Mobile payments — VietEcon

Sorry, but I don’t have much time today because of other pressing matters (my real job!). I saw this report about the merger of Vimo and mPos. They will rebrand as NextPay, raise $30m and expand to Myanmar and Indonesia in 2020. In a post on June 6, I talked about the digital payment space, but I didn’t even mention these two players. That’s because there are a lot of competitors. These include: MoMo, Moca, Viettel Pay, Zalo Pay, AirPay and ePay.

There is tons of work going on in the space. In late May, Vingroup bought another payment player (MonPay, which does eWallets). Singapore’s GIC invested in VNPay in April. Rumor is that it was around $50m.

So there is a lot of movement here. The chart on the right explains partly why this is happening: growth is just so significant, especially if you have customers through some other service (like Grab does, and so does Vingroup).

Of course the chart on the right is sort of meaningless because we don’t know the starting point. But for any service that really needs growth, a jump of 3x or more in one year is attractive. Even from a low base.

A few prognostications:

1) More consolidation: I bet there is going to be a lot more consolidation in the space. There are too many players. eCommerce is so nascent in Vietnam that lots of marketing will be just to educate consumers and acquire them. It may start to be more cost effective to just buy someone that already has customers. Especially the ones that have limited financial support.

2) More investment: There is going to be a lot more investment in the space, especially by foreign VCs and companies. They will likely see South East Asia as an attractive model over time, and given that China is too hard to compete in, they will likely go for other big population centers. SE Asia and Vietnam make sense, although the low per capita GDP may mean that they start with Malaysia or Indonesia first.

3) Every local bank needs to get in the game: At the same time, every local bank must get into mobile payments, either through an app or a full fledged product. They could do this by investing, partnering and/or starting their own product. My view is that It would make much more sense for them to invest and partner with that invested company, given that banks (especially state-run banks) have not historically been great at innovation. At the least, the banks need a working mobile app and some ability to do mobile payments.

Gotta go. Send comments to vieteconpg @ gmail.