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Mobile Money: A push for the national digitalization

Mobile Money is a new comer from telecom carriers. Mobile Money can be simply understood that each individual without a bank account can make e-payment. Users only need a mobile account to pay for all services of small values quickly and conveniently.

Mobile Money is being piloted in Vietnam for 2 years

On March 9th, 2021, PM Nguyen Xuan Phuc signed and issued the Decision no.316/QDTTg on approving the pilot implementation of using telecommunication accounts for payment of goods and services of small values.

The pilot enterprise is one that has a license to provide e-wallet payment intermediary services and a license to establish public mobile terrestrial telecommunications networks using radio frequency bands; or it is a subsidiary company licensed by a parent company with a license to establish public mobile terrestrial telecommunications networks using radio frequency bands to use telecommunications infrastructure, network or data. There are three carriers eligible for the permission to participate in the pilot experimental: Viettel, VNPT and Mobifone. And Mobifone has just been licensed by the State Bank to provide intermediary payment service on March 9th.

According to the latest report of the Global System Mobile Association (GSMA), in 2019, Mobile Money worldwide has set a milestone: the number of accounts registered to use Mobile Money Mobile Money is a new comer from telecom carriers. Mobile Money can be simply understood that each individual without a bank account can make e-payment. Users only need a mobile account to pay for all services of small values quickly and conveniently. surpassed 1 billion for the first time- an increase of 134 accounts compared to that at the end of 2018. Mobile Money daily transaction reached USD 2bnan increase of nearly 54% compared to the amount of USD 1.3bn in 2018.

Mobile Money has currently been operating in 95 countries and territories worldwide, it is used mainly in developing and under-developed countries in Asia, Africa and Latin American. It has been a popular alternative to bank accounts and cash- gradually becoming a mainstream and a convenient financial mean.

What is Mobile Money?

Mobile Money is a form of online payment on cellphones that helps customers buy, sell and use goods and service without using cash. Instead of paying in cash, by check or credit card, consumers can use their mobile phone accounts to pay for a variety of daily services.

Comparison table between Mobile Money and E-wallets

The nature of Mobile Money is a form of converting cash to e-money with a 1:1 ratio. Mobile Money is like an ATM card, when you put 1 dong in your telecommunications account, you have 1 dong of e-money in it.

According to the Decision 316, each customer is allowed to open only one Mobile Money account at one telecommunications carrier. To use the service, a customer must have a SIM of his own, which has been active for at least 3 consecutive months and is identified and authenticated by the carrier in accordance to regulations of registering mobile subscription.

Who is Mobile Money suitable for?

Statistics from the State Bank showed Vietnam currently has 89 million personal payment accounts, equally to 70% of adults having bank accounts. However, the group of 30% of adults who do not have bank accounts are those who are most difficult to access to banks and financial organizations. Specifically, they are mainly in rural remote and isolated areas.

Mobile Money targets a small segment of the market that banks have not yet reached. Thus it is more complementary than competition with banks.

A push for the national digitalization

According to the General Statistics Office, by the end of 2019, Vietnam had 125 million cellphone subscriber, of which there is more than 61.3m subscribers using 3G and 4G broadband. Experts said the approval of pilot Mobile Money in two years would create a drastic change in payment for essential services as electricity, water supply, health, education, public services, promoting comprehensive non-cash payment in Vietnam.

It can be said that the emergence of Mobile Money has contributed to the development of non-cash payment, enhanced the access and use of financial services, especially in rural mountainous remote area, expanded non-cash payment channels on mobile devices and brought convenience to users, and saved costs…

Mobile Money in Vietnam, together with the bank systems and other non-cash payment systems, is expected to provide comprehensive payments to people. This is also one of key targets by the Government at the Strategy of Financial Comprehensive Development issued in January, 2020.

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