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Cashless society

Vietnam government picks Alliex to lead cashless transition

By Apr 08, 2021 (Gmt+09:00)

Alliex CEO Park Byoung-gun (left); Vietnam's Deputy Prime Minister Vuong Dinh Hue (right) in a 2019 meeting (Courtesy of Vietnam Government Portal)
Alliex CEO Park Byoung-gun (left); Vietnam's Deputy Prime Minister Vuong Dinh Hue (right) in a 2019 meeting (Courtesy of Vietnam Government Portal)

South Korea’s fintech startup Alliex Co. has kicked off a new project in Vietnam to create a common payment platform that would standardize the country’s card payment transactions under a unified system.

According to industry sources on Apr. 8, the payment solutions provider has initiated the platform project last month after receiving approval from the government of Vietnam.

Alliex will be the only foreign company to operate a government-approved payment systems project in Vietnam, after many firms including Japan’s telecom giant NTT have failed to persuade the relevant officials in the country.

The company, founded in Korea in 2013, entered Vietnam early in 2016 by setting up a local office in Hanoi.

Alliex says that companies from different corners of the world including Japan saw new opportunities arising in the payment sector of Vietnam, a country with more than 100 million people and a young working population.

The new project aims to set up a payment system where different card-issuing banks in Vietnam can use the same card reader machine provided by Alliex.

Until now, the Vietnamese banks have been operating their own card reader machines. It was thus a common scene in Vietnamese supermarkets to see a large number of such machines on the counter placed next to each other in an untidy manner.

In other words, Alliex says, the banks have been making an overlapped investment in payment infrastructure.

While new payment services have been launching in Vietnam one after another, they are facing difficulties in market expansion largely due to technical and regulatory challenges.

Alliex says it could grab the right opportunity at the right timing due to its technical expertise and deep understanding of Vietnam government’s needs.

Accelerating the transition to a cashless society, by driving the spread of card payment practice across the country, is a key priority for the Vietnamese government, amid a rapid rise in the number of tourists and increase in wages.

Moving within the regulatory boundaries, Alliex have been persistent in persuading the relevant authorities, starting with its business presentation meeting with State Bank of Vietnam, the country’s central bank in October 2016.

Park Byoung-gun, the chief executive of Alliex, said that there were two decisive factors that differentiated his company from other international rivals: “We assured the government that our project will not be taking over the business of the local banks. Another point that we made was that we would be working in Vietnam as a long-term partner.”

The CEO also highlighted that his company quickly obtained market confidence by ensuring that no separate support will be made to individual banks, and instead announcing to focus on expanding the number of outlets that used the common card reader system.

Based on its know-how accumulated in Korea, Alliex’s new system not only allows consumers to use debit and credit cards issued by different banks, but also offers mobile payment options and additional services such as mileage and loyalty points saving.

The fintech startup’s partners in Vietnam include the state-run Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) and the private Sacombank. They signed contracts in 2019, but the actual service was launched in March this year due to the pandemic.

Alliex said it will extend the partnership to the state-owned Bank for Investment and Development of Vietnam (BIDV) and Vietnam Bank for Agriculture and Rural Development (Agribank). Agribank is the largest commercial bank in Vietnam by total assets.

The company’s next big task is expanding the number of outlets and clients that use the system. Alliex recently installed its card reader machines to 1,000 taxis through an agreement with a local taxi operator Vinasun Taxi, and will install another 5,000 within this year.

Tapping hospitals, pharmacies, schools, gas stations, groceries and others, Alliex targets installation of total 200,000 machines by the end of 2021 and 1 million machines across Vietnam by 2025.

Alliex employs more people in Vietnam than in Korea; 100 employees are working in Vietnam compared to only 50 in Korea.

The company expects its revenue to increase rapidly from 400 million won ($360,000) last year to around 10 billion won ($8.9 million) in 2021, with the implementation of the new project.

Write to Eun-jung Kim at kej@hankyung.com

Daniel Cho edited this article.

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