Merger of Vimo and mPOS shakes up Vietnam’s mobile payments market

The Vietnamese mobile wallet Vimo and point-of-sale provider mPOS are merging to form a new entity called NextPay, which will seek to raise US$30 million to expand domestically and elsewhere in Southeast Asia. NextPay’s objective is to combine online and offline solutions into one with Vimo as the online channel and mPOS as the offline one.

NextPay is capitalizing on a state-led push towards cashless payments, which the Vietnamese government believes can boost financial inclusion. Vietnam had 27,500 merchants accepting mobile point-of-sale (mPOS) in 2018, up 99% annually, according to the Vietnam Bank Card Association. Despite that torrid growth, cashless payments remain in afledgling stage in Vietnam, with ample room to grow. Currently, some 50 million Vietnamese adults – out of a total population of 90 million – remain without a bank account.

As fintechs and traditional banks alike vie for business, analysts say that a major consolidation wave could be ahead in Vietnam’s fragmented digital wallet market. 40 Vietnamese banks provide mobile banking services, while there are 29 non-banking entities licensed to provide digital wallet services, according to Nikkei Asian Review.

NextPay could be poised to take a leading role among Vietnam’s mobile wallets with the combined resources of Vimo and mPOS. Vimo and mPOS together have 1.5 million e-wallet users, are forecast to handle $1.5 billion of Vietnam’s $8.5 billion payments market in 2019 and have a presence in 11 Vietnamese cities.

“We want to take advantage of both companies to promote the development of payment products. We consolidate strategy, shareholders and the business team of 500 people,” said NextPay CEO Nguyen Huu Tuat, who formerly headed mPOS, in a statement. “By merging these two businesses, we provide a one-stop payment solution for merchants.’’

If NextPay successfully closes a $30 million series B funding round, it will have ample cash to expand both in Vietnam and overseas. The company will likely expand to both Myanmar and Indonesia in 2020. Myanmar, where no market leader has yet emerged and regulators are welcoming foreign investors, could be an excellent choice.

We aren’t so sure about Indonesia. Regulators in Southeast Asia’s largest economy have thus far favored endemic fintechs, to the extent that they have prevented the Chinese fintech giants Alipay and WeChat Pay from serving local customers. NextPay may need to think seriously about finding a local partner – perhaps a bank – if it expects to make any headway in Indonesia.