(Photo credit: VNPT)

Late last month VNPT began to pilot the Mobile Money service nationwide. The service allows customers to use their telecommunications accounts to carry out transactions, including small-sum payments, and money transfers and cash withdrawals at banks and MobiFone transaction points across Vietnam, without having their own bank account or access to modern payment services.

In contrast to e-wallets available in Vietnam like Momo, ZaloPay, or ViettelPay, which require users to have a bank account and a smart phone, Mobile Money requires users to register with a network provider, Mobiphone or Vinaphone, as a formal subscriber. Their SIM must be in use for at least three consecutive months.

The new service raises lots of questions about using the Internet for financial activities. One of the users praised the new service for its convenience for shopping and transferring money without needing to open a bank account, but wondered, "if I mistakenly transfer money to the wrong phone number, how will the service provider help me?"

Another user said, "In addition to payment methods that use e-wallets or scan QR codes, the Mobile Money service helps me shop more conveniently because I don’t have to take cash along."

The Vietnam Telecommunications Authority says Vietnam had more than 132 million mobile phone subscriptions as of December last year.

59 million mobile subscribers were only using voice and message services, 73.8 million were also using data services.

Because a large number of people don’t have access to bank services, the Mobile Money service will increase opportunities for them, especially in remote and isolated areas, says economist Ngo Tri Long.

“The service offers utility, follows the current trend, and is in line with the State's policy of encouraging cashless payments. But care must be taken to ensure that the Mobile Money service is not used for money laundering, gambling, or betting," said Long.

Similar models in operation in other countries, says Truong Duc Luong, General Director of the Vietnam Network Security Company (VSEC), have seen possible risks to information security and customer data in addition to the risk of sending money to the wrong recipient.

"If network providers don’t have good security systems, it’s entirely possible for hackers to get customers’ information. Network providers need to acknowledge this as a real risk and take neccessary actions to minimize the risk," according to Luong.

Dr. Can Van Luc, Senior Advisor to the Bank for Investment and Development of Vietnam, said that to be licensed, network providers must have an e-wallet intermediary payment service license and a license to establish public mobile terrestrial telecommunications networks using radio frequency bands.

In addition, all funds in the Mobile Money accounts of the network providers must be secured at a bank, said Luc.

"In the regulations for piloting the Mobile Money service, network carriers are required not to use that money for other purposes, but to deposit it all in a bank account. That means the bank acts as an intermediary and a supervisor to control the money in and out and the purpose of using that money. This is fairly common in international practice. In addition, there are obvious regulations on payment limits," said Luc.

MobiFone, Vietnam’s second-largest telecom company, became the first mobile network carrier allowed to pilot the Mobile Money service nationwide until November 2023.

In the first stage, it will allow service sign-ups at 600 shops across Vietnam, and will soon expand this to more than 10,000 other sign-up points.