Vietnam's Cashless Revolution: Transforming Digital Finance Landscape in Southeast Asia

1. Summary

• Vietnam is rapidly transitioning towards a cashless economy driven by innovative financial solutions and significant public initiatives. This report examines the factors influencing this evolution, identifies emerging players in the market, and discusses implications for the future of payment systems in Vietnam. As one of the most promising markets in Southeast Asia, the country's journey towards digital payments presents valuable insights for business professionals, investors, and policymakers alike.

2. The Evolution of Vietnam's Digital Finance Landscape

• 2-1. Overview of Vietnam's Economic Context

• Vietnam's economic transformation over the past decade has been nothing short of remarkable. As one of the fastest-growing economies in Southeast Asia, Vietnam has witnessed a shift from a largely cash-dependent society to a burgeoning digital finance ecosystem. This evolution is underpinned by significant governmental initiatives aimed at enhancing financial inclusion and encouraging cashless transactions. According to a report by Chiming, innovative financial solutions and a series of public initiatives have set the stage for a cashless revolution that aligns with broader economic growth objectives.

• In 2024, Vietnam's Gross Transaction Value (GTV) for digital payments reached an impressive USD 149 billion, signifying an annual growth rate of 18%. This impressive statistic is reflective of the broader digital transformation as the nation capitalizes on technology to overcome historical barriers to financial services, such as cultural reliance on cash and a high percentage of unbanked individuals in rural areas. Efforts to expand access to mobile devices and the internet have played a pivotal role in this transformation.

• 2-2. Historical Perspective on Cash Usage

• Historically, Vietnam, like many countries in the region, relied heavily on cash transactions. Cultural habits and limited financial literacy contributed to a cash-centric economy, where the majority of transactions occurred without formal banking services. Nevertheless, consumer behavior has gradually shifted as Vietnamese citizens become more familiar with digital banking.

• The utilization of digital banking services has significantly increased, with recent surveys indicating that almost a third of Vietnamese consumers now use digital banking for purchases and transfers. The government's initiatives, such as the National Financial Inclusion Strategy launched in 2020, aim to transition Vietnamese society from its longstanding cash reliance, promoting the use of digital financial services and elevating financial literacy among the populace. Efforts to launch Mobile Money, particularly focused on unbanked populations, further demonstrate the commitment to driving this historical shift.

• 2-3. Impact of COVID-19 on Payment Methods

• The COVID-19 pandemic acted as a catalyst for the acceleration of digital payment adoption in Vietnam. Prior to the onset of the pandemic, a gradual move towards digital payments was visible; however, the restrictions imposed during the pandemic highlighted the need for contactless payment systems. As a result, many consumers and businesses quickly adapted to digital alternatives to continue conducting transactions safely.

• According to various reports, the usage of bank apps surged, becoming the primary method for 37% of consumers' most recent purchases. E-wallets similarly gained tremendous traction, used by 31% of users, while the reliance on cash plummeted to just 15%. This rapid transition showcased the flexibility of Vietnam's consumer base and the transformative role of technology in enabling safe, efficient payment methods, reinforcing the long-term viability of digital finance post-pandemic.

• 2-4. Current Trends in Digital Finance and E-Payments

• In contemporary Vietnam, several trends are reshaping the digital finance landscape. The rise of e-wallets is a notable phenomenon, with over 85% of respondents in recent surveys indicating they possess at least one payment app. This is complemented by a competitive market dominated by leading e-wallet providers such as Momo, Moca, and ZaloPay. However, the success of these platforms also highlights the growing expectation for traditional banks to enhance their digital services.

• Moreover, the increasing utilization of innovations like 'Buy Now, Pay Later' (BNPL) models, which surged by 113% in 2023, reveals a shifting landscape in financing options. The fintech ecosystem in Vietnam, now encompassing around 220 solutions spanning payment processing, peer-to-peer lending, and wealthtech, is quickly evolving. As projected, the GTV of digital payments is expected to double to USD 300 billion by 2030, with considerable growth anticipated in areas such as digital insurance and lending.

3. Factors Driving the Cashless Revolution

• 3-1. Innovative financial solutions

• Vietnam's financial landscape is undergoing a remarkable transformation, led by the rapid adoption of innovative financial solutions that cater to a broad range of consumer needs. Digital payment methods have surged in popularity, becoming the most preferred option for transactions. According to the Vietnam Consumer Trends 2024 report, 37% of respondents indicated that they used bank apps for their most recent purchases, while 31% favored e-wallets, leaving traditional cash transactions at only 15%. This statistics highlight the shift away from cash reliance towards mobile and online payment solutions.

• Fintech innovations are extensively driving this revolution, with a significant focus on enhancing financial inclusion and accessibility. The introduction of products like Buy Now, Pay Later (BNPL) services has gained traction, recording a 113% increase in transaction volume in 2023. Through BNPL schemes, Vietnamese consumers can indulge in low-value purchases via interest-free installments, fostering a shift from traditional card usage to more flexible payment options. The digital lending sector is also witnessing growth, reaching a loan book balance of approximately $6 billion in 2024, marking a 49% year-over-year increase. These trends indicate that innovative financial solutions are reshaping the Vietnamese payment landscape and enhancing the consumer experience.

• Moreover, wealthtech is emerging as a significant sector within the fintech ecosystem. The number of domestic stock trading accounts has increased to 7.2 million in 2023, with projections indicating a rise to 8.7 million in 2024. This growth reflects a broader movement towards digital financial management and investment. As financial solutions continue to evolve, they are crucial in providing Vietnam's population with more accessible and diversified options.

• 3-2. Public initiatives and policies promoting cashless transactions

• Public initiatives play a vital role in Vietnam's cashless revolution, led by strategic government policies aimed at promoting digital finance and enhancing financial literacy. The National Financial Inclusion Strategy launched by the State Bank of Vietnam in 2020 set an ambitious target: to improve the proportion of adults accessing formal financial services to 80% by 2025. This initiative is primarily focused on speeding up the shift away from cash transactions and expanding the use of digital financial services.

• Programs such as 'Smart Money' and 'Tomorrow Bankers' have been instituted to raise consumer awareness while promoting the accessibility of financial services among the unbanked and underbanked populations. In particular, the pilot program for Mobile Money aims to facilitate transactions for those lacking access to traditional banking systems, thereby expanding the cashless economy to more remote and disadvantaged areas. Such governmental efforts reflect a coherent strategy to ensure that the advantages of financial technology benefit the broadest segments of society.

• Furthermore, the recent draft decree introducing a regulatory sandbox for fintech solutions allows for the experimental implementation of innovative financial services, including credit scoring and open APIs for digital lending. This regulatory framework is expected to provide a conducive environment for fintech firms, enabling them to refine their offerings while ensuring consumer protection and financial stability.

• 3-3. Technological advancements affecting the payment sector

• Technological advancements are pivotal in driving Vietnam's cashless transition. The increasing penetration of smartphones and the internet is a significant contributor to the uptake of digital payments. With over 85% of individuals reportedly possessing at least one e-wallet or payment app, and with substantial weekly usage among 71% of these respondents, it is evident that technology is enabling consumer engagement with digital financial platforms.

• The introduction of digital wallets has shifted consumer behavior considerably, as evidenced by their rising dominance in the payment sector. The National Payment Corporation of Vietnam (NAPAS) is spearheading initiatives such as the VietQR, which enhances the capacities of QR code payments and transactions, bridging gaps between various financial service providers. In addition, the burgeoning super-app market emphasizes the importance of customer convenience by integrating wide-ranging services from payments to e-commerce within a single app, thus fostering user retention.

• Additionally, the potential introduction of Central Bank Digital Currencies (CBDCs) is gaining attention in Vietnam. With the State Bank of Vietnam tasked with exploring 'virtual money' over the next three years, it opens pathways to lower transaction fees and facilitate cross-border payments. This cycle of innovation ensures that Vietnam remains competitive within the global digital economy and capitalizes on technological progress.

• 3-4. Consumer behavior changes towards digital payments

• Consumer behaviors in Vietnam are evolving rapidly, showcasing a pronounced shift towards the acceptance and usage of digital payment methods. A notable finding from a survey by Visa reveals that nearly a third of Vietnamese consumers currently engage in digital banking for various purchases and transfers. This increased adaptation underscores a broader trend of convenience and instant gratification that digital payments offer compared to traditional cash transactions.

• The COVID-19 pandemic acted as a catalyst for this shift, as health concerns prompted many to minimize cash transactions to reduce physical contact. The resulting experience has reinforced consumer comfort with digital transactions, supported by improvements in security and user experience. The portion of the population utilizing digital banking services is primarily driven by younger demographics who commonly seek quick and seamless transaction processes enabled by technology.

• The noteworthy reduction of cash reliance, reflected by the diminishing percentage of respondents using cash for transactions, signifies a deep-seated transformation in payment preferences. Financial literacy campaigns and the growing availability of educational resources are critical in promoting understanding and confidence in these digital solutions. As financial technology continues to mature, consumer sentiment is anticipated to further gravitate towards digital payments, establishing Vietnam as a robust cashless economy in the future.

4. Emerging Players and Competition in the Market

• 4-1. Profile of new competitors in the digital payments space

• In Vietnam's rapidly evolving digital payments landscape, new competitors are continuously emerging, reshaping the competitive dynamics. Recent trends indicate that the adoption of digital finance solutions has gained significant traction, with several non-bank entities gradually carving out their niche. For instance, the entrance of tech giants such as Apple Pay and Samsung Pay has intensified market competition. Both platforms leverage their extensive user bases and brand recognition to penetrate the Vietnamese market effectively. Apple Pay, which launched in August 2023, achieved a notable 7% penetration rate by Q4 2023, offering mobile payments that cater to both online transactions and in-store purchases. Such competitors enhance the variety of payment options available to consumers and exemplify the increasing presence of technology firms in the financial services sector. Furthermore, local players like MoMo and ZaloPay continue to dominate the market, maintaining significant user engagement with penetration rates of 62% and 45%, respectively. However, both platforms have experienced a decline in usage, reflecting the challenges even established players face against both traditional banks and emerging fintech solutions. The shifting consumer preferences indicate that users increasingly seek platforms that seamlessly integrate payment solutions with other financial services, prompting both established and new entrants to innovate continually.

• 4-2. Traditional banks gaining ground: Case studies

• As newer fintech entities emerge, traditional banks have recognized the need for digital transformation to remain competitive in Vietnam's financial landscape. The Vietnam Bank for Agriculture and Rural Development (Agribank) exemplifies this shift. In 2022, Agribank launched Agribank Digital, a comprehensive suite of digital banking tools aimed at enhancing financial access, particularly in rural areas. This initiative not only digitized the banking experience but also broadened the availability of banking services in underserved communities, showcasing the potential for banks to bridge significant gaps in financial inclusion. Military Bank (MB) has also demonstrated a proactive approach by partnering with IBM in its digital transformation strategy. Their all-in-one app, targeting convenience for both individuals and businesses, highlights how traditional banks are leveraging technology to retain and attract customers. Vu Thanh Trung, MB's director of digital banking, revealed that the bank invests approximately US$50 million annually in digital projects, underlining a commitment to maintaining a competitive edge amidst rising fintech competition. This strategic pivot is indicative of a broader trend where banks are not merely reacting to challenges posed by fintech but are actively reimagining their service offerings to align with evolving consumer needs.

• 4-3. Analysis of Moca by Grab's growth and market position

• Moca, a digital wallet service integrated into the Grab application, represents a significant case in Vietnam's digital payments evolution. Initially ranking as the sixth most-used digital financial platform with an 8% penetration rate in Q4 2022, Moca's position has faced challenges due to the rapid rise of mobile banking applications from traditional banks. By Q4 2023, Moca had slipped out of the top rankings, a clear indication of the shifting preferences among consumers who gravitate towards solutions offered by established banks. Despite this decline, Grab's decision to restructure its service offerings may hint at a strategic redirection. The announcement in late 2023 regarding the cessation of Moca operations starting July 1, 2024, was positioned as part of Grab's broader focus on achieving sustainable growth. This situation reflects a common challenge among fintechs: maintaining competitive viability against the robust offerings of traditional banks and the demand for comprehensive financial services beyond simple payment functionalities. Grab's experience underscores the necessity for fintech providers to evolve in conjunction with market expectations and emerging trends.

• 4-4. Competitive landscape: Challenges and opportunities for established players

• The competitive landscape in Vietnam's digital finance sector presents both opportunities and challenges for established players. With the entry of new fintech solutions and the adaptation of traditional banks, the landscape has transformed into a dynamic battleground for market share. Established players such as MoMo and ZaloPay face significant challenges from the mobile banking applications of traditional banks, which collectively achieved a penetration rate of 23%, reflecting the consumers' transitioning preferences towards these more holistic financial solutions. However, this competition also breeds innovation. The rising pressure to meet customer demands for integrated financial services has prompted traditional banks to enhance their technological capabilities and invest substantially in digital transformation. Collectively, at least 96% of Vietnamese banks have outlined plans for digital advancements, indicating a sector-wide acknowledgment of the need to innovate. This scenario offers substantial opportunities for collaboration between banks and fintech firms, potentially leading to the development of hybrid solutions that leverage the strengths of both sectors. Ultimately, while competition intensifies, it could catalyze a wave of innovation that benefits consumers and the broader economic landscape.

5. Future Implications for Payment Systems in Vietnam

• 5-1. The significance of a cashless society for economic growth

• Vietnam's transition to a cashless society is not merely an adaptation of technology; it represents a fundamental shift in the economic landscape. The total transaction value of the e-payment sector is projected to reach USD 15 billion in 2021, with an expected annual growth rate of 15.7% by 2025. This growth is largely attributed to the increased efficiency, lower transaction costs, and heightened security offered by digital payments. With cashless transactions expected to permeate deeper into Vietnamese society, economic activities are anticipated to become more transparent and easier to track, ultimately fueling broader economic growth. Financial inclusion is a critical aspect of this transition, as mobile devices and accessible payment mechanisms provide remote and underserved populations with access to financial services, potentially lifting vast segments of the population out of poverty and enhancing their purchasing power.

• Moreover, as digital wallets and e-payment platforms proliferate, they encourage spending and investment, thus propelling domestic consumption. The Vietnamese government's National Financial Inclusion Strategy, launched in 2020, underscores this commitment by aiming to increase the percentage of adults with bank accounts to 80% by 2025. By facilitating smoother transactions and supporting the MSME sector, cashless systems are expected to underpin a more robust and diversified economy.

• 5-2. Potential challenges to widespread adoption

• Despite the significant momentum towards a cashless economy, several challenges may impede the widespread adoption of digital payment systems in Vietnam. Firstly, approximately 30% of the Vietnamese adults utilize digital banking services, indicating substantial room for growth but also a strong reliance on cash among many citizens. Cultural factors and traditional preferences for cash transactions may deter some individuals from embracing e-payments, particularly in rural areas where trust in technology and infrastructure is still evolving.

• Furthermore, cybersecurity threats pose a considerable risk to the acceptance of digital payment systems. Vietnam's rise in the digital economy has been accompanied by an increase in sophisticated cyber threats, with phishing attacks notably impacting consumer trust. The 2020 Kaspersky IT Security Economics survey highlighted that Vietnam faced significant cyber threats in the region. Businesses must enhance their cybersecurity measures to protect customers. Greater collaboration between government and financial institutions is essential to improve security frameworks and build consumer confidence.

• Regulatory challenges may also arise as the rapid evolution of payment technologies outpaces existing financial regulation frameworks. The introduction of new payment methods such as mobile money, digital currencies, and decentralized finance requires agile regulatory responses to foster innovation while protecting consumers.

• 5-3. Recommendations for stakeholders in the digital finance ecosystem

• For stakeholders across the financial spectrum, embracing innovative approaches and fostering collaboration will be essential for realizing the full potential of Vietnam's cashless transition. Financial institutions should focus on enhancing their digital platforms to improve user experiences while ensuring the convenience and security of transactions. Investments in user education and awareness campaigns will help demystify digital payment solutions, making them more accessible and understandable to broader demographics.

• Additionally, stakeholders must prioritize consumer protection, enhancing transparency in operations and transactions. Implementing robust frameworks for data protection and establishing clear mechanisms for reporting and resolving fraud incidents can significantly bolster customer trust. Financial institutions should also engage with fintech companies to capitalize on technology advancements that can deliver seamless, feature-rich services.

• Given the competitive landscape, where banks and fintechs interact dynamically, strategic partnerships and collaborations will be pivotal. Traditional banks need to adapt swiftly, considering the growing penetration of mobile banking and digital wallet services and possibly integrating new technology solutions such as APIs and open banking frameworks to create a unified user experience.

• 5-4. Long-term outlook for payment technologies in Vietnam

• The long-term outlook for payment technologies in Vietnam is poised for transformative growth. As the government initiates programs like the Mobile Money pilot, financial innovators are likely to take the lead in developing new services tailored to various segments of the population, particularly focusing on those traditionally excluded from banking. E-payment platforms such as MoMo and ZaloPay have already shown impressive market penetration and are evolving their offerings to compete in a crowded marketplace.

• The growth of digital currencies and open banking will also catalyze advancements in payment technologies, enhancing consumer experiences while facilitating cross-border transactions. With the State Bank of Vietnam exploring pilot projects for virtual money, Vietnam could align with regional peers in adopting central bank digital currencies (CBDCs), further reinforcing its position in the global digital financial ecosystem.

• Moreover, the increasing interoperability of digital payment systems through frameworks like VietQR signals a shift toward comprehensive and cohesive digital financial services. These advances will support both consumer-level transactions and B2B interactions, enhancing productivity and efficiency across sectors. As Vietnam continues on this trajectory, the convergence of fintech innovations with traditional banking practices will set the stage for a new era in digital finance, enhancing the nation's competitiveness in Southeast Asia and beyond.

Conclusion

• The shift towards a cashless economy in Vietnam is not only significant for local economic dynamics but also places the nation as a leader in digital innovation in Southeast Asia. As the landscape continues to evolve, it is crucial for stakeholders to adapt to market changes, embrace new technologies, and consider consumer needs for successful integration of digital payment solutions. Preparing for future developments in this sector will be paramount for achieving a robust digital financial ecosystem.

Glossary

• Gross Transaction Value (GTV) [Concept]: The total value of transactions processed through digital payment platforms, reflecting market performance and growth over a specified period.

• Financial Inclusion [Concept]: The effort to ensure that all individuals and businesses have access to useful and affordable financial products, services, and information.

• Mobile Money [Product]: Digital payment services that allow users to send and receive money via mobile devices, crucial for unbanked populations.

• Buy Now, Pay Later (BNPL) [Product]: A payment option that allows consumers to make purchases and pay for them in installments, often without interest, enhancing consumer expenditure.

• Central Bank Digital Currencies (CBDCs) [Concept]: Digital forms of a country's currency issued and regulated by the central bank, designed to provide secure and efficient payment options.

• National Payment Corporation of Vietnam (NAPAS) [Company]: An entity that facilitates and manages payment transactions in Vietnam, promoting digital payment solutions like QR code payments.

• VietQR [Technology]: A payment system utilizing QR codes to enable seamless transactions between various financial service providers in Vietnam.

• Smart Money [Document]: A public initiative aimed at increasing consumer awareness and access to financial services in the context of Vietnam's cashless economy.

• Tomorrow Bankers [Document]: A program focused on enhancing financial literacy and promoting access to financial services among underserved populations in Vietnam.

Source Documents

• Is Vietnam Undergoing a Cashless Revolution? - Fintech Singaporehttps://fintechnews.sg/104283/vietnam/cashless-vietnam/
• Payments 2025 and beyond: Evolution to revolutionhttps://www.pwc.com/vn/en/publications/vietnam-publications/payments-2025-and-beyond.html
• Vietnam’s Digital Finance Landscape: Banks Gain Ground Amidst Shifting Competition - Fintech Singaporehttps://fintechnews.sg/97616/vietnam/vietnam-digital-finance/