On March 4, 2020, the Prime Minister signed Directive No.11/CT-TTg on urgent actions to support business and social security, Prime Minister Nguyễn Xuân Phúc requested The State Bank of Vietnam (SBV) immediately submitted to the PM the pilot project of using telecommunication accounts to pay for goods and services up to a limited value (Mobile Money Pilot Project). The Government has been pushing mobile money as a solution to fight the COVID-19 pandemic.
With mobile money, financial transactions can be performed securely, efficiently, and affordably – and customers are able to access their accounts easily and carry out financial transactions flexibly. At the same time, banks will not have to spend money to expand their networks, according to the central bank.
According to the Global System for Mobile Communications Association (GSMA), mobile money accounts now exceed one billion worldwide. The industry processed US$2 billion in transactions per day in 2019. The association’s statistics also revealed that the reach of mobile money agents was now seven times that of ATMs and 20 times that of bank branches.
According to a report of the BIDV Training and Research Institute, mobile money has huge potential for development in Việt Nam.The report pointed out that at the end of 2019, Việt Nam had 129.5 million mobile subscribers, of which nearly half were 3G and 4G. Việt Nam also had 43.7 million smartphone users, or 45 per cent of the country’s population in 2019, together with 68.5 million internet users.
In addition, the central bank’s statistics showed about 63 per cent of people from the age of 15 or higher were unbanked and could be target customers of mobile money.
Besides, mobile money service providers may offer job prospects and reduce the unemployment rate, thus stimulating economic growth. According to ICT News, mobile money may boost Vietnam’s economic growth by 0.5 percentage points.
Despite several advantages of mobile money, there still exist possible risks concerning this service, mainly related to potential fraud. The most common types of fraud associated with mobile money include identity theft, fake currency deposits, scams (mobile insurance scams, promotional scams, and so on), and phishing, exacerbated by the abundant use of SIM cards.
To promote the development of mobile money, The State Bank of Vietnam pointed that it was necessary to develop a good security mechanism, the central bank said. In addition, it also required co-operation from telecommunications providers and efforts to upgrade technology infrastructure.
Sharing the same opinion, Vo Do Thang, Director of the Athena Network Security Center, said that payment transactions in general and mobile money in particular always attract the attention of financial technology crimes, especially in new markets where such products are applied. If only one citizen lost money, then surely many people would be afraid to use it. Therefore, the units implementing this system must have good infrastructure and meet security control capacity. On the other hand, any form of payment has a certain risk rate, so it is necessary to take into account insurance regulations and solutions to compensate users for incurred losses, the director emphasized.
In conclusion, mobile money is an emerging trend and holds great potential for development in Vietnam. Given the COVID-19 pandemic, it is time for Vietnam to get the service started. A detailed plan for implementation should be compiled and trust needs to be built and preserved, as keys to success.