Vietnam’s top e-wallet by subscribers MoMo has expanded its userbase at a scorching pace in the past year — from 10 million in January 2019 to 20 million currently.
Yet, the company believes there is further room for growth and is now targeting 50 million users — or half of Vietnam’s population — in 2-3 years, as more people have become accustomed to digital solutions amid the pandemic.
For Nguyen Manh Tuong and Nguyen Ba Diep — who founded the company along with Pham Thanh Duc in 2007— the growth is part of a larger plan to gather customer insights and provide a spectrum of services to financial institutions, such as credit scores of potential borrowers that can be used by banks.
“Payments are the conduit to get customer insights from which we can develop other products and services. We position MoMo as the channel to provide those insights to financial institutions and other businesses,” said Tuong, who is vice chairman of M_Service, the company behind MoMo.
“But a scale of several million customers is not enough,” he added, “Our target is 40-50 million users… and we will continue to invest to reach the expected scale.”
His confidence is bolstered by the more than 180 per cent year-on-year growth in Vietnam’s mobile payments in the first seven months of 2020. For many banks, online transactions accounted for over 90 per cent of the total transaction volume in the period.
The growth is a vindication of the founders’ long-held belief in the transformative power of fintech.
“We were inspired by the Bangladeshi microcredit pioneer Muhammad Yunus, who provided small loans to millions of the unbanked. Having observed life in the late 90s, we knew that the combination of technology and financial services would be the key that would unlock our country’s growth potential,” Diep said, recalling the founding of the business in 2007, when less than 10 per cent of Vietnam’s population was banked.
MoMo started life as a mobile money business where users could transact with their phone balance. In 2010, it transformed into an e-wallet when its services began to be regulated. By 2015, it had enrolled about 500,000 users.
“When I was in the US in the 2000s, I was intrigued to see people bring so little cash with them as access to digital payments was fast and easy. I thought it would be so impactful in lessening the financial inequality for the bottom of the pyramid,” said Tuong.
The company is also one of the top-funded firms in Vietnam. According to DealStreetAsia’s proprietary data, M_Service has raised more than $130 million from global private equity giants such as Goldman Sachs, Affirma Capital (previously Standard Chartered Private Equity), and Warburg Pincus.
In the financial services sector, its fundraising is behind only VNPAY — a QR-code system and tech enabler for banks —which landed $300 million from marquee investors including SoftBank Vision Fund and Singapore’s GIC.
Given the pace of internet and technology adoption in Vietnam, the founders and investors seem optimistic that MoMo can reach the 50 million user base in 2-3 years.
“That ambition is entirely achievable,” said Jeffrey Perlman, managing director and head of Southeast Asia at Warburg Pincus. “If you look at the penetration of Ant Group in China, you can have an incredibly profitable business if you reach that kind of size and scale. And obviously, you are able to offer numerous products and services to the user base,” he pointed out.
The Vietnam government is also catalysing the growth of the sector in terms of regulation. In July, the country’s central bank, State Bank of Vietnam (SBV), agreed to an e-KYC pilot programme to allow banks to open payment accounts online.
SBV has also said it will work on agent banking norms to spread financial access across the country, especially in rural areas. About 43 million Vietnamese, or 63 per cent of adults, have a bank account, the SBV said earlier this year. The goal for the country is to bank 80 per cent of adults by 2025. “This means major barriers to opening banking accounts will be removed,” said Diep.
For MoMo, this means more users for its gamut of services.
The MoMo app currently offers services such as money transfer, payment of daily bills, travel and leisure, payment of insurance, loan dues, and allows users to participate in social campaigns such as charity — resembling a super app. “Demand has been developed to pay for multiple services on the MoMo app. So, it naturally evolves as a super app,” said Diep.
A super app offers a one-stop mobile platform housing many different services. In Vietnam, those include the likes of Grab and Gojek and local banks, besides MoMo.
Most banks’ mobile platforms are akin to a super app, according to VNLIFE’s managing director Niraan de Silva. Softbank- and GIC-backed VNLIFE is the parent firm of VNPAY, which builds and manages the mobile banking infrastructure and related technology for local banks.
A competitive space
MoMo is trying to grow in a competitive sector.
Almost 40 Vietnamese companies have to date been licensed to operate e-wallets. The top five operators (including MoMo) had a 90 per cent market share, the central bank said in August last year.
Vietnam's key e-wallets
|E-wallet||Current ownership||Investors||User base||Key partners||Ecosystem targeted||Merchant Network|
|Momo||Foreign investors (66.49%)/ M-Service (33.5%)||Warburg Pincus, Standard Charter, Goldman Sachs||20 milion||BAEMIN, Tiki, Lazada,||Ride hailing, e-commerce, gaming||100,000|
|Moca||Not Available||Grab||Over 5 million (2018)||OceanBank, Shihan Bank, Vietnam Airlines, McDonald’s, 7-Eleven, EVN, VNPT, FPT Telecom||Ride hailing||200,000|
|Payoo||Foreign investors (64%)||NTT Data Group||Not Available||Hanwa Life, FE CREDIT, 25 banks, IDP, FPT||Ride hailing, e-commerce, gaming ||12,000|
|WePay||Not Available||Gojek||Not Available||Not Available||Not Available||Not Available|
|1Pay||Foreign investors (90%)||TrueMoney (Thailand's CP Group)||100,000+||7-Eleven stores, SCB Bank, HD Bank||E-commerce||30,000|
|eMonkey||Not Available||Ant Financial||Not Available||GPBank, Vinafone, Mobifone, Lazada||E-commerce||Not Available|
|VNPT EPAY||Foreign investors (70%)||Korea Omega Investment Corp, UTC Investment Co Ltd.,||Not Available||VietinBank, Vietcombank, BIDV, Sacombank, VPBank, Woori Bank, BAE MIN||Ride-hailing, e-commerce||Not Available|
|ZaloPay||Foreign investors (not available)||VNG owns 60%||over 2 million (2018)||Bamboo Airways, BAEMIN, Golden Gate restaurant chain,...||Ride-hailing, e-commerce, gaming||Not Available|
Currently, only bank account holders can use e-wallets in Vietnam. MoMo, therefore, works with banks so that the account holders can use its wallet.
In terms of the number of bank partners, MoMo tops with 28 partner banks in Vietnam, followed by Moca (the local partner of Grab) with 24 banks, according to the firms’ websites. The figures for other e-wallet apps such as Airpay, Payoo, and Zalopay are in the range of 20.
MoMo has also partnered with consumer finance companies so that their customers can pay debts via the app.
According to the company’s founders, this partnership model has helped it widen the base of customers, partners, and merchants.
Tuong said it is more cooperation than competition with banks. “We are the ‘tech’ and banks are the ‘fin’. Technology is the stretching arm for banks to reach to more consumers while reducing costs for them.”
Jens Lottner, the CEO of Techcombank, a private lender in Vietnam, had this to say: “The ones I’m concerned about are the Gojeks, the Grabs or the Facebooks, because they have a high level of customer interface. Their reach is tens of millions of people in every country. If they suddenly become a bank, what then happens can be quite seismic.”
Ultimately, it’s about who brings solutions to a broad set of the population. It’s unclear who is in a better place, Lottner added.
He opined that there are markets like China, where the likes of Alipay and WeChat have taken over payments and personal credits, but there are other markets where established banks have transformed themselves to compete successfully against startups.
Warburg Pincus’ Perlman, added that MoMo is well-positioned to extend its lead. “As you educate the people and get them onto the platform, it may ultimately become their primary mode of saving, spending and transacting,” he said.