what is network wallet? Why does Vietnam have more and more e-wallets?

Momo, ZaloPay or ShopeePay… perhaps the applications are no longer strange to you, it is used by a lot of people to pay bills, services or buy and sell goods online today…

So what are these apps really? And why are there more and more such applications born? Is it simply convenience? Or is there something else you don’t know? Let’s find out in today’s post!

#first. what is network wallet?

Or you can understand an electronic wallet (digital wallet) is an online account, it is used to pay for online transactions today.

Electronic wallet if understood literally, it is a “wallet” containing money, but only it does not directly contain cash in it. Instead of money that you top up your account or when you have linked a certain bank card, in addition to money, the e-wallet also contains many more utilities!

The essence of an e-wallet is an application (most often used in the form of a mobile application – Mobile app).

In more depth, you need a little technology knowledge to distinguish Mobile app and Web app, but within the framework of this article, we can simply understand that an e-wallet is a mobile application. Installs primarily on mobile devices and works as a standalone application.

To use e-wallets, we must have an account (like an account when you play games or a social network account). Based on this account, we can pay for popular online transactions today.

#2. Why was there an e-wallet?

It can be said that the birth of e-wallets is one of the revolutions in online payment.

So why was the e-wallet born?

Before answering this question, we must understand another concept that is payment intermediaries and actually E-wallet is a form of payment intermediary.

So what is a payment intermediary?

I assume the buyer is A, the seller is B. If buying and selling online, it means that either A must transfer money first to B, or B must deliver the goods first to A.

It all depends on the trust between the two parties, but that is the point.

What if one of the two parties does not fulfill the commitment (for example, A transfers money first but B does not deliver, or vice versa, B delivers first but A does not pay)

This is the direct cause leading to the formation of the concept of payment intermediaries. That is, there will be a 3rd party (party C) standing out to ensure the credibility of both buyers and sellers.

Normally, party A (the buyer) will pay party B (the seller) through party C (the payment intermediary).

So why are e-wallets considered as a form of payment intermediary?

We all know that, before the advent of e-wallets, we still used to use bank accounts to make payments (so far, this is still a popular and safe method) because of the nature of the transaction. Only banks are allowed to transfer money by law.

But now we have too many reputable services (fully legal) that can make online payments (order food, buy things, buy phone card codes, pay for electricity, water, Internet, buy movie tickets, etc. , payment when buying things…)

The problem is that banking applications were born with the main purpose not to pay, pay for services and utilities, but to make the bank more convenient in managing and moving people’s money. use.

Second, making payments by transferring money between banks is sometimes inconvenient, because not everyone uses the same bank accounts.

Currently, due to fierce competition, most banks have just removed the transfer fee, but before, each transaction cost money, but the fee is not cheap, with some banks up to 10,000 / 1 transaction.

That is one of the main reasons why e-wallets were born to solve the online payment problem as quickly and conveniently as possible for most of today’s increasingly diverse services and utilities.

#3. Why does Vietnam have more and more e-wallets?

In Vietnam in particular and in the world in general, the demand for online payment is becoming more and more popular and can be said to account for the majority of transactions today.

That is one of the reasons why more and more e-wallets are born.

But is that the root cause or not?

For example, in Vietnam today, Momo wallet is considered one of the “unicorn” start-ups with a valuation of more than 2 billion USD and is also one of the pioneering startups in the field of e-wallets.

Obviously looking at it, we can see that the e-wallet is a “fat pie” that those who go first will get the most share.

That is also one of the reasons why many businesses try to develop their own e-wallet products.

In addition to seeing the potential that e-wallets bring financially, there is another factor that makes businesses want to develop e-wallets that is the advantage of data.

In the digital age, data is one of the most important things for product analysis and development.

Having data is like holding an invaluable resource, and of course, no business wants to share this rare resource with a competitor.

So they have to develop products that support other products in their ecosystem. For example, if you use Shoppee, ShopeeFood, you will prioritize paying via ShopeePay or using Zalo, you will have ZaloPay…

Finally, I think it’s about policy. In order to build and develop an e-wallet product in Vietnam, it is necessary to obtain a license to be allowed to operate, this is to avoid frauds, violations of the law, money laundering …

At first, it seemed easier to apply for a license because the government’s policy also wanted to do digital transformation, develop online payment services, change user habits, as well as stimulate the development of the platform. economy.

But later on, when e-wallets sprang up like mushrooms after the rain, as far as I know, getting an operating license is somewhat “harder” and also much more expensive than before, simply because countries want tighter control.

But many businesses still try to develop their own e-wallet products because they are aware of the advantages and potential of owning an e-wallet of their own.

#4. Epilogue

E-wallets are really a great technology product, especially in an era where online payments are becoming more and more popular today.

E-wallets help us solve a lot of problems, save a lot of time and money in paying for services, and many other useful utilities, not just stopping at payment like other electronic wallets. Traditional product.

However, as I mentioned above, e-wallets also need a source of money (mainly from banks through account linking). There are many e-wallets that support borrowing through credit, but in essence it is still a credit product of a certain bank.

That said, the nature of e-wallets only makes it more convenient for us to pay, if you consider this a financial solution, then I don’t think so because we should just use it anyway. only as a payment instrument.

Hope this article has helped you to visualize some of the e-wallet products and use it more rationally. See you in the next posts!

CTV: Nguyen Duc Canh – Blogchiasekienthuc.com
Edit by Kien Nguyen