Cash is still king in Vietnam, but two fintech firms look to bring a drastic change

By Andrew Rowan for

Last year remittances to Vietnam topped US$12.24 billion, up from US$6.18 billion in 2007 (the year Vietnam joined the World Trade Organisation), according to the World Bank. These incoming funds, about half of which came from the US, contributed to 6.4 per cent of Vietnam’s GDP and solidified the country’s status as the 11th biggest remittance recipient worldwide.

Considering the growing flow of remittances into Vietnam, it should come as no surprise that in November 2015, WorldRemit, headquartered in London, launched its services in Vietnam, allowing anyone to use the WorldRemit app to send money directly to a Vietnamese bank account.

According to Alix Murphy, Senior Mobile Analyst at WorldRemit, “Expanding into Vietnam was a natural step for us, seeing as personal money transfers to Vietnam amount to more than US$12 billion every year. There are more than four million Vietnamese migrants all over the world, many of who are currently relying on traditional money transfer companies to send money home, often at significant cost and inconvenience.”

WorldRemit, which was launched out of a London Business School competition by Ismail Ahmed in 2010, is an online-only service which eventually wants to connect the more than 270 mobile money services in the world. Money sent using its service can be received as a bank deposit, cash pick-up, or mobile airtime top-up—usually the same day or within two days, which are all effective ways to get money inside Vietnam. (Xoom, a service of PayPal, offers similar money transfer options and even introduced a website in Vietnamese in August 2015.)

The introduction of these kinds of online services for sending money to Vietnam means that the efficiencies and cost-savings (of not maintaining physical locations) can be passed onto customers, allowing for lower fees for remittance transfers. Yet once the sent money is inside Vietnam, it historically stays in cash form as there remain many unbanked and underbanked people in Vietnam, especially in rural areas. However, two companies—MatchMove Pay and Tapp Commerce—are offering new ways for Vietnamese consumers to participate in the growing digital economy.

Closing the Gap

The expression “cash is king” is even more apt in developing nations like Vietnam. According to the World Bank, slightly less than 27 per cent of Vietnamese consumers had a debit card in 2014—and almost 70 per cent did not have a bank account. While these numbers have surely changed since then with mobile payments on the rise and increased access to banking services, cash is still the preferred method of payment in Vietnam. (Even Uber accepts cash in Vietnam, where it saw the highest rates of credit card declines in Southeast Asia last year when new customers tried to sign up.)

A Singaporean company called MatchMove Pay saw this gap a few years ago and decided to take the concept of a physical payment card and convert it into a digital format. MatchMove Pay developed a digital wallet which allows any major brand to issue a digital payment card, which can then be used for online purchases via a consumer’s smartphone.

Matchmove Wallet, as the Platform-as-a-Service is called, launched in 2014 in partnership with American Express. Last year, the company joined the MasterCard network, partnering with the card issuer to offer mobile, virtual, and physical payment cards across Southeast Asia. Additionally, Matchmove Pay launched IMBA Gamercard for gamers, allowing younger consumers who would not be eligible for debit and credit cards to pay for digital games and in-game purchases. (Gamers traditionally use scratch cards for micro-transactions, which telecommunications operators take a hefty percentage of.)

In 2015, MatchMove Pay partnered with HD Bank to introduce the first virtual payment card in Vietnam. MatchMove Pay also partnered with TPBank (another local bank aiming to become a regional leader in digital banking), and recently announced a collaboration with VTC Intecom, the largest corporation in Vietnam that specialises in development payment services, e-commerce, media, and online entertainment. This step will enable MatchMove’s services to reach more than 30 million users across Vietnam.

Shailesh Naik, CEO of MatchMove Pay, sums up his company’s interest in Vietnam: “With a huge population of more than 90 million, and smartphone users of 30 million, but only less than 10 per cent of the population has access to international payment cards, we believe that there is a huge potential market here in Vietnam. We believe that we have found the way to bring in millions of people who don’t have cards and bank accounts; we have found the way to reach out to them and bring them to the internet economy very quickly and very easily. And safely.”

Since its founding in 2009, MatchMove Pay has expanded into Thailand, the Philippines, and India besides Vietnam; it has been recognised and awarded for its innovative practices including receiving accolades from Deloitte Technology, Red Herring, and Sibos. Currently, it is developing plans for entry into Indonesia later this year as it continues to rapidly expand across Southeast Asia.

Another Approach to the Same Challenge

MatchMove Pay is not alone when it comes to rapidly scaling in a short amount of time: another company looking to connect Southeast Asian consumers to the digital realm is Tapp Commerce, which launched its Tapp Market service in Indonesia last July. Since going live, it has been used to serve over 1.7 million customers via more than 26,000 sales agents. Tapp Market launched in the Philippines last month while Tapp Commerce is currently setting up operations in Thailand and Vietnam for a summer launch, and will enter Myanmar by the end of the year. Currently, the team is comprised of over 65 people in Europe and Asia.

Tomi Helkearo, Director of Market and Business Expansion at Tapp Commerce, states, “Vietnam is clearly a key market in the region with close [to] 100 [million] people, [a] rapidly growing base of smartphones and disposable income, and still with a large share of the population without the means to participate in today’s e- and m-commerce: e.g., debit and credit card; education and understanding of available alternative payment methods; experience in and trust on online experience and brands; and/or an appropriate device with a data connection.”

Tapp Market connects merchants with unbanked and underbanked consumers in their own neighbourhoods via a network of local agents comprised of small businesses, corner shops, and micro-entrepreneurs. The members of this network are enabled income opportunities by selling digital and online goods, accepting bill payments—and depending on the market—collecting insurance premiums, making them the entry points to digital and physical goods by these sensible offerings.

The company, which was established in Finland in September 2013, seeks to build upon existing consumer behaviour in the markets in which it operates in as well as the habits and trust among the people in their own communities. It does this by allowing consumers to pay with cash for products that had previously been available via credit card or COD. Thus, consumers can gain access to more goods and services in their local area and make purchases through a trusted agent, i.e., a shop keeper and neighbour. This flexibility enables someone in a village to start collecting payments locally, saving a trip to the nearest city to pay a bill.

According to Tomi, anyone with phone and a few dollars to top up their account can get started, whether it’s a student or housewife or even a courier to make some secondary income. (Some non-traditional bill payment options include tuition fees, tickets, and physics products which will be processed via a Point-Of-Sale tool that Tapp Market agents are equipped with.)

Its accomplishments haven’t gone unnoticed either: Tapp Commerce recently won the Young Innovative Company award, presented by Tekes, the Finnish Funding Agency for Innovation, which is valued up to €1.25 million (US$1.44 million).

From Analog to Digital

Fintech choices for consumers in Vietnam are steadily growing as there are already other services vying to transfer remittances into Vietnam including Cash2VN (which uses Bitcoin as a transfer medium) and Sharemoney. And last month, homegrown MoMo, which offers mobile wallets for unbanked consumers (as well as peer-to-peer transfers), raised US$28 million from Standard Chartered Private Equity and Goldman Sachs. This growing interest in digital financial services makes sense considering the optimistic economic projections for Vietnamese consumers in the next five years.

According to BCG, Vietnam’s middle and affluent class (MAC) is the fastest-growing in the region and will reach 33 million in 2020, up from 14 million in 2012. This increasing middle class will desire and drive access to new products and tools to exert their newfound disposable income. Today, about 70 per cent of Vietnamese consumers are in rural areas and there are major opportunities for building a network of complementary services within rural communities in Vietnam.

However, increased capital inflows and wealth creation within Vietnam doesn’t mean that there won’t be any potential downsides. One risk for traditional money transfer services is their potential disintermediation due to direct deposit features built into digital payment cards, allowing Vietnamese (and others) overseas to convert money directly into a digital format in Vietnam. (WorldRemit also plans to offer mobile wallet integration around the world though it would not comment on specific plans for Vietnam.) Think of this feature as an international version of Venmo, allowing for a one way stream of up to US$12 billion or so from the Vietnamese diaspora around the world to end up directly in the digital hands of Vietnamese consumers.

For now, it’s clear that WorldRemit, Matchmove Pay, Tapp Commerce, and others have made it a priority to provide access for Vietnamese consumers to be able to participate in the digital economy. And the Fintech space will only get more crowded as local, regional, and international digital solutions for financial transactions propagate across Southeast Asia—and maybe even originate from Vietnam. In turn, there will be a growing number of innovative approaches for Vietnamese—at all socio-economic levels—to become more integrated with financial systems without physical limitations like cards, kiosks, and cash.

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