An economic expert has said e-wallet firms are breaking out promotions to try and win large chunks of the high potential market in Vietnam.

Customers pay with e-wallet to enjoy the 50 percent cash back at a Circle K store
in Nguyen Hue Street, Ho Chi Minh City. (Source: internet)

Banking expert Nguyen Tri Hieu said millions of people in Vietnam already use e-wallet services to pay for everyday items like Grab rides, phone bills and groceries, but e-wallet firms are playing a long game.

MoMo, which has received 140 million USD of investment from Warburg Pincus, Goldman Sachs and Standard Chartered, leads the market with more than 12 million users, VinGroup’s VinID and Grab-backed Moca follow with 8 million and 7 million users, respectively. There are no clear user figures for the other e-wallet firms in the country, which total about 30.

According to the Department of E-commerce and Digital Economy, Ministry of Industry and Trade, Vietnam is one of the countries with the highest growth in e-payments in the world, with annual growth of 35 percent.

Nguyen Khac Quoc Bao, head of the Financial and Bank Department from HCM City Economics University, said he thought the growth of local e-wallets is thanks to the considerable money firms spend on promotions.

In the third quarter last year, Moca started refunding 20 percent up to 200,000 VND each electricity bill paid via the wallet. Most recently, Grab offered a promotion at 14 parking lots in Vietnam where users only pay 500 VND for their parking and Grab pays the rest via Moca.

Last November, Momo offered a viral promotion of 50 percent cashback with different types of services such as buying gasoline and shopping at convenience stores. VinID even offers users who pay bills via the wallet for the first time discounts worth up to 550,000 VND.

VnPay, after receiving 300 million USD investment from Vision Fund of SoftBank and the Singapore government's GIC investment fund, also refunded users for some in-store purchases.

AirPay, which belongs to Singapore based SEA Group, the owner of Shopee, offered free shipping service for Shopee users. It has also recently offered a 30 percent discount for in-store purchases. 

According to the expert, Việt Nam is a great market for Fintech firms including the e-wallets as more than 80 percent of the retail market is paid with cash.|

Hieu said Vietnam’s population of 97 million made it a great market for e-wallet firms.

“The e-wallets are burning money now, but they will get the profit back in a certain time by starting to collect user fees for example,” he said.

Nguyen Ba Diep, CEO of e-wallet company Momo, seems to agree that the future is bright for firms like his.

“We expand our services in Vietnam by proceeding the payment in public services in some cities and provinces in Vietnam, most recently, southern Khanh Hoa province," he said.

Hieu predicted that e-wallet firms would compete with each other by pouring money into promotion like Grab and Uber did two years ago. Hieu said losers will burn all their money, and a few winners “will take it all". 

According to the 'e.Economy SEA 2019' report by Google, Temasek Holding and Bain & Co, digital payments in Southeast Asia are expected to cross 1 trillion USD by 2025, becoming the payment method for nearly one in two dollars spent in the region.

E-wallets, though starting from a small base, are poised to grow even faster. Accounting for just over 22 billion USD in 2019, e-wallets in the region are likely to grow more than fivefold and exceed 114 billion USD by 2025.