Payment system in Vietnam

Importance of electronic and non-cash payments in the Vietnamese economy

They have become an integral part of Vietnam's financial infrastructure in recent decades, and their importance continues to grow. Let's take a closer look at why these payments are so important to Vietnam's economy.

• Improving financial accessibility for the population: electronic and cashless payments reduce barriers to access to financial services for the general population. Vietnam, as a developing country, faces challenges of limited accessibility to banking services in some remote areas. Electronic payments, especially through mobile applications and the internet, provide the opportunity for the public to make financial transactions without having to visit a bank branch. This increases the level of financial inclusion and provides a more even distribution of financial services across Vietnam.
• Reducing the risk of cash loss: electronic and cashless payments minimise the risk of cash loss. Vietnamese people often face security problems related to the storage and transport of cash. Electronic payments provide safer and more secure storage of funds, and reduce the likelihood of theft or loss. This is important for both individuals and businesses with large financial transactions.
• Increased transparency of financial transactions: e-payments contribute to increased transparency of financial transactions in Vietnam. Each electronic transaction leaves a digital footprint that can be easily tracked and analysed. This makes it possible to monitor the flow of funds, fight financial fraud and gather statistics on financial flows in the country. With this transparency, the government and regulators can better plan economic policies and develop anti-corruption measures.
• The augmentation of the digital economy hinges on the pervasive utilization of electronic remittance systems. They facilitate the progression of digital platforms, e-services, and online trade. The proliferation of both the interweb and digital technologies has facilitated Vietnamese enterprises to participate in fintech, and it has also unveiled an extensive array of commodities and amenities to Vietnamese patrons. Consequently, both economic endeavor and revenues ascend.
• Reducing the use of colloquial pecuniary transactions and combating the subterranean economy are both assisted by electronic and non-cash payment systems. It is more challenging to partake in illicit activities or circumvent duties when all transactions are digitalized and supervised. A more equitable apportionment of fiscal obligations is ensured and budget revenues are augmented accordingly.

Electronic and cashless payments are of great importance for Vietnam's economic development. They improve the availability of financial services, ensure the safety of funds, increase the transparency of financial transactions, contribute to the development of the digital economy and combat the shadow economy. Regulators, banks and entrepreneurs in the country are actively developing e-payment infrastructure, making this sector increasingly important for Vietnam's future economic growth.

Current dynamics and trends

Growth of electronic payments in 2023

The growth of e-payments in Vietnam in 2023 is a clear indicator of the dynamic development of the country's digital economy. This trend has been made possible by several key factors that have driven the increase in electronic transactions.

• Increase in the number of smartphone users: Vietnam is one of the countries that has seen a rapid increase in the number of smartphone users. This is due to more affordable smartphone prices and increasing incomes of the population. Smartphones provide access to the internet and mobile applications that provide the ability to make electronic payments anytime and anywhere.
• Availability of high-speed internet: the development of high-speed internet infrastructure plays a key role in the growth of electronic payments. Vietnam is actively investing in 4G and 5G networks, which provides a stable and fast connection for users. This enables online transactions at high speed and without delays.
• Requirement for electronic remunerations is being impelled by the expansion of e-services and the stratospheric ascent of online shopping. Many corporations are shifting their amenities to an online format, and consumers are situating more and more online requisitions for wares and services. Because of this, the necessity for secure and effortless remittance choices is escalating, and electronic remunerations are fulfilling that necessity.
• Development of mobile payment applications: banks and payment services in Vietnam are actively developing mobile applications for electronic transactions. These applications provide convenience and security in making payments, which attracts users. They also offer a variety of services such as account-to-account transfers, bill payments and more, making them an integral part of everyday financial life.
• Decreasing cash usage: the gradual decrease in dependence on cash is also fuelling the growth of electronic payments. With the development of electronic payment methods, users prefer to use them instead of cash. This reduces the risk of theft and loss of money and also contributes to better accounting of finances.

Electric remuneration expansion in Vietnam in 2023 is a indication of the country's shift toward more efficient and present-day banking processes. Electric compensations have the potential to expand and solidify their stance in the Vietnamese economy due to factors such as the spread of smartphones, the accessibility of high-velocity internet, and the advancement of digital amenities.

Popularity of payments via QR code and decrease in the use of ATMs

The expeditious expansion of QR code remittances in Vietnam has notable implications for the nation's consumer ethos and monetary sector, as it has rapidly emerged as a favored technique for remunerating goods and amenities.

• Contrasted with more orthodox forms of remuneration, QR cipher payments in Vietnam are exceedingly facile to employ and provide copious convenience. The entire procedure of executing a remuneration consumes merely a few moments and necessitates the operator to scrutinize a QR cipher. When addressing habitual negligible transactions, such as remitting for amenities at eateries or procuring at emporiums, this is genuinely straightforward.
• Security: QR code payments offer a high level of security. Transactions are protected using state-of-the-art encryption technology, making them secure and fraud-proof. In addition, not having to hand over physical cash reduces the risk of theft and loss of funds.
• Cashlessness: payments via QR code in Vietnam contribute to reducing reliance on cash. This aspect is particularly important in an environment where public health and hygiene is becoming a priority and users try to avoid physical contact with cash, which can be a source of contamination.

Payments via QR code have become not only popular, but also a very convenient and secure way to make transactions in Vietnam. This trend, accompanied by a decline in the use of ATMs, reflects society's desire for more modern and digital payment methods, which in turn contributes to the development of the digital economy and the improvement of the country's financial infrastructure.

Commercial banks' investment in digital transformation and electronic payments

A crucial segment of Vietnam's ameliorated e-payment infrastructure is the currency that commercial banks are investing in digital metamorphosis and novel forms of electronic remittance. Increasingly, financial institutions are endeavoring to provide their clientele with innovative and superior methodologies to manage their finances.

Commercial depositories' investments in digital metamorphosis and the fostering of electronic remittance frameworks have rendered financial amenities in Vietnam more reachable and expedient for patrons. This has additionally fostered the proliferation of electronic remunerations and diminished dependence on currency, thereby augmenting the security and efficacy of fiscal dealings in Vietnam.

Regulatory environment and strategic development

Role of the State Bank of Viet Nam in streamlining the legal framework for payment activities

The State Bank of Vietnam is pivotal in establishing and overseeing Vietnam's remittance framework, ensuring monetary steadiness and advancing the integration of the country's remittance system into the global fiscal system.

• Devises and executes decrees for sundry modes of pecuniary transactions.
• Ensures adherence with worldwide standards, safeguard requisites, and methodologies.
• Regulates and grants licenses to remittance operators in Vietnam for efficacious surveillance and implementation.
• Combats pecuniary deceit and unlawful finance through protective measures, clientele identification, and surveillance of transactions.
• Administers the nation's settlement and clarification system, ensuring guarded and effective transactions between banks and other pecuniary entities.
• Cooperates with overseas entities and establishments to synchronize Vietnamese remittance standards with worldwide benchmarks and encourage global pecuniary engagement.

The Commonwealth Reserve of Vietnam is accountable for coordinating and regulating remittance operations, which aids in maintaining Vietnam's monetary framework steady and advancing it further. The advancement of the nation's cybernetic economy and the enhancement of financial inclusion for the populace are significantly influenced by its endeavors to streamline the regulatory structure and ensure remittance security.

International standards for the development of retail payment services and their application in Vietnam

When it arrives to evolving and merging Vietnam's pecuniary industry, global norms for retail payment facility evolution are pivotal. Compliance to the implementation of these norms advances global incorporation while ensuring the safeguard and efficiency of the nation's fiscal pursuits.

Vietnam stands to accrue ample benefits from constructing its retail remittance frameworks in accordance with global norms. Some of these objectives involve facilitating financial institutions to disseminate information and execute global fiscal transactions, reinforcing verification and security protocols for web payments, and mitigating the probability of deception and data infringements. These measures ensure that Vietnam's fiscal structure is reliable and proficient, concurrently fostering the country's incorporation into the global economy.

Digital financial inclusion standards and their role in the development of payment systems

In order to construct remittance frameworks in Vietnam and ensure that all denizens, including those in underserved or hinterland areas, have impartial access to pecuniary services, the Digital Financial Enclosure Standards are indispensable. These directives facilitate economic expansion by simplifying the utilization of pecuniary services for a broader populace.

• Financial institutions are capable to devise and execute innovative tactics and technology to furnish pecuniary amenities even in far-flung or undersupplied locales, owing to digital monetary inclusion criteria. This encompasses the utilization of no-contact technology, electronic billfolds, and mobile platforms that facilitate the approach to fiscal reservoirs.
• Enhancing pecuniary erudition: Public edification on pecuniary literacy and conscientious utilization of digital pecuniary technologies is also upheld by Vietnam's digital pecuniary inclusion standards. Individuals are more proficient in managing their funds and acquire to utilize digital remittance systems because of this.
• Diminishing the pecuniary circulation: employing electronic transactions in lieu of currency diminishes the necessity for cash, thereby lessening the jeopardy of larceny and forfeiture of funds. Users also gain from heightened security and convenience.
• Backing Small and Medium Enterprises (SMEs): Vietnam's fiscal structure for small and middling-sized businesses (SMEs) is additionally fortified by the enlargement of digital fiscal incorporation. Electronic disbursements enable petite and middling-sized enterprises (SMEs) to more effectively manage fiscal dealings and activities.
• Diminishing disparities: formulating and executing digital pecuniary inclusion norms aids individuals from all strata to access banking amenities and assets, thereby mitigating pecuniary disparity.
• The evolution of a fully operational digital economy is supported by digital financial inclusiveness norms, which establish the foundation for effective online transactions and payments. As a result, progress in finance, digital marketplaces, and e-business will advance more rapidly.

Fundamentally, digital pecuniary inclusion norms are exceedingly crucial for ensuring that all segments of the Vietnamese populace can utilize the payment systems, which bolsters the economy flourish. Not only do these norms facilitate access to pecuniary amenities, but they also enhance transactional security, efficacy, and ingenuity.

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Challenges to the accessibility of retail payment services in Vietnam

Retail remuneration services remain inaccessible to some demographics and those inhabiting in more rustic parts of the nation, notwithstanding the expeditious augmentation of Vietnam's payment system. Owing to these quandaries, individuals may encounter difficulty utilizing fiscal infrastructure and effectuating electronic payments.

• Lack of bank branches in remote locales: Challenge in accessing financial services due to absence of bank branches or ATMs.
• Deficiency in financial literacy: Public instruction and education on financial literacy might impede comprehension of electronic payment advantages and protocols.
• Restricted internet and smartphone accessibility: Inaccessible digital payment techniques due to limited high-velocity internet and smartphones.
• Data security and confidentiality apprehensions: Caution regarding potential security menaces and personal information disclosures.

The following measures are needed to address these challenges and improve the availability of retail payment services in Vietnam:

• Extending banking networks and automated teller machines in distant regions.
• Enacting financial literacy education initiatives.
• Creating mobile and web-based banking platforms.
• Advocating for rapid internet connectivity in isolated regions.
• Enhancing security protocols for payment integrity and user confidentiality.

If these quandaries can be resolved, more Vietnamese individuals will have access to contemporary remittance and pecuniary governance tools, and the accessibility of retail remittance amenities would augment.

The following steps should be taken to improve coordination between government agencies and economic sectors:

• Inception of a communal strategic framework for remuneration system and digital economy advancement.
• Inauguration of coordination bodies for inter-agency synchronization.
• Standardization of norms and regulations for pioneering remuneration amenities.
• Consciousness elevation and enlightenment for inhabitants and proprietors on novel remuneration technologies.
• Reinforcement of patron safeguarding actions for pioneering remuneration facility utilizers.

To ensure a durable and competitive remuneration framework in Vietnam, enhanced collaboration among economic sectors and government agencies would facilitate the advancement of novel remuneration amenities.

Conclusion

The import and office of Vietnam's payment system, which is presently undergoing expansion, cannot be exaggerated in connection with the country's economy. The escalating use of electronic payment methods in recent years is a manifestation of Vietnam's endeavors to modernize its banking system and render its services more accessible to individuals and enterprises.

Remarkably, a substantial tendency in Vietnam is the utilization of unprecedented payment alternatives such as QR codes. This manner of payment facilitates transactions, diminishes the necessity for currency, and emphasizes user safety and convenience. Another sign of this tendency is the move away from automated teller machines and towards electronic payment techniques.

Although Vietnam's remuneration system has progressed significantly, many populations, notably those residing in rustic regions, still encounter challenges when endeavoring to utilize retail payment amenities. We must prioritize the enhancement of electronic payment reach, instruction, and safeguarding.

In peroration, the repercussion of Vietnam's remuneration scheme on the nation's ascending economy is burgeoning in consequence as it experiences perpetual refinement and metamorphosis. Vietnam aims to erect a modern and perdurable pecuniary system that will assist in economic burgeoning and pecuniary inclusivity for all denizens with the assistance of the regime, vigorous investment from banks, and adherence to international standards.