With Mobile Money Summit being hosted in Singapore in a couple of weeks, we are taking an in depth look at the status of mobile money in the South East Asian region. In this post, we focus on Vietnam, one of the most promising emerging markets in the world. This rising country has a 130% mobile penetration, yet 12 million of its inhabitants live on less than 40 cents per day and a total of 80% of its population lack access to financial services.
I recently caught up with Tuong Nguyen, Vice President of Business development at mService, the country’s largest pre-paid airtime distribution network, to discuss the current dynamics in this fast growing telecom market and to look more closely at MoMo, the new service launched in partnership with Vinaphone, one of the largest MNOs in the country with a 28% market share.
MMU: What makes the Vietnamese market different? What are the biggest challenges?
TN: Vietnam is the second most populous country in South-East Asia. We have a high mobile penetration coupled with a very young population, where two thirds are under the age of 30 and who are willing to try new technologies such as mobile financial services. According to the World Bank, Internet and mobile adoption are very high, especially when compared to other middle income countries in the region. In addition, our telecommunications market is very competitive. Due to new market players, prices have come down, making entry barriers for new users low, therefore mobile money will help us reduce churn. In addition, there are other fundamental factors which could lead to a booming mobile commerce environment, such as the country’s 130% mobile penetration and the fact that the market is composed of 95% prepaid users who are interested in high-value low-price services.
MMU: Could you tell us more about mService? How was the service evolved over time?
TN: mService is a mobile commerce company which started as an operator agnostic e-top up provider. We are the country’s largest pre-paid airtime distribution network and we work with all of the seven operators in the country via a common mobile wallet based system. We innovated in the space by introducing the concept of a single SIM card for agents which could hold inventory for all MNOS in the country. Having achieved this has resulted in almost a 70% reduction in the working capital for the agents and retailers in the distribution network, and also savings for them due to the fact that only one handset is required. Today, we have over 80,000 agents and work with Utiba as our technology partner.
At present, mService is starting to move forward with the hope of creating a full-fledged mobile commerce ecosystem by extending the functionality of the mobile wallet beyond our agents and onto the end users across our different service providers.
MMU: Could you tell us about MoMo?
TN: Momo is a mobile wallet offered in partnership with Vinaphone. Unlike our traditional e-top service which is focused on the agents, this line of business is focused on the end user. Using the e-Wallet, agents were able to purchase airtime for top up and process bill payments.
With Momo, we can now allow customers to make transactions such as buy games credit, top up, bill payments and will eventually allow customers to do p2p once we have the approval of the State Bank of Vietnam (SBV) and the cash-in cash-out network in place. Vinaphone has the responsibility to promote the service which is available only to Vinaphone customers and we are currently working with Vietcombank and Vietinbank, the two largest commercial banks in the country. We are first acting as the banks’ extended arm to reach the under-served and will gradually expand to accommodate unbanked customers via the mobile channel.
MMU: Your product offering has evolved from airtime to mobile money. How is marketing different for these two products?
TN: You have to take completely different approaches. With our airtime distribution network, we relied on word of mouth and some BTL marketing to encourage agents to learn to use the service. With MoMo, given the product is focused on the end user. We have made the effort to not just make it an attractive holistic product for customers, but also on educating them. It takes time for users to understand the concept of mobile money, therefore, we have launched a mix of ATL marketing campaigns to raise awareness, but have also relied on BTL activation blitzes in places such as universities, where students and younger people congregate. We want them to have time to talk to our sales agents so they can explain to them how the service works.
MMU: Can you tell us about the process you used to engage with your regulator?
TN: The State Bank of Vietnam has awarded mService one of the first e-wallet licenses in the country. Under this license, we can offer mobile wallets which enable a host of mobile commerce services. However, at this stage only banks are allowed to do the cash-in and cash-out which makes it less optimal for our clients who have to go to the bank to perform these duties and also creates a barrier for the lower income segment, since you have need a bank account to use the service. We hope that in the near future, non-banks will be allowed to perform cash-in and cash-out.
Nevertheless, we have strong support from SBV because our model could benefit the unbanked. We are at the moment in close discussions with SBV, helping them gather enough information and grounds to issue new regulation in order to create a sustainable ecosystem for mobile money.
MMU: How many customers do you estimate that MoMo will have in a year’s time?
We expect to have 300,000 at the end of 2011. We hope that in the coming months we will be able to improve our cash-in channels and think that once this is done the market will change.
MMU: Thank you, Mr. Nguyen