Why Vietnam Is The Next Payments And Commerce Frontier

Here’s a thought as the unofficial end of summer draws near and a new decade looms: Pay more attention to Vietnam. No doubt you already are, but maybe pay even more attention, especially to get a better sense of how digital and mobile payment and commerce trends are playing out in one of the fastest-growing economies in the world.

In a new PYMNTS interview with Karen Webster, Ryan Frere, the vice president of global payments at Flywire, made one of the latest cases we’ve heard about why Vietnam not only matters when it comes to payments and commerce, but why that country and that market is significant to all the things that are important to the digital economy.

Similar Paths

Granted cash — and cash-on-delivery — still have principal roles in Vietnam. A robust middle class is still emerging, and wealth is pretty small compared to the region’s leading player, China. However, things are changing, things that signal an ongoing and lasting move toward more digitalization.

“It’s taking a similar path as China,” Frere told Webster. That is, consumers in Vietnam are moving toward the general idea of using their mobile devices — “The device in hand,” as he described it — to handle the multitude of transactions that pop up in a typical day. Those transactions might include food delivery,  ride-hailing and retail purchases, among others. Already, China-based operations such as Alipay are building their presence in this Southeast Asian country, and more mobile offerings are sure to follow or find deeper footings there.

Indeed, Flywire is getting involved in the payments game for Vietnam and its consumers. As PYMNTS has covered, the company is joining forces with Vietnam Prosperity Bank (VPBank) to make it easier for Vietnamese students to make international tuition payments. According to a release, Flywire will allow the students — many of whom study in Japan and Australia — to make payments in VND in the method they choose. That includes bank transfers, which are very popular in Vietnam.

So what does it take to achieve payments success in Vietnam — to have a chance to grab meaningful market share and have an opportunity to build a product or even ecosystem that will attract and retain consumers?

Champion Bank

According to Frere, having the right bank partner is critical. Vietnam’s government and central bank have rather strict FX and currency controls, and working with the right local bank will help an outside company navigate those thickets of regulations. “The amount of documentation to make FX transactions can be almost prohibitive,” he told Webster. “The government doesn’t want currency moving out of the country. You need a strong champion bank.”

Outside firms that want to play a significant and profitable role in Vietnam in the 2020s also need to pay attention to how manufacturers are moving there, and all the general supply chain issues related to that. After all, such economic activity is sure to bring more income benefits to Vietnamese consumers, and to help build that middle class. Moreover, those trends, in turn, will almost certainly encourage more efforts to bring even more digital and mobile transactions to the country.

What is happening, or has happened, in neighboring countries — and to developing countries in general — also is worth studying. After all, Vietnam has the benefit of taking lessons from those experiences. Also, in many respects, what is happening with payments and payment process in Vietnam is not too dissimilar from what was happening in other parts of that region, Frere said.

Fresh Investment

No matter what, relevant and interesting things are happening in Vietnam. One recent example? Grab recently announced that it will invest $500 million into Vietnam, and the Singapore-based provider of transportation and other services is now revealing details about what it has planned for Vietnam. Already, Grab has teamed up with Vietnam FinTech company Moka to introduce a digital wallet. The company also partnered with Japanese credit card outfit Credit Saison to offer loans and credit insight to small entrepreneurs in SE Asia.

It’s hardly news that Vietnam is on the rise. However, a closer — and sustained — look at the payment and commerce trends playing out there could pay big dividends down the road.