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Vietnam Allow Banks Use Foreign E-wallets To International Payments

The State Bank of Vietnam is attending a seminar of a Circular on non-cash payments that allows domestic commercial banks, intermediary payment companies, domestic companies to cooperate with fintech companies, foreign intermediaries to provide the best international payment solution.

Traditional: Banks and third-party payment companies

Hanoi (VNS / TTXVN) - The State Bank of Vietnam is attending a seminar of a circular on non-cash payments that will allow domestic commercial banks and domestic payment intermediaries to cooperate with Foreign intermediary payment companies to provide international payment services.

According to the current regulations, domestic banks are only allowed to cooperate with foreign banks and international card organizations for global payment solutions.

There are no rules on international settlements via foreign e-wallets and international payments without payment accounts. This loophole in the era of Industry 4.0 has witnessed the rapid explosion of international payment services, creating a premise for the development of neobanks. In recent years, the demand for payments through foreign e-wallets such as WeChat Pay and Alipay has been huge from Chinese tourists in Vietnam. Vietnam attracts a large number of Chinese tourists and increases continued in the next years.

Banks and third-party payment companies have asked central banks to allow them to cooperate with foreign intermediary settlement companies to serve international needs such as investments, loans, payments, basic consumption and exploit the huge potential of the field at the same time.

Mr. Nguyen Hung, General Director of TPBank, said domestic banks cannot collaborate with worldwide e-wallets such as WeChat Pay and Alipay at the moment due to the lack of legal framework. "We have been preparing for a long time to open the main door but have to wait for the central bank to turn on the green light and break the barrier," said Mr. Hung, as quoted by the Investment (Investment) newspaper on an online newspaper.

According to Pham Tien Dung, director-general of the central bank’s Payment Department, Industrial Revolution 4.0 has created a number of new worldwide payment and remittance paradigms. This is the inevitable trend of technology 4.0, repelling customs, and complicated frames.

In the past, international settlements were mainly made via bank accounts, small money transfer companies and credit cards, but now e-wallets are emerging, all the limits will be broken, we all integrate, he added. “It is clear that the definition of international payments has to be changed. People can make global payments through their banks and through third-party payment methods, ”he said. "In a changing world, methods of management, spending and accumulated investment also need to change", Mr. Dung emphasized.

Along with the advancement of technology, cross- border payments and remittances are becoming much easier. Cross-border third-party payment platforms are booming around the world, attracting not only fintech companies, venture capitals, but also large corporations like Amazon, Apple and Google.

See more: Venture Capital Vietnam

Vietnam e-wallets are reaching out to the border

The experts predict there will be a wave of cooperation between domestic banks and fintech companies with foreign e-wallets after the central bank opens this important sandbox pilot. This will also provide support for the travel industry and e-commerce. E-wallets are developing rapidly in Vietnam. AppotaPay received a license from the State Bank of Vietnam in October, becoming the 39th third-party payment companies in Vietnam.

Although the COVID-19 pandemic brings many difficulties for almost all industries, this pandemic is a massive push for the development of cashless payments for settlement intermediaries or fintech companies. Of the country's 97 million population, about 70% of them have internet access and 45% use a smartphone, about 33% of the population has the potential to use this service equivalently.

Statistics from the Central Bank showed that there were about 13 million e-wallet accounts activated in Vietnam with a total outstanding balance of 1.36 trillion dongs (58.62 million USD), as of the end of the first quarter. More than 225 million transactions were made, worth 77.7 trillion dongs via e-wallet in the first quarter.