Mobile pay threatens banks: experts
Foreign tech giants are set to jump into the mobile payments market on both the paying and receiving sides of the transaction, thus posing a threat to local commercial banks payment market share, warn local experts.
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| A customer shops on lazada.vn, an e-commerce website. Multiple new payment methods that do not use bank cards have recently been launched. — VNS Photo Doan Tung |
According to the Dau Tu newspaper, Samsung Pay is planning to appear in Viet Nam this year. Kim Kyung Dong, Product Manager at Samsung Pay said Viet Nam remained a potential market with great opportunities for Samsung Pay, and they wanted to help bring e-payment to Viet Nam.
The newspaper also reported that Apple is expected to bring its Apple Pay product to Viet Nam as well. Nguyen Tu Anh, CEO of Banknetvn said transactions via Samsung Pay and Apple Pay took only 10 seconds. She hoped that both Samsung Pay and Apple Pay will setup in Viet Nam.
Multiple new payment methods that do not use bank cards have recently been launched, including Apple Pay, Samsung Pay, Facebook Payments, Google Wallet and Amazon Payments. They are seen as a threat to the payment market share of local commercial banks.
Samsung Pay launched in the US and South Korea in September last year, with plans to expand to China, Spain and the United Kingdom in early 2016. In China, Samsung is partnering with Union Pay, the country's largest provider of bank card settlement services.
Samsung has reported a strong response to its mobile payment system, notably due to the fact that its technology is compatible with magnetic stripe card readers, which are already being widely used by retailers.
A representative from a local commercial bank told the newspaper that it's not only foreign tech giants who wanted to enter Viet Nam, but domestic tech companies are also eager to offer e-payment services. Together, they are seen as a major threat to local banks.
Banks need to renovate
The number of smartphone users has rapidly increased, which will lead to a related increase in using e-payment, said Tran Huu Linh, Director General of the Vietnam E-commerce and Information Technology Agency, Ministry of Industry and Trade.
Linh said that over two billion people used smartphones globally, 35 million of which were in Viet Nam.
According to statistics from the Ministry of Industry and Trade, at least 25 per cent of online buyers bought products using their smartphones in 2015. The new consumer trend was quickly followed by the tech giants. In response, commercial banks will have to quickly renovate their banking technology.
Can Van Luc, a finance and banking expert said that all banks will need to quickly renovate and improve their banking technology, create new banking products, develop similar technologies to compete or repurchase the technology from existing tech companies.
Nguyen Hung, General Director of Tien Phong Bank, said both Apple and Samsung had already revealed their plans to enter the e-payment market in Viet Nam this year, but that the Vietnamese market remained too small for them to give much priority to major investment.
Hung said that the tech giants would perhaps run test trials, but thought it would still take at least one or two years for e-payment to become popular in Viet Nam.
He said that investment in banking technology still remained essential. However, investment in banking technology cost a lot of money, with an average project costing between US$2-$5 million.
If banks wanted to expand their networks they must invest in developing technology, and then the development of e-banks would bring them a high profit, said Hung. For this reason, TPBank would continue to invest in banking technology to make its banking system more efficient.
Cash payment habit
Speaking at the Viet Nam E-Payment Forum held in Ha Noi in December, Deputy Prime Minister Vu Duc Dam said that although Viet Nam's e-commerce market had seen recent growth, in-cash habits in Viet Nam were still overwhelmingly popular, accounting for 65 per cent of total payment transactions.
"This habit has hampered the country's economic development as well as people's living standards," he said.
Dam highlighted how in other countries electronic payments accounted for 90 per cent of total payments and had helped increase their GDP by about 1 per cent.
With more than 120 million mobile subscriptions and more than 40 million Internet users in Viet Nam, electronic transaction processes have a lot of potential, he said.
The Deputy PM said that in 2014, e–commerce in Viet Nam was valued at US$2.97 billion, and was expected to reach $4 billion in 2015, increasing to $7 billion in 2017. Many experts agreed that the country's e-commerce sector has potential, but that the cash payment habit remains a big and resilient hurdle for its growth.
According to statistics issued by the Viet Nam Bank Card Association, 90 per cent of card payment revenues came from transactions at ATM machines. Of this figure, 85 per cent came from money withdrawals, 14 per cent from transfers, and the remainder from payments. — VNS
