At The Ministry of Information and Communications’ conference in February to announce the information and communications infrastructure masterplan in 2021-2030, with a vision to 2050, one of the masterplan’s important goals was to ensure that 100% of the adult population in Vietnam would have smartphones by 2025. The ambition indicates the importance of technology application in today's world, especially in the context of Industry 4.0. Vietnam's current 4G network coverage rate is 99.8%, surpassing many high-income nations.

Arising cashless payments

With the convenience of online shopping and digital payment solutions, consumers adopt quickly and demand for fast and safe payment methods from payment providers.

Smartphones have become true "e-wallet" to handle all kinds of transactions via integrated online banking-app or e-wallets. Cashless payment methods become common across all consumers especially young populations via debit cards, credit cards, e-wallets, QR codes or bank transfers. Cashless payment is not only applicable to restaurants or shops but also used by street vendors or shippers.

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

Thuy Do, Country Head of Global Payments Solutions, HSBC Vietnam, said consumers’ demands have boosted businesses’ adoption of technology in connecting with banks and payment service providers, aiming to maximize buyers’ convenience with advanced experience, raising their competitiveness in the market. HSBC’s ASEAN Business Sentiment earlier this year, gathering 600 responses from companies with annual revenues of at least USD150 million in six biggest ASEAN economies: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam, told us that 65% surveyed businesses in Vietnam confirmed digital payments as their focus in tech strategy or investment in 2024, the highest within ASEAN.

In terms of corporate finance, in Thuy Do’s opinion, cashless payments provide several potential implications.

First, 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.

Second, 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 corporations to optimise cash allocation strategies and organisations’ growth objectives.

Third, capital allocation efficiency: Digital payment platforms enable corporations 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.

Entering the new era

Banking digitization strategy has driven the industry’s digital transformation, enhanced more optimal solutions to meet corporate clients’ diversified digital payment demands, from real-time payment, 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.

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 catch up the trend while still protecting financial transactions, both consumers and corporations need to be trained to understand thoroughly the available cashless payments, their roles and meanings in finance, and then select the most appropriate options.

“In addition to strengthening cybersecurity measures and fraud detection mechanisms, adopting multi-factor authentication and encryption protocols, businesses need to periodically apply risk rating, stay updated on risks and emerging attack vectors, and comply with new regulations in digital payments such as anti-money laundering regulations and data privacy laws,” said Thuy Do.