Who's winning the fintech war in Vietnam?
First, I'd like to clarify what I mean by fintech. On Google, Fintech is a portmanteau of the terms “finance” and “technology” and refers to any business that uses technology to enhance or automate financial services and processes.
This definition for me is not satisfying enough to discuss the topic and I'd like to narrow it down to payments for merchants done with an app through a QR code offline. With that, let's get started and see who's really on track to become the leader within the next 10 years.
First of all, let's list down 3 players that will likely have a chance to win the market. First, let's zoom out and look at the mess in fintech thanks to Vietnam Investment Review. You can click here to look at the article.
Who are the 3 main players in the market?
Momo
With over 20 million users since September 2020 and a recent round of 100 million US dollars, more than 100,000 locations and over 30,000 merchants accepting Momo, the app is on track to become a clear winner in this market.
Against all odds, they built everything from scratch and connected directly with banks so transaction fees would be free. The payment experience is seamless and the app keeps improving consistently with more use case.
VNPay
With over 15 million users since December 2020, 300 million US dollars investment from Soft Bank and GIC since July 2019, more than 9,000 locations and over 20,000 merchants accepting VNPay, the app is on track to become a clear winner in this market.
Located in Hanoi, the company is focused primarily on improving its products for now. The founder of VN Life was the co-founder of Garena, belonging to the SEA Group today. The biggest question is the ability of VNPay to compete effectively against Momo by focusing on that market as VN Life seems to go all over the place with many investments through Teko Ventures ( its venture funds ) hindering their ability to focus and deliver a great product.
Click here for the source
Grab Pay ( formerly Moca )
Grab is one of the curious cases in Vietnam when it comes to fintech. They acquired Moca and set themselves to become an app you could use for payments as well aside from ride-hailing and food delivery. One of the key people Tuan Anh Nguyen from Grab left for a competitor VinID and left a year later in the past 12 months.
Grab Pay has all the necessary ingredients to win the fintech war. The financial backing is excellent. There's a strong active user base thanks to ride-hailing and food delivery. A great startup culture to take on new challenges and expand into new verticals. Why aren't they able to materialize a stronger leadership in payments?
To me, Grab will suffer from entropy as they're expanding into various verticals and will slow down in their ability to execute their plans as complexity will keep increasing. Managing such complexity across various markets will eventually come back to hiring talents and set the structure for the future. In the end it will be an organizational challenge with a pinch of HR.
What about the rest?
There are 2 other nice local players in the market as well but I chose to discard them for the following reasons
Zalo Pay
Zalo Pay is a payment app and works beautifully. For some reasons, Zalo is a chat app with millions of users but the company decided to create a separate app and ask people to download the app for payments. It doesn't make sense to me. Zalo had a tremendous opportunity to win the market faster with a far lower user acquisition cost. They could have followed the patterns of WeChat in China.
Mark Morawski, their new CTO, has recently given an interview on Vietcetera. You can take a look at it and track over the next quarters what may change with them.
AirPay ( who just turned into ShopeePay )
AirPay is an app that belongs to the SEA group. Despite the fact that it belongs to a very successful group, AirPay is barely used as a payment app offline with merchants in Vietnam. I'm not sure why AirPay has failed to dominate the market in Vietnam as they have all the necessary ingredients to be one of the main players. Maybe the regional management wasn't right.
The recent move to change its name into ShopeePay may show that they will simply surrender and focus only on online payments and will be integrated mostly with the Shopee e-commerce platform. Thus, it will simply does not fit our definition anymore.
One more thing
I mentioned earlier in a previous article about operational profitability, I'm fortunate to find an article on CafeF ( Vietnamese news website ) written on May 12th 2021 about the profitability of these players :
You can look at the article yourself by clicking here. To be honest, I'm not sure how CafeF was able to collect these numbers but the it seems to be biased towards VNPAY having some profitability versus the other players.
If it's true, VNPAY ability to acquire 15 million users and remain profitable is great and I'm not able to see something. The business model of payments is transactional with a % usually under 3% per transaction.
That means they would have lots of new and repeat transactions on their platform. That would mean they have a great user acquisition channel. I personally downloaded and signed up for VNPAY but I couldn't even use it. I'm using Momo almost everyday ( it took me over 5 years though to become a regular user ).
To end up with some numbers VNPAY seems to have some odd usage activity compared to Momo and Grab where their users are mostly on mobile from Similarweb.
Also VNPAY seems to have way less traffic on their website compared to the other incumbents.
Eventually, the traffic rank confirms in Vietnam that Momo is far ahead in the war.
If I had to rank the main players, I would say that :
Momo is the clear winner in the fintech space today. Grab is following closely and VNPay is behind. Things change in tech really fast so let's not take this ranking as a constant. Many things can happen in the market.
