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Covid-19: opportunity to promote cashless payment

Covid-19: opportunity to promote cashless payment

Monday 23, 03 2020
Covid-19 pandemic is believed to be an opportunity to develop cashless payment. Will Vietnam take advantage of this opportunity or miss it?

Special opportunity

According to Minister of Information and Communications - Nguyen Manh Hung, the Covid-19 pandemic has been posing a great challenge for the country because many economic activities have been delayed. However, challenges always come with opportunities, and there are opportunities that only appear when challenges occur.

The Covid-19 epidemic is spread by contact, which is a great opportunity to develop cashless payment. Since the Lunar New Year (the beginning of the Covid-19 outbreak), the total number of non-cash payment transactions through the financial switching system of the State Bank increased 76% over the same period last year.

In particular, the number of transactions worth less than VND 500,000 increased sharply, accounting from 21% to 25% of the total number of transactions. The total value of transactions increased 124% over the same period in 2019.

This shows the increasing trend of using online transactions and non-cash payment tools. In fact, when the disease broke out, Vietnamese people were conscious of switching to non-cash payments to ensure safety and limit the spread of the virus.

This is a "golden opportunity" for Vietnam's payment sector because the awareness of the people has been raised. Will Vietnam take this opportunity to popularize non-cash payment or miss it? Decision 149 / QD-TTg on the National Comprehensive Financial Strategy to 2025 with orientation towards 2030 was approved by the Prime Minister on January 22, 2020. Specifically, enterprises will be allowed to participate in the market of financial switching and clearing electronic.

This is considered a solution to open the exclusive field, create competition, help reduce costs, increase utilities, and accelerate the cashless payment sector. According to Lawyer Truong Thanh Duc, currently in the field of financial switching with electronic clearing, National Payment Corporation of Vietnam (NAPAS) is the only provider of payment infrastructure for dozens of domestic and international banks in Vietnam.

Meanwhile, the trend of switching to non-cash payment is increasing, if Vietnam only relies on the current switching system, it is difficult to increase the transaction processing speed and accelerate comprehensive financial universalization throughout the country.

Having more businesses participating in this market will certainly create strong competition, help reduce costs, increase utilities, and accelerate the cashless payment process. Vietnam's non-cash payment rate is still very low. Statistics show that this rate is only over 20%.

Vietnam's electronic payment system only partially meets the needs of people in urban areas. The low coverage of service providers together with high cost is a major barrier for the poor and low-income people to access to formal financial services.

Perfect the legal system

To popularize non-cash payments nationwide, it is necessary to go through the network of correspondent banking networks, fintech companies, Mobile Money services, e-wallets and other modern payment channels. In the current context, the resources and efforts of all sectors, fields, both public and private, should be concentrated, creating effective solutions to promote comprehensive finance in Vietnam. Opportunity has come.

The transition to non-cash payments is growing very fast. It is a must to have a good switching system and multi-channel connectivity that can meet the needs of the market. If Vietnam cannot meet these requirements, the development of electronic payment in particular and the economy in general will slow down.

Covid-19: opportunity to promote cashless payment

Industrial revolution 4.0 has created more and more new payment forms, consumer habits therefore have changed rapidly. However, transaction speed and fees are also required to improve. If the switching service infrastructure is not innovated, cashless payments are unlikely to make a breakthrough.

Allowing more businesses to participate in the financial switching and clearing electronic market is a solution to help develop infrastructure and promote new forms of payment. The development of financial services will enhance the development of e-commerce, promoting non-cash payment methods.

Experts said that the State Bank should soon allow technology and telecommunications enterprises to participate in this market to promote new types of payment. Leaders of the Ministry of Information and Communications also suggested that the Government and State management agencies should quickly decide on a number of policies on non-cash payments, mobile payments, etc. that are still under consideration.

When cashless payments grow, all residents and businesses will benefit, especially people living in rural and remote areas, the poor and the low-income, small and medium enterprises, and household businesses. It has great significance in terms of socio-economic development, helping to increase resistance, flexibility, creativity, quick adaptation, prompt recovery when facing unpredictable events such as Covid-19 epidemic.

​>> Cashless payment: Drastic need for state management

Source: Vietnamnet

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