Vietnam is a largely cash-dominated society, with consumers preferring cash for day-to-day transactions due to factors such as a large unbanked population, limited financial awareness, and an inadequate payment infrastructure.

Financial inclusion remains a top priority for the country, with the government and other bodies introducing initiatives to improve banking penetration in Vietnam.

The Vietnamese government is aiming to bring 70% of the country’s adult population into the formal banking system by 2020. Expansion of POS infrastructure, a reduction in cash usage, and payment of utility bills through electronic methods are other key government objectives.

To boost non-cash transactions, the central State Bank of Vietnam has granted licenses to 27 non-bank companies to provide payment services in the country, most of which offer services through online and mobile channels.

Banks are also expanding their services to both rural and urban locations in the form of new branches, mobile van banks, and digital self-service branches.

Debit cards dominate

Debit cards account for 94.6% of the total payment card transaction value in 2018.

At present, most transactions are cash withdrawals, but with banks imposing fees on ATM withdrawals, the number of card payments registered robust growth rates, both in terms of volume and value, at respective CAGRs of 56.9% and 27.5%.

With banks expanding their services to rural areas and introducing digital branches, the debit card market is anticipated to grow further.

Credit cards

Pay-later cards are not popular among Vietnamese consumers, accounting for only 5.4% of total payment card transaction value in 2018. This is mostly a result of the high unbanked population and limited consumer awareness of the benefits of credit cards.

Banks are promoting usage by offering discounts, cashback and instalment payment facilities. For example, Sacombank offers interest-free instalment payments on select credit cards.

E-commerce growth

E-commerce in Vietnam has registered robust growth, rising in value from VND62.8trn ($2.8bn) in 2014 to $7.5bn in 2018. A large young population and growth in internet and smartphone penetration are the key drivers.

The government introduced the Online Friday initiative in 2014 to promote e-commerce in the country. This annual online shopping event is held on the first Friday of December. In 2016, 3,000 companies participated and 370,000 promotional products and services were offered.

Virtual prepaid cards

Vietnam’s prepaid card market registered robust levels of growth in terms of both the number of cards in circulation and the overall transaction value between 2014 and 2018.

In addition to conventional prepaid cards, virtual prepaid cards are growing in demand, mainly as a result of an increase in the number of online shoppers.

VietinBank offers the E-Fast On Visa prepaid card with a one-time issuance fee of $0.29 and a maximum load amount of $220.16. It can be used to make secure online purchases on all websites that accept Visa.

Similarly, Sacombank offers the e-Prepaid Visa card for online shopping.

Payment infrastructure

The number of POS terminals grew from 172,036 in 2014 to 275,644 in 2018 at a CAGR of 12.5%. This growth was mainly supported by an increase in the number of POS installations at smaller retail outlets, which is in response to the government’s plan to increase the number of POS terminals in the country.

In February 2018, the city of Hanoi initiated plans to promote non-cash payments. As a part of the plan, 100% of all modern supermarkets, restaurants, shopping centres, and distribution facilities in the city are expected to install non-cash payment systems by 2020.