Arn Vogels, the card company's Indochina director, said Viet Nam had recently been taking steps towards non-cash payment thanks to a number of factors including the expansion of the card acceptance network.

"With the increasing e-commerce and the popular use of smart phones, non-cash payment will surely become indispensable here," he told the media on Wednesday.

"We consider Viet Nam the most promising market in the region."

There are around 30,000 taxis operated by scores of companies in the country, but only each one in HCM City and Ha Noi accept cards, according to the director.

The country's half million small and medium-sized enterprises and micro businesses and direct sales and insurance companies are also untapped opportunities for non-cash payment.

The number of merchants accepting cards in Viet Nam, at 1.06 per 1,000 persons last year, is low by Southeast Asian standards. The comparable rates are 2.51 in Indonesia, 4.88 in Thailand, and more than 10 in Singapore. In Australia, it goes up to 31.62.

But the network was growing quickly, he said, citing statistics from the Vietnam Bankers Association showing there were more than 132,000 merchants and 15,000 ATMs as of June end.

The State Bank of Vietnam has set a target of 250,000 merchants by the end of next year.

Speaking about the challenges to popularising non-cash payment, he said even government disbursements like unemployment allowance were still in cash, which was discouraging.

The process of promoting non-cash payments and expanding the merchants' network could not be achieved overnight and would take time and joint efforts by the Government, service providers, and consumers, he said.

Nguyen Hoa Binh, chairman of e-commerce solutions provider Peacesoft, whose subsidiary MPOS Tech Vietnam recently began producing mobile card readers — which are now much cheaper than traditional ones — said since the installation and operation of a merchant network was expensive, banks were wary of investing in it. This, in turn, entrenched people's habit of using cash.

With few non-cash transactions, the investments they had made naturally result in losses, making banks wary even more.

Another hurdle to popularising non-cash payments was the fear of theft through hacking and phishing attacks.

Nguyen Minh Khang, who works for a foreign company in HCM City and often travels abroad, said he only used his credit card on these trips.

"When I return home, I get the bank to lock my card until the next trip. My account has been stolen several times," he told Viet Nam News.

"Each time it was a sum of around US$10. So complaining for such a small amount is not worth the effort. But I can't let it go on like that and so I have my account locked when I come back home."

He pointed out that small sums add up to significant amounts especially if stolen from many cards. — VNS