E-wallets get thin as banking apps prosper in Vietnam

E-wallets appear unable to compete strongly against online banking applications in Vietnam, several market observers say.

They note that developing e-wallets is a costly endeavor that often leads businesses to burn through their resources quickly.

Recently, ride-hailing service provider Grab retired its Moca e-wallet despite managing to reduce losses from the app. The company had seen an e-wallet as essential to streamlining online payments as it targeted evolving into a multi-service platform.

However, the tech unicorn decided to shutter Moca to “optimize profitability.”

Meanwhile, Momo, the largest and most popular e-wallet in Vietnam, has shifted its focus and repositioned itself as a “financial assistant with AI.” This indicated a move towards being more than an e-wallet.

Launched in November 2010, MoMo has over the past 14 years become a key player in shaping Vietnam’s e-wallet market. However, increasing competition has pushed it to explore new directions beyond its original e-wallet focus.

Rapid decline

Some experts have said that the slow uptake of e-wallet applications is “understandable” despite cashless payments becoming a widespread trend.

Financial expert Ho Ba Tinh said e-wallets are clearly in decline because they are struggling to compete with banking apps. People seem to prefer a single and comprehensive “all-in-one” app.

“The race among e-wallet providers will come to an end quickly. This is an industry driven by economies of scale, and there is no room for niche players,” Tinh said.

Echoing Tinh, a market analyst who wished to remain anonymous noted that few people are willing to download an extra app when they can already use online banking for payments.

“E-wallets will struggle to grow if they continue to focus solely on online payments. MoMo and other apps have attempted to go beyond the traditional e-wallet model by integrating various additional functions. Despite these efforts, however, many customers continue to use e-wallets primarily for money transfers and payments,” he noted.

According to Vietdata, MoMo incurred a net loss of VND287 billion ($11.3 million) in 2023, a significant improvement from the 2022 loss of VND1.15 trillion ($45.25 million). ZaloPay, a mobile payment app developed by tech firm VNG Corporation, suffered a loss of over VND1 trillion the same year.