A Look at the Vietnam eCommerce Divide
Vietnam is proving to represent a strange dichotomy for mobile payments watchers. While ecommerce sales in general are on the rise, and digital retail set to make up a big part of the Vietnamese economy, the same can’t be said for digital payments. In fact, digital payments aren’t gaining at anywhere near the rate ecommerce is, and that’s making for a strange—but somewhat familiar—picture.
While ecommerce sales are set to grow around 22 percent this year, to the point where digital retail in Vietnam represents 1.2 percent of all retail market share. That’s no small number, especially for Vietnam.
Yet 85 percent of respondents in a DI Marketing study said that their primary method of payment for all that online shopping was cash on delivery (COD) payment. Just 15 percent noted turning to a digital payment system.
This is leaving analysts a bit perplexed as smartphone use in the region is on the rise; with the end of 2018 will come a simple majority—51 percent—of smartphone users in the country. Yet despite this growing smartphone count, mobile wallet use is actually on the decline. In 2014, it was around 37 percent. In 2015, that number dropped to 11 percent.
Reasons for this odd discrepancy vary, but many seem to point to a combination of lack of trust in the system and a generally underbanked population. That’s a bad combination for mobile payments, but it’s also a familiar combination; most every place that only recently started dealing with mobile payments immediately trusted it.
When mobile payments got started, even in the United States, there were serious trust issues. Mobile payments companies had to work very hard to earn that trust. That’s not an easy thing to do, and generally comes around as the result of long periods of criminal inactivity. Once users perceive the development is safe, convenience can take hold and draw in users that are ready to go.
Firms wanting to succeed in mobile payments in the Vietnamese market will need to focus on security first and foremost. Failure to do so will lead to a lack of trust in the system, and that will cost businesses a lot of lost opportunity.