Cross border payment (Part 1) - What are cross border transactions? 3 types of cross border transactions in Vietnam

When you have an international business, you must find international payments for your business to make transactions with other countries. These transactions are called cross border transactions.

How do cross border transactions affect Vietnamese people?

Cross border transactions have effects on all activities of the Vietnamese people. Back to the content of the article How remittance helps economy in Viet Nam? FinFan mentioned about what are the effects of remittance on Vietnamese people’s life and total the economy of Vietnam.

That is only one part of cross border transactions. Cross border transactions include more than this. They are maybe foreign direct investments (FDI) from abroad, international business transfers, forex exchanges, etc.

For easy visualization, Realized FDI investment in Vietnam in the nine months of 2022 was estimated at 15.43 billion USD, up 16.3% over the same period last year. This is the highest level of realized FDI in 9 months for the past five years.

The ratio of realized FDI to registered capital in the period 2018-2022 shows a very positive trend of foreign direct investment in Vietnam: The ratio of realized capital to registered capital in the nine months of 2022 reached 82.3%, which is a record-high rate.

This ratio of realized capital to registered capital in the nine months of 2022 in Vietnam was real evidence of the importance of cross border transactions in Vietnam.

The other example comes from trade cooperation between Vietnam and Cambodia over the years. Bilateral currency trade between Vietnam - Cambodia (as of May 2022) is more than §5 billion. That is not a small number and can be grown more in the future.

Knowing that problem, FinFan and Wing Bank from Cambodia have connected to bring the best way to transfer money between both sides.

With this cooperation, FinFan hopes that the remittances from Cambodia to Vietnam can be easier. Both sides don’t need to transfer money to each other through dealers and get cheated by them.

3 most popular types of cross border transactions in Vietnam

From the above information, we can easily recognize the 3 most popular types of cross border transactions in Vietnam: cross border remittances, cross border investments and cross border trading.

Cross border remittances

Remittances are the money that immigrants abroad send back home to their families for helping the economy of these families in many ways.

Annually these remittances can help many people to have better education conditions, better places to live and agriculture can develop well.

With the development of technology, these remittances are updated, and people can receive this money faster than before.

However, digitizing Vietnam remittances still have many difficulties to overcome, especially the people's awareness of modern technologies.

Cross border investments

Investments Vietnam market, especially the Vietnam fintech market have been increasing so fast in recent years. Many big venture capitals step foot into this market and turn startups into unicorns, the best example is MoMo with the investments of Standard Chartered and Goldman Sachs.

This money from big investors has contributed to making FDI activities in Vietnam more exciting. It also helps Vietnam closer to the goal of becoming Asia's next dragon within the next 5 years.

Cross border trading

Trading is also the activity that promotes the economic growth of a nation in the fastest way because, through trading, both domestic and foreign businesses can take profits and can contribute to the state budget.

With the correct policy line of the Party and the State, Vietnam has opened the trading market and welcomed all foreigners to Vietnam to trade since 1992. From that, Vietnam’s economy and life quality have upgraded to the next level, especially in the age of technological development like today.

By now, cross border trading to Vietnam is becoming more modern by using the newest technologies such as AI, the internet of things, etc., especially blockchain in cross border payments.

Continue watching part 2 of the series about cross border payment here