Mobile money to heat up e-payment market

Hanoi (VNA) - The pilot application of mobile money services aims to contribute to the development of non-cash payments, improving the access and use of financial services, especially in rural, remote, border and island areas.

One of the topics that attracted the most attention in the past week was the Prime Minister's approval for the pilot application of 'mobile money', which allows the use of mobile phone credit to pay for small-value goods and services.

The decision will allow some businesses to join the pilot programme for two years.
The pilot application for mobile money services will also take advantage of infrastructure, data and telecommunication networks to reduce spending and develop non-cash payment channels on mobile phones, bringing benefits to users.
In addition, the results of the pilot implementation of the mobile money service will be a practical basis for authorities to review, develop and issue official legal regulations for the service in Vietnam.

In fact, when the Covid-19 epidemic broke out, Vietnamese people consciously switched to non-cash payments to ensure safety and limit the spread of the disease. This has become a "golden opportunity" for Vietnam's e-payment sector.

As of the end of October 2020, the number of payment transactions via mobile phones reached more than 918.8 million with a value of nearly 9.6 million billion VND, up 123.9 percent in quantity and 125. 4 percent in value over the same period in 2019.

The number of payment transactions via the Internet reached nearly 374 million with a value of more than 22.2 million billion VND, up 8.3 percent in quantity and 25.5 percent in value compared to the same period in 2019.

According to the decision, businesses need to have licenses to provide intermediary e-wallet payment services, licenses to establish a public mobile terrestrial telecommunications network using radio frequencies or have subsidiaries with permission from the parent company to use telecommunications, network, and data infrastructure.

The firms participating in the pilot programme can provide services to customers who register their mobile accounts with an identity card, citizen identification or passport. Customers must use mobile services for at least three consecutive months before registering for mobile money.

The mobile money service will be applied nationwide. However, the businesses must prioritise implementing services in rural, remote, border and island areas.
Businesses involved in the pilot are prohibited for banking activities such as lending, raising capital or providing or using mobile money accounts for transactions for the purpose of money laundering, terrorism financing, or fraudulent practices.

According to experts, mobile money has many advantages, such as convenience, low cost, and wide coverage.

Mobile money services are inevitable as they help increase access to banking and financial services for residents and businesses, especially those who do not have a bank account and live in rural and remote areas.

It will contribute to promoting non-cash payments in Vietnam where the proportion of cash payments is still relatively high compared to neighbouring countries.

It will also help reduce transaction costs across the economy.

Banking and finance expert Nguyen Tri Hieu supports the Government's idea that any economy which wants to develop will have to gradually limit cash payments.

Hieu said an economy that uses a lot of cash will lead to a lot of money printing costs. In addition, using cash creates a favorable environment for money laundering, corruption and illegal activities, including tax evasion.

Hieu added that in order to pilot mobile money, the State Bank and relevant agencies must have legal regulations to manage and closely supervise all possible risks. If the risks are not well managed, there will be a situation of the telecom network operator abusing people’s accounts.

Therefore, to protect money in people's accounts as well as prevent fraud, according to experts, it is necessary to carefully introduce legal corridor before licensing mobile money./.