While e-commerce is booming in Vietnam (from $300 million in 2011 to an estimated $2.5 billion by the end of 2015), the online payments market has been slow due to the popularity of COD (cash-on-delivery).
There are 4 main reasons for this:
1. Old habits die hard- Vietnam's consumers are used to paying for online goods via cash on delivery. Customers have not yet developed the habit of using credit cards and merchants don't encourage its use, given that they are hesitant to pay transaction fees.
2. Lack of trust in online service providers
3. Low credit card penetration
4. Generation gapâ€”while young people are more willing to spend money online, they don't have much purchasing power yet and the older generation is not willing to do so.
Despite these barriers, there are more and more service providers emerging in Vietnam which may slowly change the trend by giving consumers a good reason to pay online.
1. Make it more convenient to pay online:
A good example is Paybillâ€”a bill payment service that allows homeowners to pay electricity, water, telephone, internet and cable bills online, as an alternative to paying utility collectors at the doorâ€”which is still common in Vietnam. By giving consumers a more practical solution to pay their bills, it gives consumers a more practical reason to use online payments.
2. Give a good discount:
Group buying and daily deals sites have brought Asian consumers online because of the attractive deals offered, overcoming consumer distrust of the virtual economy. According to Hung Huynh from IDG Ventures Vietnam, group buying in Vietnam grew 700-800%.
3. Create a solution that co-exists with cash
Ngan Luong, one of Vietnam's leading online payment startups, is the first online payment platform that supports cash, integrating COD within their own business model by partnering with ShipChung.vn, a shipping gateway in Vietnam. In this partnership, Ngan Luong serves as an online bank that helps ShipChung so the whole COD payment volume goes through Ngan Luong.
Have insights and expertise in Vietnam and Thailand? Get in touch with email@example.com for speaking opportunities for Total Payments Asia, an event to be held this October 8-10 in Bangkok.