A US$700-million cashless payment network, jointly developed by South Korean payment servicer Alliex and the State Bank of Vietnam (SBV), is scheduled to become operational in 2020 and expanded over five years, Nikkei Asian Review reported.

Illustrative photo.

As part of the plan, Alliex has signed agreements on providing point of sales (POS) with local banks, including Joint Stock Commercial Bank for Foreign Trade of Vietnam (VietinBank) and Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank).

The system is part of a broader effort to realize the Vietnamese government’s plan on non-cash payment in the 2016 - 2020 period approved by the prime minister, aiming to reduce the ratio of cash transactions from 90% in 2016 to below 10%. 

As of present, just 40% of citizens in Vietnam have bank accounts. However, 90% of daily transactions are conducted in cash, while the rate goes up to 99% for transaction worth under VND100,000 (US$4.34).

The core system will serve as a platform for electronic payments and bookkeeping. Tablets will be distributed to stores where the devices can be used to process QR payments and other cashless options.

In a meeting with Director of Alliex Part Byounggun on September 19, Deputy Prime Minsiter Vuong Dinh Hue said the the non-cash payment market has huge potential for development in Vietnam, and requested Alliex to closely cooperate with the Vietnamese central bank in finalizing an ecosystem for non-cash payment activities in Vietnam.

The Vietnamese government has issued policies on e-invoice and payment via bank cards, among others, while targeting an advanced level of public online services for online payment and processing administrative procedures in the internet, said Hue.

Alliex, wholly owned by a parent based in Japan, envisions earning fees from each transaction.

South Korea boasts one of the most advanced cashless societies with penetration exceeding 90%. As a mid-tier player in the market, Alliex is behind the payment systems used by Lotte group stores and South Korean Starbucks outlets. Overall, its payment systems oversee over US$700 million in transactions a year in South Korea.