HO CHI MINH CITY -- Most Vietnamese do not have a Mastercard, and the company says it can live with that. All it wants for now is for consumers in Asia's fastest-growing economy to give up using cash -- even if it means choosing rivals like digital wallets.
The U.S.-based company is diversifying beyond credit cards to cater to an emerging market and emerging technologies.
Winnie Wong, the Mastercard country manager for Vietnam, Cambodia and Laos, says the company is preparing for technological changes in Vietnam so it can be a part of most payment methods of the future, from smartwatches to QR codes.
"It's not just about the card," she said in an interview with Nikkei Asia. "It's about any form factor -- be it QR, be it virtual, be it wearable, be it a watch, be it anything as we digitalize."
Her company must contend especially with the rise of e-wallets across Asia, where many people have leapfrogged credit cards altogether and gone straight to the virtual wallets.
Mastercard is starting from a very small base in Vietnam because only 56% of Vietnamese have a debit or credit card, by far the lowest in the region's six big economies, according to the Visa Consumer Payment Attitudes Study released in 2020.
Meanwhile, with investments from Warburg Pincus and Goldman Sachs, Vietnam's biggest e-wallet, MoMo, said it reached 20 million users in 2020 and is angling for 50 million within three years. That far eclipses the 3.6 million Visa, 2.4 million Mastercard, 790,000 JCB and 340,000 American Express credit cards in the country, according to 2019 data from Euromonitor. More broadly, Vietnam has licensed 29 companies to provide e-wallets, according to the central bank.
This presents a problem for all credit networks that operate in Vietnam. Shops can avoid credit card fees, instead having their customers pay via MoMo or another fintech app.
Wong doesn't say Mastercard will go head to head with the payment startups, but instead presents a friendlier-sounding scenario: cooperation through using their technologies.
One example is called "pass-through" -- customers already can link their Mastercard to various e-wallets, from Vietnam's Moca to South Korea's Samsung Pay. In the past a shopper might carry a leather wallet holding five credit cards. In the future he is more likely to carry a smartphone with five virtual cards loaded into an app.
Another example is adding e-wallets into Mastercard's worldwide network, though this is still pending. "We're in very active discussions with some of the e-wallets," said Wong, sporting a red-and-yellow Mastercard mug and lapel pin.
What happens when MoMo's 20 million users want to travel outside Vietnam but have no credit cards? That was the question for Grab, which added an option for customers from Singapore and the Philippines to use GrabPay to buy a prepaid virtual or physical Mastercard. This allows them to spend at 53 million merchants globally, a scale that Mastercard will offer to more e-wallets.
"How do I bring in our other payment technology tools and also connectivity and network, so that you can now expand exponentially?" Wong said.
Credit card networks have their own e-wallets, too. A Visa or Mastercard holder can use those brands' apps, or add her card to an app from a bank or fintech company. The networks also work with banks to issue virtual versions of traditional credit cards. These options allow them to stay in the game as more shoppers skip physical cards and increasingly make contactless payments, which can certify customers who prefer to avoid any form of direct touching.
These options also are matched on the merchant side, where payment by smartphone can be accepted in three main ways: Shoppers can open an e-wallet app on their phone to scan the screen of a payment terminal; they can send money directly from their e-wallet account to the merchant's; or they can use their phone to scan a store's QR payment code provided by Visa, Mastercard or Vietnam's VNPay network.
For now, the credit networks aim for compatibility with e-wallets, which can hold multiple cards from Discover to UnionPay. Someday they will strive for interoperability, Wong said. That means if Mastercard partnered with Vietnam's ZaloPay, for example, cardholders could pay wherever ZaloPay is accepted, and vice versa. Mastercard has inked these interoperability deals in other markets, such as with the Zapper fintech app in South Africa.
For its growth in Vietnam, the first step is getting consumers to relinquish cash, as Wong puts it. The second step is having them use credit in a country where people are more likely to save than borrow. Some Vietnamese still buy homes and cars with cash.
Ultimately, its key goal remains wooing locals with Mastercard-branded products, usually cards issued by a bank. It deploys conventional marketing methods, giving discounts to customers who pay with their Mastercard at partner companies, from the Lazada e-commerce site to the Grab superapp.
But it is also playing such a long game that some of its methods seem oblique at times. For example, the company urges Vietnam's small and medium-size businesses to work with its partner Zoho, which sells software for office functions like bookkeeping.
The rationale is that businesses will replace informal accounting with a digital track record that generates data they can take to a bank for assessment of their creditworthiness. Those business owners could go on to apply for corporate credit cards.
On the consumer side, credit remains an opportunity. Vietnam's credit card payments were worth $12 billion in 2019 -- more than quadrupling since 2015, Euromonitor data shows. Wong says both the banks and fintech apps are active in digitalizing the broader payment boom in Vietnam. As she put it, "This market is ripe for expansion either way."