Vietnam's New Decree on Cashless Payments: Transforming the Financial Landscape

Vietnam’s financial landscape is set to undergo significant changes with the implementation of Decree No. 52/2024/ND-CP, which regulates non-cash payments. Effective from July 1, 2024, this decree replaces Decree No. 101/2012/ND-CP and its subsequent amendments. The new regulations are designed to address existing challenges and promote a modern, efficient payment ecosystem, laying a solid foundation for the nation’s digital economic development.

What Are the Key Provisions of Decree 52?

Decree 52 introduces stringent requirements for payment service providers (PSPs) and intermediary payment service providers (IPS). One notable change is the increased capital requirement for providing financial switching services and electronic clearing services, which now stands at VND 300 billion (approximately USD 11.8 million), up from VND 50 billion. Additionally, the decree stipulates that IPS providers must focus solely on their payment services and not engage in other business operations during the licensing process.

How Does Decree 52 Define E-Money?

For the first time, Decree 52 provides a clear legal definition of electronic money (e-money) in Vietnam. E-money is described as the value of Vietnamese Dong (VND) stored electronically and is based on prepaid funds provided to banks, foreign bank branches, or IPS providers offering electronic wallet (e-wallet) services. The decree explicitly excludes virtual currencies from its scope, ensuring that only regulated forms of e-money are recognized for transactions.

What Are the New Requirements for Foreign Currency and International Payments?

The decree imposes comprehensive regulations on foreign currency and international payments. These payments must comply with various Vietnamese laws, including those on foreign exchange management, data protection, cybersecurity, tax administration, anti-money laundering, and counter-terrorist financing. The State Bank of Vietnam (SBV) is tasked with overseeing these transactions to ensure compliance with international treaties and agreements.

How Will Decree 52 Affect E-Wallets and Prepaid Cards?

Decree 52 mandates that e-wallets and prepaid cards, now officially recognized as forms of e-money storage, must comply with SBV regulations. Payment intermediary service providers must maintain a total balance in bank accounts that support e-wallets, ensuring it exceeds the total balance of all issued e-wallets. Additionally, e-wallet services must be linked to customers’ payment accounts or debit cards, enhancing the security and traceability of transactions.

What Is the Impact on Payment Service Providers?

The decree grants the SBV extensive supervisory powers over payment systems, PSPs, and IPSs. These entities must comply with the SBV’s regulations, which include conducting inspections and actively managing risks to prevent illegal activities. The SBV is also authorized to determine and supervise economically important payment systems to maintain their stability and security.

How Will the Transition Period Be Managed?

Decree 52 provides various transitional periods for stakeholders to align with the new regulations. For example, commercial banks and foreign bank branches have 24 months to comply with the decree’s requirements for participating in international payment systems. Similarly, IPS providers connected to international payment systems must comply and apply for new licenses within the same timeframe.

What Are the Broader Implications of Decree 52?

The implementation of Decree 52 marks a significant step in Vietnam’s journey towards a cashless economy. By providing a clear regulatory framework for e-money and cashless payments, the decree aims to enhance financial inclusion, reduce fraud, and promote the use of digital payment methods. The SBV’s enhanced supervisory role will also ensure that payment systems operate securely and efficiently, fostering trust among consumers and businesses.