Mobile commerce fails to take off with Vietnamese consumers

Millions of Vietnamese use smartphones for tasks like listening to music, making a phone call, sending text messages, hailing a taxi or checking in for a flight, says the Ministry of Industry and Trade.



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But hardly anyone uses their mobiles for buying something at a store, Do Thang Hai, deputy minister of the MOIT told an audience at a recent conference in Hanoi discussing the lack of development of mobile commerce in the country.

Mobile payment systems are not likely to replace traditional wallets anytime soon in Vietnam, said Mr Hai.

Such systems are pretty much just a tech entrepreneur’s fantasy, he noted, as most consumers are not familiar with them and those that are— see absolutely no benefit from their use.

The numbers speak volumes, said Mr Hai.

With an estimated 60 million smartphone users throughout the country, the total volume of sales using mobile payments, or m-commerce as it is most often referred to, amounted to just US$900 million.

For comparison purposes, in 2014, m-commerce sales reached US$11.51 billion in the Republic of Korea with a total of 67.5million smartphone users. M-commerce sales in the ROK are forecast to reach US$29 billion by 2019 with a total of 71 million smartphone users.

Clearly, this does not mean that m-commerce won’t ever take off in Vietnam, noted Mr Hai.  It just means that m-commerce is not going to revolutionize shopping in the country anytime soon.

Most likely it will just evolve over the next couple of decades ang gradually find its way as an alternative sales channel, he added.

Le Thi Ha from the Department of E-commerce and Information Technology in turn said developing a mobile payment system together with improving the trust of consumers was critical to the development of m-commerce in Vietnam.

At one time, there was an assumption by many that m-commerce was just going to explode in the marketplace in Vietnam and become a mainstream sales channel in concert with a revolutionary transformation to a more modern mobile payment system utilizing applications such as Google Wallet.

But that didn’t happen, said Ms Ha, largely because people do not mind paying with cash or a credit card. In fact, she noted that a recent survey of companies in Vietnam revealed that only 25% of them accept online payments.

In other words, three out of every four vendors that offer online sales only accept cash on delivery as the payment method.  If a consumer wants to pay by credit card they are forced to go the store to make payment.

None of the companies surveyed had found a winning combination to transform mobile payments into everyday consumer behaviour.

As the digital payment world stands now in Vietnam, consumers who want to buy things with a phone must first find a business that supports the technology, and then figure out which smartphone technology the store accepts.

Which is usually cash upon delivery.

Phan The Thang from the Vietnam Competition Authority said that first and foremost the country needs to get a mainstream digital payment solution started, which is a bit of a catch-22.

More consumers would most likely use such a service if it were widely available, he said, but merchants are not interested in installing new payment software and hardware unless a large swath of shoppers are already using the service.

But even if the payment process were widely available, companies still would need to persuade consumers that there was an advantage to making payments from a phone versus by cash or credit card.

The most logical approach, he said, is for companies to offer cash incentives that they do not offer for cash or credit cards for consumers who purchase by phone and pay using an electronic wallet service.

As more consumers use the service they will find that it is a better alternative to pay by using a mobile payment system because of the savings and the convenience of not having to deal with cash or credit cards.

Instituting a good mobile payments application universally throughout the country that gains the confidence of both the consumer and retailer is the solution to unlocking the door to m-commerce, Mr Thang underscored.

But until that happens, don’t expect m-commerce to take off with Vietnamese consumers.

VOV

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