Online Payment and E-commerce: Huge Potentiality but Unsolved Difficulty

According to businessmen, the development growth of e-commerce and online payment in Vietnam is high in recent years but online in the initial period of the global e-commerce integration. Vietnamese companies encountered difficulty on settling online payment, especially with foreign partners. The State Bank of Vietnam (SBV) has not allowed individuals or enterprises to open online selling accounts to carry out transactions with foreign partners, which raise high barriers for online payment and expansion of e-commerce in Vietnam.

 

According to Visa International and ACNielsen, Vietnam now has some 330,000 international payment cards in use, a small number compared with the potentiality of some 7 million cards.

 

A Visa International study showed the positive attitude of Vietnamese people in acceptance of payment cards although the main tool of payment in Vietnam is cash. “The number of credit cards, debit cards and international cards issued in Vietnam is increased in geometric progression in Vietnam,” a Visa representative said. In 1996, Vietnam only had 400,000 cardholders but the figure jumped to 3.5 million in 2006.

 

Payment by card thus increased more strongly. From 2002 to late 2006, the transaction value amounted to US$200 million. Especially, the amount of cash foreigners spending by card in Vietnam increased 323 per cent to US$407 million.

 

To boost e-commerce transaction, online selling and online payment development, the internet must be widely used and the consumers must consider it as a convenient channel of shopping. The internet use growth rate increased significantly in the past 12 months. Since June 2006 to May 2007, the number of internet subscribers in Vietnam rose 27 per cent to 4 million, and the number of internet users accounted for 25 per cent of population. Currently, with over 16 million internet users, Vietnam ranked 17^th worldwide and 6^th in Asia. However, in terms of internet density, Vietnam ranked only 93^rd in the world and 9^th in Asia. The above figure is the proof for the unpopular use of internet in Vietnam. Mainly young people and dwellers in big cities like Hanoi and Ho Chi Minh City have frequent access to internet.

 

In spite of huge shortcomings, the international access still increased 50 per cent and the number of broadband internet more than doubled from 310,000 subscribers to 753,000 subscribers. Three biggies VNPT, FPT Telecom and Viettel are sharing 86 per cent of internet market in Vietnam and they are accounting for nearly 95 per cent of international internet connection capacity.

 

According to Vice Chairman of OnQ Vietnam Co., Nguyen Hoang Luong, the online trading in Vietnam has quickly expanded but online payment has remained unpopular. “This has become a big matter not only for e-commerce of Vietnam but also Vietnamese enterprises when online trading of Vietnamese enterprises is not accepted in foreign nations,” Luong warned. This fact is proven by the rejection of payment of Vietnamese credit and debit cards in other nations. International payment service providers also turn down to provide services for Vietnamese websites. This is a disadvantage of Vietnamese enterprises when they want to expand their business to other nations.

 

The reason is blamed on the infancy of e-commerce in Vietnam, the increasing cheating in card uses and the ineffectiveness of legal documents on e-commerce. Experts said the e-commerce of Vietnam needs online payment tools in the condition of globalisation and the use of electronic payment services provided by intermediary suppliers like Bopo, Paypal and 2checkout is crucial.

 

The internet market keeps expanding and the internet development strategy may reach the result two years sooner than expected. Although there are a lot of positive figures, the integration into the world economy requires Vietnamese enterprises to overcome difficulty and hindrance in ecommerce with other nations.

The development of internet should not only focus on the increase of users and decrease of service tariffs but also meet the demand of growth rate, quality, security of network and the absolute security of transaction information.