VNLife, a diverse fintech ecosystem in Vietnam, made a profit from payment gateway solutions. Currently, the payment company wants more than that.
Customers are probably not familiar with VNLife, however, it’s fairly accustomed to financial technology companies. VNPay, VNLife’s subsidiary, is confident with the local consumers for its sprawling QR code payment network. However, many of them don’t realize that VNPay is also providing mobile apps for 22 banks in the country, including leading ones as Agribank, Vietcombank, VietinBank, and BIDV.
“I use the Vietcombank payment app, but I had no idea that it was created by VNPay,” says a former banking officer from Hanoi.
VNPay serves over 15 million monthly active customers by banking apps through which customers can make payments, transfer money, pay bills, mobile credits, book bus tickets, top-up, send rewards and even shop for groceries. It’s an outstanding app maybe just in Vietnam- one is an exclusive method to build a super app. Instead of building "one app to rule all", VNPay built a set of super apps, one application for each of its banking partners.
VNLife is the mobile payment company
Niraan De Silva, VNLife’s managing director, said: “This model doesn’t exist anywhere else in the world,”. Yono, a popular super app of the State Bank of India, has 10 million daily logins, but that is an in-house program. VNLife’s co-founders qualify to develop a business. Tri Manh Tran, chairman of VNLife, was the Agribank’s CTO who helped to modernize its internal systems.
VNLife was established by the doh in 2007 and succeeded in enabling SMS banking. It then made a partnership with banks that integrated deeply with their systems into a blooming app business. Although banks in China and Indonesia have fallen behind the curve, causing the fast rise of e-wallets, Vietnamese banks saw a need to digitize relatively early – and VNLife helped with that. Despite the company’s hard-obtained financial figures, De Silva says that it’s “meaningfully profitable.” He adds, after its funding round last year that put in Softbank Vision Fund and Singapore state fund GIC, the company has become “north of a unicorn”. This would make it Vietnam’s second billion-dollar tech company after VNG, a gaming and entertainment firm.
VNLife, the mobile payment company is working on a campaign plan to gain more public awareness in the coming years. In addition to allowing banks, the company is now making a big push to reach small sellers with access to consumer data. It’s also bringing its digital banking services abroad. VNLife has cooperated with banks in Cambodia and Myanmar, and De Silva says “banks in the Philippines and Indonesia have come knocking on our doors,”. Nevertheless, most of its revenue will still come from Vietnam soon.
Dominant apps tend to snowball into giant-apps: WeChat started with chat while AliPay relied on a mountain called Alibaba. For VNLife and banks, it is hard to separate them because they partner based on a symbiotic relationship. Customers tend to use banking apps because of safety and they can do a transaction simply through it regardless of app pay and other e-wallets.
Linh Nguyen, an office worker, says “I am satisfied with the Techcombank mobile app (built by VNLife). It has a huge convenience and no additional fees”. VNLife has also become the main key in a giant ecosystem, connecting with the telcos to enable mobile top-ups and payment of airfares at airlines. For any fintech companies desiring to participate in this ecosystem, why do they have to make a conversation with each telco or bank when they can associate with VNLife?
Life of digital payment companies
Furthermore, digital payment companies have the right to access data on a consumer’s direct transactions and credit-worthiness through sustainable relationships with banks. And the next step in the race to become a super-app, VNLife has to have an accurate view of customers and demands of the fintech market. It is entering a central position, which is a key position every company is eyeing. It launched VNTravel, a travel company that operates a network of online travel agents and booking for transportation, hotels, tickets and other activities in 2015. According to data from App Annie, it even operates Vietnam Airlines’ mobile app, which is one of the prestigious Android travel apps in Vietnam as per data from App Annie
According to De Silva, despite being small compared to its parent fintech companies, VNTravel has passed the breakeven point. And while it was affected by the outbreak of the pandemic, he claims that it has recovered since then, even surpassing its pre-Covid level and becoming Vietnam's top-focused online travel retailer on domestic tourism; The government's success in isolating Covid has certainly aided.
VNLife’s “new agent” arm, a significant piece of the puzzle, aims to help Vietnam’s large and small firms trade goods both online and offline. De Silva said it has implemented a point-of-sale system for more than 100,000 domestic traders, allowing them to study more consumer transaction information. It could manage the VNShop e-commerce store, which exists as a standalone site and as part of various banking applications, though De Silva says it is still in the development phase.
Bounding everything together is payments. VNPay has become one of the two most huge available QR payment networks in Vietnam with more than 100,000 transaction points since it launched its QR about two years ago. Meanwhile, there is an e-wallet called MoMo which declared that it has approximately 150,000 transaction points.
VNLife has unanimously agreed to prioritize working behind the scenes. De Silva said, "we don't want it to be dramatic."
There is a business logic for this approach: Although VNLife does run some consumer services, it primarily manages at the intangible "infrastructure level," providing software and services to banks. goods, large enterprises and traders. "It's hard to convince customers to become loyal," he explains. "A lot of these giant technology platforms in Asia focus on discounting [...] For example, in e-commerce, customers would look across all platforms to find the best product." The company considers itself technology-first: within 4,000 employees, 1,200 are engineers, the rest work in merchant acquisitions, customer relations, and other groups. (In comparison, 64% of Ant Group's 16,660 employees serve in some sort of technology role, according to its IPO filing).
“We’ve already won in QR cashless payments.”
Although VNPay QR is renowned, it is a simpler QR code standard integrated on e-wallets and some banking systems. This makes it different from MoMo, the popular e-wallet app and its network of QR-enabled transaction points.
But VNLife sees its approach as strength, opportunity, not weakness and challenge. "You have a trader with a QR code that can be accepted by 33 banks," said De Silva. Cooperative units using VNPay QR include ViettelPay and VinID, both of which are e-wallets with significant business support.
In fact, "we've won cashless payments over QR, we are mobile payment company" says De Silva, with the huge network reaching the US $ 1 billion annually in total payment volume. Certainly, it is a small fraction of Vietnam's total payments market, showing more possibilities for QR codes to grow. However, MoMo opposed VNPay QR's claims of the market leader in an email response to Tech in Asia. “Many unicorn businesses only use MoMo, including supermarket chains, convenience stores, coffee shop chains, coffee shop chains, and gas stations as more.” Said Ba Diep Nguyen, co-founder and senior vice president of fintech. The company also has cooperated in major movie theater chains as well as in client finance, investment and insurance markets.
Besides, MoMo is acknowledged as a payment determinant by several government services and by both Google Play and Apple App Stores.
20M user offers Momo, which is digital payment companies
However, the two payment gateway companies imperials have got the sack for tax avoidance. “This raises the question of whether services like MoMo are responsible for taxes within the country or not, ” Investment Newspaper asked. De Silva also claims that MoMo tends to offer upfront guarantees and incentives to lockout sellers - something his business doesn't do. Usually, when these guarantee periods are over, sellers will switch to a VNPay QR network connection, he added.
Despite, Nguyen says MoMo's popular consumer app, coupled with extensive integration with sellers, means the app has detailed insights into consumer behavior.
VNLife’s approach echoes the strategy used by Chinese fintech giant Ant Group, which is due for a massive public listing. VNLife serves financial institutions and partners with them to offer financial products to the community.
With the collected consumer data, VNLife has been testing insurance and loan products for small businesses and consumers, and plans to roll it out over the next 12 months, De Silva said. But the effort to build a much wider ecosystem on off-bank won't be easy.
All three online payment companies users that Tech in Asia talked to say that they almost use VNLife for remittance which is confirmed as its top feature by De Sillva. However, he explains that this is followed by QR payments, bill payments, telco top-ups and travel, in that order. MoMo is also on a page from Ant Group. AliPay, Ant's super app, is a popular e-wallet at first but has since added more functions such as food delivery, transport booking, online shopping, and more.
Nguyen says, “MoMo is exactly a super app,” Users also have access to countless services through it. Besides, Grab is another opponent in the race for consumer app dominance in Vietnam. It’s a leader in ride-hailing and food delivery in the country and negotiating in fundraising with Alibaba. It’s also been supplying more instruments for businesses. VNLife can survive through doing business in profitable banking software even if the e-wallets aren't profitable, which depend on investors to throw them a lifeline, splurge on subsidies to attract fickle users. But it's not the only company with a cash cow.
Shopee, which is funded by Sea’s profitable gaming business, is dominant in e-commerce and also has desires to take part in payments and financial services. And Zalo, the super-app contender that beat WhatsApp in the country, benefits from a profitable VNG. VNPay also has to compete with the telcos that are set to pilot their mobile money services with the support of Vietnam’s central bank, the State Bank of Vietnam (SBV). This means that consumers will be entitled to deposit and withdraw money through their telco accounts.
Mobile money is ubiquitous in countries with low bank penetration rates, with Kenya's M-Pesa being the most prominent example. Could mobile money be VNPay’s biggest competitor? E-wallets in Vietnam face a sole limitation: SBV requires each e-wallet account to be attached to a bank account, so limiting their approach in Tier Two or Three cities. This makes VNPay, MoMo, and the banks somewhat in the same boat.
The problem is that banks in Vietnam have not yet penetrated as far as payment companies, simply because the income of people living outside the urban center is not high enough to set up a bank branch.
The growth of Digital Payments Companies
Nevertheless, De Silva believes that e-wallets and mobile money supplement the banks. “If you want to serve people without banks until they become banks, the only way is through the telecom companies, because they already have that point of contact with the consumer, "he said, it’s obvious that e-wallets are being used most once using discounted mobile top-ups. Telco e-wallets are at no reason to be restricted outside of the main cities – which means they could be competing with VNLife in attracting mobile top-ups.
De Silva believes that banks’ penetration into the lives of most Vietnamese residents is just a matter of time. He forecast they could achieve an 80% penetration in five to 10 years. “ When you have more money, you’ll want to open a bank account as a primary store of value,” he adds
In fact, he thinks VNLife is urging banks further along. It reduces the banks’ need to open physical branches by enabling mobile banking services and electronic Know Your Customer (KYC). Combine that with Vietnam’s young, tech-savvy population and its rising income, and you have a recipe for a banking revolution.
At least there’s one thing that MoMo and VNLife can agree on. Nguyen points out that SBV has allowed 10 local banks to pilot eKYC to open bank accounts. He says, “ anyone can open a bank account easily and connect to MoMo’s e-wallet for immediate use by this approach”. De Silva ends, “Our biggest competitor is still cash and third party payment.”