After much debate, and facing opposition from industry stakeholders, the State Bank of Vietnam has dropped the proposed 49% foreign ownership cap in locally registered e-payment firms
In a note on its website, the central bank said it will not submit the proposal to the government in June after taking into account the feedback provided by entities in the fintech industry. The suggested cap was previously part of a revised decree to regulate non-cash payment activities. And fintech experts have said that a limit in foreign ownership would hinder the country’s developments in the field.
The central bank’s move to relax this requirement comes as a surprise, as it normally adopts a cautious approach to fintech regulations compared to its counterparts in other ASEAN countries. The regulator has been concerned about Vietnam’s financial security and the encroaching influence of overseas entities in e-payment companies operating within the country.
Investors have poured significant amounts of money into Vietnam’s fintech sector recently—at least USD 410 million between January and September last year, according to a report by UOB, PwC, and the Singapore Fintech Association. This is second only to Singapore, where funding totaled USD 714 million. The report also noted that Vietnam’s mobile payments market is projected to reach USD 70.9 billion by 2025.
This new development is considered a relief for fintech firms, as many of them have already received huge amounts of foreign capital. Momo bagged USD 100 million from Warburg Pincus last January. VNPAY reportedly secured a record USD 300 million in funding from SoftBank and Singapore sovereign wealth fund GIC in 2019. And Ant Financial, the fintech powerhouse from China, acquired a major stake in Vietnamese e-wallet player eMonkey last summer.
To date, the State Bank of Vietnam has licensed 32 companies that provide e-payment solutions. The government has mapped out a national financial strategy to increase the number of non-cash payments by 20–25% by 2025.