Skip to main content

Vietnam Fintech Brief in 2024.

Posted in .
Vietnam fintech brief in 2024

The technology-enabled innovation in financial services known as Fintech is presenting significant opportunities in Vietnam for international investors who are able to navigate complex regulatory challenges. The Vietnam Fintech Brief in 2024 will help entrants understand the opportunities and challenges of this industry in the Vietnam market, and sketch out a picture of the investment environment and market entry requirements and conditions for specific Fintech activities. Download our Vietnam Fintech Brief in 2024 for specifics.

Vietnam remains one of the most attractive markets in the region for investors interested in the fintech sector, and the potential for value creation is significant. To surf on the Vietnam Fintech wave, entrants should be aware of the complex regulatory framework, take advantage of the digital workforce as well as understand the potential challenges ahead in order to build successful and sustainable products for consumers in Vietnam.

From cash to digital payment: Vietnam Fintech Transformation.

“Cashless transactions in 2023 were valued at 23 times the GDP, estimated at US$9,890 billion, while Vietnam’s GDP reached approximately US$430 billion (State Bank of Vietnam)”

Vietnam Fintech is predominantly driven by payments and mobile wallets. By the end of 2023, Vietnam Fintech had 32.77 million active e-wallets. Additionally, the average number of payment transactions via internet and mobile channels grew annually by 52% and 103.3%, respectively, between 2021 and 2023. The number and value of payments via QR codes surged by over 170%.

In the first four months of 2024, non-cash payments continued to show solid year-on-year growth. Cashless transactions increased by 57.11% in number and 39.49% in value, with internet transactions rising by 47.48% in number and 30.20% in value, and mobile transactions growing by 59.26% in number and 35.91% in value.

Funding and the number of Vietnam Fintech firms.

The Vietnam Innovation & Tech Investment Report 2024 reveals that from 2013 to 2023, a substantial US$1.04 billion has been invested in payment FinTech startups in Vietnam, alongside US$495 million directed towards financial services. This influx of capital underscores the growing dynamism of the sector within the country.

According to Statista, Vietnam is currently home to over 260 fintech startups, offering a diverse array of services such as digital payments, alternative finance, wealth management, and blockchain technology. The Vietnam Fintech market is characterized by intense competition, reflecting its vibrant and rapidly evolving landscape.

Vietnam’s QR code revolution.

Vietnam Fintech is experiencing a dynamic shift as QR-enabled payments gain significant traction. In a country where mobile-first solutions are at the forefront, tap-to-pay QR codes have swiftly become a popular alternative to cash transactions.

This transition is evidenced by the impressive growth rates in non-cash payment and digital banking activities during the first two months of 2024, with QR code payment transactions skyrocketing by 846.41% and 1,146.14% compared to the same period in 2023.

The year 2023 marked a pivotal moment with the official launch of a bilateral cross-border QR payment link between Vietnam and Cambodia. This initiative enables citizens to conveniently scan QR codes for payments in either country using their local currencies, enhancing financial interoperability in the region. BIDV was among the first banks to successfully integrate this groundbreaking utility into its system, showcasing Vietnam’s leadership in fintech innovation. Additionally, Vietnam joined Indonesia, Malaysia, Thailand, the Philippines, and Singapore in a collaborative effort to connect their payment systems, including QR codes for retail transactions, further solidifying the region’s commitment to seamless financial integration.

The QR payment trend in Vietnam is poised for continued growth as banks intensify their focus on enhancing QR payment systems and user experiences. This burgeoning emphasis poses new challenges for e-wallets, which must innovate to stay competitive. Meanwhile, the B2B payments market, still largely untapped, is on the cusp of significant transformation, signaling an exciting horizon for the future of digital payments in Vietnam.

In response to the rise of Vietnam Fintech, both policy makers and entrants should heighten collaboration. It calls for new approaches to regulation and supervision from the authorities. Moreover, Fintech players should understand in depth the regulatory framework to build inclusive products for the Vietnamese market.

Market entry guide.

Below is an analysis of selected prominent activities in Vietnam Fintech from a licensing, commercial and legalistic perspective, covering business conditions as well as licensing procedures:

  • Payment Intermediary Services, including:
  1. Electronic Payment Gateway Services
  2. E-Wallet Services
  • Peer-to-Peer Lending (P2P Lending)
  • Other intermediary payment services such as financial switching services, international financial switching services, electronic clearing services, collection support services, and cash disbursement services are not to be discussed here.

Payment Intermediary Services

Electronic Payment Gateway Services

Electronic Payment Gateway Services are services providing technical infrastructure to connect between the payment acceptance units (the Sellers) and banks (where the Purchasers have owned their payment account), in order to assist customers to make payments in e-commerce transactions, electronic bill payments and other electronic payments.
The platform acts like a bridge between the purchaser and the seller in electronic transactions, enabling clients to make non-cash payments quickly and conveniently, and keep their personal information secure.

Electronic wallet service (e-Wallet service)

Under Decree 52/2024/ND-CP of the Government regulated cashless payment, an E-wallet service is referred to as “services provided by banks, foreign bank branches, and payment intermediary service providers for clients to deposit in or withdraw money from e-wallets and implement payment transactions” and consider an E-wallet is “a mean of storing electronic money”. Note that “electronic money” here refers to “the value of Vietnamese Dong stored on electronic devices, provided based on the equivalent amount of money prepaid by customers to banks, foreign bank branches, or payment intermediary service providers”. It does not include cryptocurrency as Vietnam has not yet recognised the value of cryptocurrency in civil and commercial transactions, nor are they subject to taxation.

Operational conditions and sub-licenses.

According to Decree 52/2024/ND-CP on Cashless Payments, the Vietnamese law allows both credit and non-credit institutions to provide Intermediary Payment Services. However, non-credit institutions (to simplify, ordinary Vietnamese companies in the majority of cases) can only be allowed to undertake the payment intermediary service after attaining a Provision of Payment Intermediary Services (“License”) from the State Bank of Vietnam (SBV).
The prime condition to attain the License is the requirement for minimum charter capital of at least 50 billion Vietnam Dong and the companies must ensure the legality of the capital source. In addition, the company must satisfy the following prerequisites:

  • Have a scheme to provide an intermediary payment service
  • The legal representative, General Director (Director) of the organization applying for the license is required to have an university degree or higher in economic, business administration, law, information technology, and have at least 5 years of working experience in one of the fields of finance, banking, and must not be prohibited under the law
  • Must have at least one legal representative residing in Vietnam, who must authorise another person in Vietnam to represent them when they leave the country
  • The Deputy (General) Director and key staff (such as department heads or equivalent positions, or technical staff) implementing the scheme must have at least a college degree or higher level in economics, business administration, law, information technology, or their specialized field
  • Have a technical solution proposal for the payment intermediary service that meets the level 3 information system safety requirements as per the law.

Peer-to-peer lending.

In addition to the foreign investments flow into the Payment Intermediary Services sector, peer-to-peer lending (P2P Lending) is a widely used service enabled by the growing digital market transformation where all monetary transactions are supported by technology. That being said, despite of the rapid, global development of this new financial service, in Vietnam the relevant regulations and laws governing businesses which facilitate peer-to-peer lending (P2P Lending Companies) are still limited.

Until this day, there is no legal definition for “P2P lending” in any relevant Vietnamese legal document, or any specific decree and or circular which regulates the activities of companies (local-invested and foreign-invested) providing P2P platforms/apps in Vietnam. However, this can be clarified further by reviewing the third draft of the Decree on Controlled Testing Mechanism in the Banking Sector. This decree outlines the controlled testing mechanism (sandbox) for technology solutions applied in the banking sector, applicable to both credit institutions like banks and non-credit institutions such as fintech companies. According to this draft, “Peer to Peer Lending (P2P)” is defined as “a lending solution in Vietnamese Dong on a digital platform designed and implemented based on financial technology applications provided by peer-to-peer lending companies participating in the Controlled Testing Mechanism to connect borrowers with lenders”. A “peer-to-peer lending company” is defined as “a fintech company providing peer-to-peer lending solutions to the market”, and “clients using peer-to-peer lending solutions” include “borrowers and lenders who are organisations or individuals with contractual relationships and who directly use the peer-to-peer lending solution”. These definitions align with the general global concept of P2P lending, where loans originate from non-credit entities, which can be ordinary individuals or organisations, facilitated by a fintech company creating an environment for borrowers and lenders to meet. However, as this is still a draft, a sandbox mechanism for P2P lending remains a question for fintech companies seeking to operate legally in Vietnam in the future.

We recommend international investors active in the Vietnam Fintech market to continue to monitor the developments within the regulatory digital transformation framework in Vietnam and be aware of the above prerequisites for market entry provisions and conditions before setting out a long-term investment strategy in the country.

 

Get Vietnam Fintech insights and recommendations to boost your business in Vietnam:

  1. Fintech in Vietnam: Licensing and Market Entry provisions for foreign investors
  2. Industry report: The Advance of Fintech in Vietnam 2023
  3. Fintech in Vietnam: Market access and conditions

Contact our teams for expert support and further information on the fintech sector in Vietnam and the opportunities available for investors.
Rizwan Khan – Managing Partner – r.khan@acclime.com
Vlad Savin – Partner – v.savin@acclime.com

Default placeholder image 76869528

Download a free PDF version of this guide

The PDF version contains all of the content and resources found in the web-based guide.

Updated on July 11, 2024
Need business support in Vietnam?

Get in touch with us to take the next step towards starting and managing your business in Vietnam.