Embracing digital payments

June 25, 2024 - 11:37
One of the masterplan’s most important goals was that 100 per cent of the adult population in Việt Nam would have smartphones by 2025.
Thuy Do, Country Head of Global Payments Solutions, HSBC Vietnam. — Photo of HSBC

HCM CITY — One major goal for Việt Nam is that every adult in the country will have a smart phone by 2025.

The target was announced at the Ministry of Information and Communications’ conference on information and communications infrastructure as part of the masterplan for the years to 2030, with a vision to 2050.

According to Thuy Do, Country Head of Global Payments Solutions, HSBC Vietnam, the ambitious goal indicates the importance of technology application in today's world, especially in the context of the Industry 4.0.

Việt Nam's is well placed to take advantage of the trends, with a current 4G network coverage rate of 99.8 per cent, surpassing many high-income nations.

Demand and capacity are two factors that promote Vietnam’s digitalisation journey, impacting all aspects from administrative procedures, through to shopping and payments.

Arising cashless payments

With the convenience of online shopping and digital payment solutions, consumers are fast adopters and demand fast and safe payment methods from providers.

Smartphones become a true 'e-wallet' able to handle all kinds of transactions via integrated an online banking-app. Cashless payment methods become commonplace for all consumers, especially the younger generation, via debit cards, credit cards, e-wallets, QR codes or bank transfer. Cashless payment is not only applicable to restaurants or shops, but also used by street vendors and shippers.

According to the State Bank of Vietnam, over 87 per cent of the adults in Việt Nam currently have bank accounts. Some banks process more than 95 per cent of their transactions on digital platforms. During 2021-2023, both QR payments’ volumes and values increased, reaching over 170 per cent. In the first four months of 2024, cashless payments rose more than 57 per cent by volumes and nearly 40 per cent by values year over year. Among those mobile payments went up 59 per cent by volume and 36 per cent by value.

Consumer demand has pushed businesses to adopt technology to connect with banks and payment service providers, aiming to maximise buyers’ convenience with advanced experience, raising their competitiveness in the market.

Earlier this year HSBC’s ASEAN Business Sentiment, which surveyed 600 responses from companies with annual revenues of at least US$150 million in the six biggest ASEAN economies: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Việt Nam, told us that 65 per cent of businesses in Việt Nam confirmed digital payments as their focus in tech strategy or investment in 2024, the highest within ASEAN.

In terms of corporate finance, cashless payments provide several potential implications.

Enhance efficiency: Cashless transactions can streamline financial processes, reducing the administrative burden, cost and risk associated with handling physical cash. Digital platforms can automate payment workflows, optimise cash-flow management and minimise manual errors.

Record detailed, full and accurate data: Technologies such as application programming interfaces (APIs) help centralise data management, gain real-time visibility into financial transactions. Besides, huge amounts of data generated from cashless transactions reflect valuable insights into consumer behaviour, spending patterns and market trends, supporting corporates to optimise cash allocation strategies and organisations’ growth objectives.

Capital allocation efficiency: Digital payment platforms enable corporates to optimise working capital management, accelerate cash conversion cycles, improve forecasting and ultimately deploy surplus funds towards strategic investments. By leveraging cashless transactions, treasurers can unlock liquidity, reduce financing costs and allocate capital more efficiently to support the organisation’s strategic growth goals, Thuy said.

Entering the new era

Banking digitisation strategy has driven the industry’s digital transformation, enhanced more optimal solutions to meet corporate clients’ diversified digital payment demands, from real-time payments, to the solution that facilitates up to 24/7 electronic payment for tax/custom obligations with direct connectivity with tax/custom authorities and omni collect solution, which offer multiple payment options in one platform. This June, HSBC also integrates the innovative dynamic QR solution.

Every customer transaction will be credited directly into businesses’ HSBC accounts in real time, resulting in corporates’ liquidity improvement. Also, this solution offers real time visibility on transaction flow, auto reconciliation with consolidated settlement reports, virtual account support with simple integration.

While cashless payments offer convenience, they also introduce new risk factors, such as cybersecurity threats and fraud, caused by account takeover, stolen or spoofing login information, leading to unauthorised transactions and personal information leakage.

Hence, to keep up with this trend while still protecting financial transactions, both consumers and corporates need to be trained to understand thoroughly the available cashless payments, their roles and meanings in finance and how to select the most appropriate options.

In addition to strengthening cybersecurity measures, fraud detection mechanisms and adopting multi-factor authentication and encryption protocols, businesses need to periodically make risk assessments. They need to stay updated on risks and emerging attack vectors, new regulations in digital payments such as anti-money laundering regulations and data privacy laws. — VNS