As COVID-wary shoppers seek safety from germs in cashless transactions, digital payments have boomed. And where consumers go, businesses must follow. Bucking the trend, Vietnam’s SMEs are stubbornly clinging to the old way of doing things. But according to Winnie Wong, Country Manager of Vietnam, Cambodia & Laos for Mastercard, there are early signs that contactless payments are going mainstream as digital transformation is becoming more widespread.
In her interview with Vietcetera, Winnie explains why it’s time to retire cash, how digitizing payments opens up ways for Vietnamese businesses to improve payment tracking, make cash flow more manageable, and provide higher financial security.
Mastercard Vietnam's Winnie Wong on digitizing payments [Vietnam Innovators Ep. 2]
What encouraging signs towards digitization in payments has Mastercard observed in Vietnam of late?
For the last 50 years Mastercard has been striving towards a world beyond cash. And recently, we have seen an acceleration towards a ‘beyond cash’ economy. In Vietnam, our office has been actively working with banks and Fintechs to drive this transition.
Vietnam is one of the most dynamic markets in SEA and APAC, so we are bullish about the signs and trends that are happening. From the regulator’s push to drive a cashless agenda, which is part of the broader government’s vision, to private companies who partner up for the public, a lot of exciting initiatives are happening.
Vietnam is still a very cash-based economy. What has been implemented so far on the digital payments side is just the tip of the iceberg. The willingness to push this forward is very encouraging for us. We hope to use our global expertise to accelerate the growth on digital payment here.
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What is your strategy for getting Mastercard credit cards into the wallets of Vietnamese consumers?
Mastercard identifies as a payment technology company, not a credit-card company. The banks give the credits, while we focus on transactions and the data that can be gleaned from them.
Rather than supplying the population of Vietnam with credit cards, we’re active in promoting digital payments in the country. Our expertise lies in bringing cutting-edge innovation, and Mastercard-powered software for real-time payments systems is what our clients come to us for. In addition to leveraging our acquisition of account-to-account capabilities, we’re continuing to work with banks to make sure that the payment tool becomes more accessible to businesses and consumers.
What are some examples of successful partnerships you have formed that have accelerated this narrative in Vietnam?
We’ve been talking to banks about going digital-first for quite some time now. As a result, many banks globally are coming to us for digital banking expertise, while non-banks are applying for their digital bank licenses.
In Vietnam, banks are following the global trend. Given that millennials have come into their own as a major social and economic force, banks are being forced to meet them on their smartphones. Instead of branch visits, customer engagement and service delivery are now taking place in the digital space.
To help banks move from traditional to digital, we are bringing proprietary technology to the table. There are ways to simplify customer identification processes using biometrics and artificial intelligence.
Behind the scenes, the piping is becoming much more sophisticated and seamless, creating enhanced security and better consumer experiences that keep up with how people live and work.
On a macro-level, what are some trends that make you believe Vietnam is making significant progress to becoming a cashless society?
In Vietnam, the growth of digital payments continues in high double digits. Even as global economies are being ravaged by COVID-19, Vietnam’s market has still grown by leaps and bounds. We still have a long way to go, but the trend is very positive.
Domestically, spending returned to pre-COVID levels, especially online. This is a positive sign, so we are optimistic.
What do Vietnamese consumers recognize Mastercard for?
Consumers associate us with travel convenience, appreciating the ease with which they can cancel a lost or stolen credit card when on the road. We hope that one day we’ll be equally known for everyday transactions and purchases.
What challenges are you seeing in the market?
The biggest challenge is changing consumer habits. Despite the industry’s best efforts to promote the benefits of going cashless, consumers and e-merchants are not quite on board yet.
For consumers, we’ve seen a greater adoption after showing them the benefits of contactless payments. But merchant adoption is something we all need to work on. Business owners forget that cash comes with hidden costs: handling, counting, fraud, theft, or the cost you incur when losing cash.
For businesses looking for funding, it’s worth keeping in mind that cash-based transactions are not recorded. Whereas with digital payments, everything can be tracked through the bank's systems. Without proper bookkeeping and financial records, you cannot prove your credibility and get financial backing.
When talking to young people, many are surprised to learn that to get a mortgage on a house or to pay for a car in installments, they will need credit history with a bank or a statement from a recognized financial institution. “My mom said I’m good with money” won’t wash.
I’ve been on many panels speaking to SMEs about the importance of going cashless and you’d be surprised to hear that for many attendees these revelations are an AHA moment.
Can you give us a view into the inner workings of Mastercard?
We leverage a lot of support from experts from the region, especially in our regional offices in Singapore. In Vietnam, I have a small team who are frontliners focusing on account management or business development.
We’re a B2B2C company: we are the processors and the banks are the retail clients for the consumers. Consumers are having a hard time with this definition, but we are working to brand in a way that makes what we do more understandable.
We’re going to continue to invest and thrive in this country by bringing in the payment solutions and global expertise that banks and Fintechs in Vietnam may not be exposed to yet. With increasing digital penetration and the fastest growing middle class in the region, we have an exciting future ahead of us.