Fintech in Vietnam: Market access and conditions

Financial Technology (“Fintech”) is one of the fastest growing business sectors globally, with Vietnam at the forefront of Fintech growth. Fintech targets a diverse customer base, from individuals, to enterprises, banks, non-government organisations (NGO), public authorities, and so forth.

Fintech has become an integral part of financial activities for individuals, starting with traditional activities usually undertaken by banks such as payments, lending, wealth management, and Point-Of-Sale (POS), and continuing with new business models developed through introduction of new technologies such as blockchain, insurtech and digital banking.

General discussion on Fintech

While the opportunities for growth are substantial for international investors seeking to enter the financial technology sector in Vietnam, it is important for foreign investors to be aware of the conditions, limitations and particular licensing provisions before setting out with a defined market entry strategy.

In Vietnam, Fintech companies received $410 million, or 36% of the total global capital invested into Southeast Asia’s Fintech economies, between January and September of 2019, only behind Singapore. This further outlines the foreign investors’ consistent interest in the Fintech business in Vietnam.

Below is an analysis of selected prominent Fintech activities in Vietnam from a licensing, commercial and legalistic perspective, covering business conditions as well as licensing procedures:

• Payment Intermediary Services, including:
  • Electronic Payment Gateway Services
  • E-Wallet Services
• Peer-to-Peer Lending (P2P Lending)

Electronic Payment Gateway Services

Electronic Payment Gateway Services are services providing technical infrastructure to connect between the payment acceptance units (the Sellers) and banks (where the Purchasers have owned their payment account), in order to assist customers to make payments in e-commerce transactions, electronic bill payments and other electronic payments.

The platform acts like a bridge between the purchaser and the seller in electronic transactions, enabling clients to make non-cash payments quickly and conveniently, and keep their personal information secure.

In Vietnam, some of the more popular electronic payment gateway service providers include:

• https://vnpay.vn/
• https://www.payoo.vn/
• https://www.smartlink.com.vn/
• https://www.nganluong.vn/vn/home.html

Electronic wallet service (e-Wallet service)

Pursuant to Decree 101/2012/ND-CP of the Government, an E-wallet service is regulated where “a provider of payment intermediary services provides a client with a nominal electronic account on an information carrier (such as electronic chip, mobile phone sim, computer, etc.) that enables the client to store a sum of money in the form of deposit equivalent to the sum of money transferred from the customer’s payment account at a bank to a secured payment account of the provider of digital wallet service with the ratio of 1:1.”

E-wallets in Vietnam are growing widely and are used to pay for goods and services at supermarkets, convenience stores, e-commerce websites (such as Shopee, Lazada, Tiki), or other applications and software (such as Grab, Spotify, Delivery Now). At the same time, e-wallets are supported by incentivised users due to frequent promotions, discounts and points accumulation.

Popular e-wallet service providers in Vietnam include:

• https://momo.vn/
• https://www.moca.vn/
• https://airpay.vn/gioi-thieu/
• https://zalopay.vn/

Market access limitation under WTO commitment and Business Line registration

With regard to market access regulations for foreign investors entering Vietnam applicable to the provision of intermediary payment services, these activities have not been committed by the Vietnamese authorities under the WTO Commitment. Accordingly, after receiving an investment project registration application from foreign investors, the licensing authority needs to consult the relevant Ministries in regard to permitting investors to undertake activities in-country. That said, there are currently no regulations or conditions regarding foreign investors’ ownership limitations when establishing entities in Vietnam operating with intermediary payment services.

In practice, we have seen a number of foreign-invested companies in Vietnam obtaining approval from the licensing authorities to perform intermediary payment services under their approved business lines. One of the most common business lines which is relevant for companies providing Payment Intermediary Service is