“For me, cash is still very convenient in a way,” said Syphong Bui, the founder of Vietnam-based mobile wallet developer Ononpay in an interview with KrASIA. Perhaps surprising coming from someone looking to bring payments online.

Not only is cash safe in the sense that it is a tangible asset, always firmly within grasp, it’s also convenient to use because it’s universally accepted at transaction points nearly everywhere, said Bui. Yet, he thinks it’s important for Vietnam to push for mobile wallets now.

The fundamental issue he sees is unequal access to the formal banking system, which can bring benefits loans and much higher convenience, for example being able to pay for something online without leaving the house. Only 31% of Vietnamese own a transaction account, according to the World Bank in 2017, leaving 69% of the country’s 90 million people critically underserved by banks. Local media VN Express International recently cited an economist as saying that most banks are located in the city, not the rural areas.

TheWorld Bank identified a number of barriers that prevent Vietnamese people from “accessing and using formal financial services“. 6.2 million adults found that financial services are too far to access, 2.2 million adults said these services are too expensive to use, 2.3 million adults were restricted by the documents required to apply, and 1.1 million adults did not trust the financial industry.

For those who have to commute to pay for utilities, or need a simpler, quicker way to apply for small loans, mobile wallets can be an alternative.

Ononpay was officially established in April 2015. Bui combined his experience working for smartphone maker HTC in France with that from his stint helping banks with digital transformation projects in Vietnam’s emerging, smartphone-first market. As one of the early movers in the industry, he faced the challenge of convincing people – both consumers and merchants – to trust the service even though, unlike a bank, it did not have branches across the country or even a presence in a neighbouring province.

To combat this issue, Ononpay mobilised mom and pop store owners to act as ‘branches’ for them. When consumers need to top up their mobile payment accounts, they give the store owner the same amount in cash. Ononpay has around 3,000 such transaction points, said Bui. Aside of these mom and pop stores, consumers can also top up their mobile wallets online by linking their bank accounts to the app, but only 3% of people using Ononpay do so, since most are unbanked.

The company generates revenue in a number of ways, including a 1% transaction fee which it collects from service providers, and a fee for connecting users with other services provided by financial institutions like lending.

He added that Ononpay will offer financial services to those who make a lot of transactions with the platform. “You don’t have to bring your account to any bank at all [to show them your credit history]. Most likely in rural areas, there would be no bank,” he said.

While Bui insists that Ononpay is the only company in Vietnam truly targeting the unbanked population in third-tier and rural areas, another service that has served this demographic is ViettelPay, the e-wallet arm of the eponymous telco. According The Voice of Vietnam, ViettelPay is a newly launched service that has hit two million users in four months of operations, and has “gradually” served those in “rural and mountainous areas”.

Other mobile wallets in Vietnam include Momo, which targets Hanoi and Ho Chi Minh City, according to the Asian Banker;VNG-developed ZaloPay, which has plans to “replace cash in every transaction in major cities in Vietnam”; and GrabPay by Moca, a solution that is looking to drive mobile payments across Vietnam.

Recently, Singapore-headquartered O2O giant Grab announced that it will be co-launching a physical and virtual prepaid card with Mastercard, eyeing markets like Singapore and the Philippines in the first half of 2019. It is one of Grab’s many initiatives to target the unbanked. While the firm did not say that Vietnam would be a key market for this card, the country is home to a large unbanked population. Bui was not entirely convinced a card-based system will make a big difference in the lives of those in third-tier and rural communities.

“What do you think they’re going to change? I wouldn’t say a bad word about them, but Mastercard has been around for decades,” he said. “Do you think that something [Mastercard] failed to do with banks, they are going to succeed with Grab? Because basically, the population the banks have is first-tier, second-tier cities. Grab also has the exact same population.”

He remarked that “it’s a good initiative”, however, it is the execution that will set it apart. Ultimately, Ononpay may also go down the road of providing a physical card, even as it aims to bring people online through its app. “That could be one of our end goals,” he said.

There are a few cases where users may benefit from card-based payments, he said. For example when speed is of the essence, like on the bus or for a quick meal at the food court. He also said that these sort of transactions will need to be “low-risk” meaning that consumers might use the card for small transactions, topping up their cards periodically to make sure that there are enough funds on them instead of a lump sum at once. While Bui and his team are now in talks with “a few Korean partners” who provide such card-based solutions, he is not sure if they will be using the technology in the near future.

While it is easy to get carried away by optimism, it appears that there’s more to do now than ever. “The market will be still growing a little faster than today, than this year, but we’re still in the early stage,” he said, predicting how it will be in a year’s time.

However, he is certain that there will be a trend of e-wallet companies giving up because of the difficulty in managing a payment business, “unless you can make money fairly quickly on value-added services that you place on top of payments and have a long runway”. He concluded, “If not, investment will run out fairly quickly.”

Editor: Nadine Freischlad