A Game Changer in Non-cash Payments
15 May 2024 marks a transformative day for Vietnam’s financial landscape with the issuance of Decree No. 52/2024/ND-CP (“Decree 52”). This groundbreaking regulation is set to foster the development of payment products and services, addressing previous gaps and paving the way for a more robust, innovative financial ecosystem.
Electronic Money – A New Area
1. For the first time, the Vietnamese legal framework formally defines electronic money. Under Decree 52, electronic money is “the value of Vietnamese currency co-stored on electronic means provided on a reciprocal basis with the amount prepaid by customers to banks, foreign bank branches, and intermediary payment service providers providing e-wallet services”. This definition establishes electronic money as a digital form of Vietnam’s legal currency, the Vietnamese Dong (VND).
2. Decree 52 specifies two primary methods for storing electronic money: e-wallets and prepaid cards. The provision and use of these methods are governed by specific regulatory requirements outlined by the State Bank of Vietnam (SBV), covering various aspects such as eligible users, principles for providing and using the services, the scope of services, and obligations of the parties involved, including data protection and reporting.
3. Despite earlier drafts hinting at its inclusion, Decree 52 excludes mobile money as a storage method. The sandbox period for mobile money has been extended until 31 December 2024 by the Prime Minister’s Resolution No. 192/NQ-CP. This extension likely explains why mobile money is not included in the current decree, as the final outcomes of the sandbox are still pending.
4. Entities authorized to provide electronic money under Decree 52 include banks, foreign bank branches (offering e-wallet and prepaid card services), and intermediary payment service providers (offering e-wallet services linked to customers’ payment accounts at the payment service providers). Intermediary payment service providers must ensure that the total balance on all accounts guaranteeing payment for e-wallet services opened at banks and foreign bank branches is not lower than the total balance of all e-wallets issued to customers
5. On a side note, as shared by a representative of the SBV with the press, with electronic money now defined as a digital form of Vietnam’s legal currency, different legal terms are expected to be used for virtual currencies and digital assets. This distinction aims to help eliminate illegal payment methods by clearly separating legitimate electronic money from other digital assets.
For further information, please contact:
Pham Hoang Vu, Indochine Counsel
vu.pham@indochinecounsel.com
