Analysis of the Current Status and Prospects of Digital Payment Development in Vietnam

Vietnam's digital payments industry has developed rapidly in recent years to become one of the fastest growing markets in Southeast Asia. It is analysed below in four dimensions: current situation, drivers, challenges and prospects:

I. Status of development

1. market size

   • Vietnam's digital payment turnover expected to top $30bn in 2023, growing at 25% annually (Fitch Solutions data)
   • E-wallet users exceed 40 million, accounting for more than 50% of the adult population (State Bank of Vietnam data)

2. Major Player Landscape

   • Locally dominated: MoMo (market share over 50%), ZaloPay (under VNG), VNPAY
   • Foreign participation: GrabPay (Singapore), Moca (with Ant Group)
   • Bank-based products: Viettel Pay (military background), MB Bank and other banks' mobile payments

3. Mainstream application scenarios

   • QR code payment penetration has reached 78% (2022 Nielsen report)
   • Highest share of bill payments (utilities/tuition) (42%)
   • Rapid growth of e-commerce payment share to 35% (driven by platforms such as Lazada/Tiki)

II. Core drivers

1. Policy support
   The Government's "cashless" strategy is well targeted:

• The Electronic Payments Development Plan 2021-2025 calls for an average annual growth of 20% in non-cash transactions
• Post COVID accelerates drive to digitise payments for government services

2. Well-established infrastructure
   -Smartphone penetration reaches 73% (We Are Social data)
   4G network covers 98% population, 5G pilot launched

3.youth dividend
70% population is under 35 years old, with Internet natives making up the bulk of the population

4.Fintech Investment Boom
870 million invested in 2022 (large case: MoMo gets $200 million Series D led by UBS)

III. Existing challenges
1.Lagging regulatory framework
-P2P Transfer Limit Controversy (current single transfer limit is about $430)
Slow approval of cross-border payment licences

2.Insufficient penetration in rural areas
Cash transactions still account for 60% of overall payments (World Bank Research)

3.Profit model under exploration*
Most e-wallets are not yet profitable, relying on subsidies to gain customers

4.*Rising security risks
Online financial fraud surges 162% year-on-year in 2022

IV. Outlook for development
Short-term (1-3 years).
- Accelerated process of harmonisation of QR code standards (led by Napas)
- Expansion of biometric payment technology applications (face recognition transactions expected to double)
- Buy now, pay later (BNPL) could be exploding

Medium-term trend.
- Open Banking API push will reconfigure the ecosystem
- Digital Currency Pilot Could Land (CBDC Testing on the Agenda)
- Asean regional connectivity brings cross-border opportunities

Long-term potential points.
Super App model integrates more life services (MoMo has access to 40+ scenarios such as medical registration)
Blue Ocean Market for Digital Acquiring for MSMEs

Suggested Areas of Interest.
①Supply Chain FinTech Solutions
② Customised payment products for agricultural scenarios
③ Opportunities for in-depth cooperation with telecommunication operators

Overall, with 75% internet penetration rate and continuous policy support, Vietnam's golden period of digital payment development will continue for more than five years. However, enterprises need to pay attention to balancing the speed of innovation and compliance costs, while paying attention to the development of differentiated demand in second- and third-tier cities.

Analysis of the current status and prospects of digital payment development in Vietnam (continued)

V. Analysis of market segmentation opportunities

1. Cross-border payments and remittances

   • Vietnam is among the top 10 remittance-receiving countries in the world (projected to reach $19 billion in 2023, World Bank data)
   • Main pain points: high handling fee (5-7%), slow arrival (1-3 days) in traditional channels
   • Emerging solutions: blockchain cross-border settlement pilots (e.g. VNPAY testing with Ripple), direct e-wallet remittances

2. Social e-commerce payment integration

   • Small Merchant Transactions Surge on Facebook/Zalo and Other Platforms, but Rely on Cash Collections
   • MoMo has already launched the "Shopee Pay Later" model, and may expand to TikTok Shop and other platforms in the future.

3. Digitisation of public transport

   • Ho Chi Minh City Metro Line 1 (opening in 2024) to support e-wallet ticketing
   • Grab SuperApp model may be replicated for public transport systems (refer to JakLingko case in Indonesia)

4. Agricultural supply chain finance
   Agricultural products such as coffee/rice are still traded on a cash basis and there is huge scope for digitisation.

• Application of electronic scale + QR code payment in the field (similar to China's "DuoDuo Buying")
• Microfinance services based on transaction data (VNPAY has been piloted)

VI. Direction of technological evolution

VII. Suggestions for Foreign Investment Entry Strategies

For international players such as PayPal and Alipay, a differentiated path is recommended.

1. B2B Priority:
   Cutting through services to cross-border e-commerce sellers (40% sellers on Lazada in Vietnam need cross-border collection solutions)
2. Technology export model:
   Providing cloud computing/big data capabilities to local banks (Vietcombank has adopted AWS Financial Cloud)
3. strengthen by merger and acquisition (M&A):
   Vertical specialists such as education bill payment platform OnPay could be acquired

VIII. Risk early warning indicators

Investors should pay close attention to the following signals.
✅Policy: Progress on the revision of the Foreign Exchange Management Measures for Non-Banking Institutions
✅Market Side: When will MoMo/VNPAY achieve stable profitability?
✅Technical: QRPh (Asean Unified QR Code Standard) landing schedule in Vietnam

Conclusion Outlook

Vietnam's digital payments are undergoing a transition from 'high growth' to 'high quality growth'. The key winners and losers for the next three years are.
🔹Can we break through the last kilometre of the rural market (Agency point network construction is key)
🔹 Whether a sustainable closed loop of realisation is formed (share of high margin business such as advertising/credit etc.)
🔹 Openness of regulatory sandbox innovation pilots

Conservative projections to 2026.
- E-wallet penetration to reach 65% (now about 50%)
- BNPL market size crosses $1.5bn
- First fintech unicorn to be valued at over $5bn emerges