017, a total of over 110 million bank cards were issued in Vietnam. This is a fairly impressive number and it is forecasted to grow stronger, expected at 150 million cards in 2018, mainly focusing on young people (according to data of the State Bank of Vietnam (SBV)).

Regarding mobile market, the ratio of people using smartphones by late 2016 increased to 72 percent from just 20 percent in 2013. By the end of late June 2017, Vietnam had about 48 million broadband mobile subscribers, including both 3G and 4G (according to report on Vietnamese mobile market in April 2017 by Appota the provider of smartphone platform).

Vietnam is a developing country with a large and young population, in which over 50 percent at working age with average income per capital. Of these, just 40 percent of the population have access to financial services and most of them are urban residents. Since each urban citizen is at the same time owning many bank cards, the number of bank cards in urban areas accounts for very high proportion compared to rural areas.

 


Category: Finance

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