Explosion of cashless payments: Fault creates opportunity

The Covid-19 pandemic has caused a major disruption in life and production and business activities. But this spurred a spike in cashless payments. After the pandemic, non-cash payment is increasingly developing as banks grasp the trend, expand services, and people have adapted to new payment methods.

Difficulty is leverage

Since the beginning of 2020, when the Covid-19 pandemic broke out and lasted, the principle of limiting contact and avoiding infection was promoted, causing many transaction activities to come to a standstill, and the sale and purchase of cash decreased. very strong. But that fault and difficulty is the leverage for the forms of electronic payment, card payment or mobile application to explode.

A representative of Saigon Co.op recounted the unexpected developments at the beginning of 2021 when Ho Chi Minh City was in the midst of the epidemic, from the proportion of 4% of customers paying cashless when buying at supermarkets and stores of Saigon Co. op, even during the Covid-19 epidemic, this number skyrocketed to 40%, sometimes even up to 50%. This is the goal that Saigon Co.op expects to take 3-4 years to achieve.

Also in the most stressful time because of the pandemic, Asia Commercial Joint Stock Bank (ACB) had to close 100 out of 137 transaction offices. There is no other way but to provide service through digital channels. A big surprise happened when the service of opening an online account using electronic customer identification (eKYC) technology skyrocketed. The expected number of ACB is only 3,000 new accounts opening / day, the reality is 10,000 accounts / day. Sales and the number of online transactions during the peak months of the epidemic doubled. Digitized banking services have brought great convenience not only to customers but also to help the bank overcome the most difficult times.

An expert from the World Bank said that shifting the growth model to be more efficient through digital transformation is the path that Vietnam has started and accelerated by the “shock”. Covid-19. This is a bright spot in this crisis, as trade and services have been increasingly digitized in response to social distancing policies. In fact, banks that have implemented strong digital transformation have very positive business results. Especially, during the time of social distancing, banks still attract a large number of new customers thanks to digitization.

On the favorable momentum when consumer behavior changes drastically in the digital era and the multi-dimensional impact of the Covid-19 epidemic makes cashless payment an inevitable trend, banks and technology companies have focus on developing new applications on the digital technology platform, providing products and services aimed at promptly meeting the changing needs of customers. As a result, cashless payments seemed to subside after the pandemic, but in fact continued to grow stronger and more diversified. A cashless society seems clearer after Covid-19.

At cafes in Hanoi, in the past, very few customers paid online and the subjects were not interested in cashless payments when only accepting large-value payments through monotonous POS machines and many problems. Up to now, payment methods such as bank transfer, swiping card, e-wallet or QR code scanning … for small amounts of a few tens of thousands of dollars have become popular, it is more common to pay for coffee online than to use change.

With many “conservative” customers who maintain the habit of paying directly in cash when “forced” to adapt to cashless payment services, they also become interested in discovering mobile banking applications, E-wallets and digital ecosystems of banks and payment intermediaries, because they realize that not only can they transfer money online, but they can also pay and pay for almost every shopping need. such as paying tuition fees, hospital fees, going to the online market/supermarket, calling a car – delivering goods, ordering air tickets, tours, train tickets… Instead of carrying cash for transactions, now With just a card or a mobile phone, consumers can complete the payment process anytime, anywhere and for any amount big or small.

Up to now, most credit institutions have been developing and implementing digital transformation strategies. Many basic operations have been digitized 100%, payment via mobile devices has grown annually by 90% in quantity and 150% in value. Many banks achieved over 90% of transaction value on digital channels. 

A recent report by Coc Coc shows that the most prominent trend of Vietnamese users on the Internet in 2022 is online shopping and cashless payment. Up to 47% of users choose to use modern payment methods, including wire transfer, e-wallet, domestic bank card, credit card.. According to a statistics of the State Bank (SBV), total The amount of people’s money in 45 electronic wallets in circulation is up to trillions of dong. That shows that people’s demand for using e-wallets in particular and cashless payments in general is increasing.

On the banks’ side, the digital banking model allows for rapid network expansion and customer base, while increasing operational productivity and controlling costs effectively. Estimated transaction costs at digital banks are only 1/50th of traditional branches, so although the number of customers and transactions increases many times, human resources only increase by 5-7% per year.


Mutant numbers

E-payment in Vietnam in recent years has continuously increased sharply. The average annual growth rate of mobile payment transactions is more than 90%, many types increase by 100-200% per year. Mastercard statistics in 2022 show that up to 94% of Vietnamese consumers have used at least one digital payment method in the past.

According to the SBV, non-cash payment activities in the 11 months of 2022 achieved high growth compared to the same period in 2021. Non-cash payment transactions increased by 85.6% in quantity and 31 .39% in value; via Internet channel increased 89.36% and 40.55% respectively; via mobile phone channel increased by 116.1% and 92.3% respectively; via QR code method increased 182.5% and 210.6% respectively; transactions via POS increased by 53.57% and 48.78% respectively; ATM transactions increased by 13.28% and 14.04% respectively.

According to the National Payment Corporation of Vietnam (NAPAS), in 2022, the total number and value of transactions through the NAPAS system will increase by 92% in terms of transaction volume and 83% in value. transactions compared to 2021. The number of card service users increased by 93% and account users increased by 174% compared to 2021. Notably, 2022 continues to record the proportion of cash withdrawal transactions in total transactions processed through the NAPAS system decreased from 12.1% in 2021 to 6.56% in 2022. The proportion of chip card transactions performed through the NAPAS system continued to increase from 26% in 2021 to more than 60% in 2022.

It is forecasted that 2023 will continue to boom in cashless payments, especially in big cities. Currently, the Government and the banking industry have been applying many policies and measures to promote payment by methods based on digital technology. The goal of the banking industry is that by 2025, cashless payments in e-commerce will reach 50%.

However, according to the Card Branch – Banking Association: “This boom is still mainly concentrated in urban areas. Meanwhile, in rural and remote areas, there is still a lot of open space, more than 90% of transactions here are still cash transactions and people do not have ATMs to withdraw money when needed. receive card for transaction. Not many banks invest heavily in card acceptance infrastructure because of high costs and low profit margins. Currently, Vietnam’s population reaches nearly 100 million people, but the number of POS and mPOS machines is only over 400,000.

To promote non-cash payment, banks and financial companies need to invest and expand their network of card acceptance in rural and remote areas so that people have places to use them. At the same time, it is necessary to diversify methods of cooperation, build an open banking ecosystem, serve multi-channel user needs.

Mastercard research also shows that safety and security are the top concerns of consumers when making electronic payments. In addition, non-cash payments also have potential risks such as users’ payment data being tracked and malicious codes that can penetrate e-wallets when users pay using forms such as scanning QR codes. … Therefore, retail businesses and payment service providers should prioritize ensuring and maintaining safety and security in all electronic financial transactions.