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Vietnam: Lack of Credit Cards Not Stopping Pursuit of E-commerce

A kumquat seller uses a mobile phone while waiting for customers in Hanoi in January 2014. E-commerce is growing in Vietnam, despite the lack of credit cards that usually facilitate electronic transactions.

When it comes to e-commerce, Vietnam is somewhat perplexing to observers.

Many Vietnamese love to buy things from the internet, and yet the country seems to lack a key ingredient for online shopping: credit cards.

Concerns about security and transaction fees deter both buyers and sellers. Among Vietnamese who go online, 61 percent prefer to pay with cash, according to market researcher Nielsen.

This number rises when taking into account the two-thirds of Vietnamese who don’t use the internet and are less likely to own credit cards.

“It’s a chicken and egg problem,” said Tomo Huynh, an Ohio native who has been building e-commerce websites since he moved to Vietnam in 2008. “People don’t use credit cards, so merchants don’t make it an option, so people don’t see it as an option.”

Buy online, pay with cash

That hasn’t put off e-commerce companies, which have adapted by letting shoppers pay at the point of delivery.

For comparison purposes, consider an online transaction in the United States. A person could go to to buy a notebook, enter his credit card details, and have the U.S. Postal Service ship the book to his house.

By contrast, a Vietnamese would go to to find the notebook, have the vendor drive it by motorbike to his house, and then pay in cash. This method solves two problems for Vietnam.

The first is confidence in payment, which is done physically rather than electronically. The second is delivery; merchants tend to use their own motorbike fleets because the postal system is notoriously unreliable and few Vietnamese have mailboxes.

“Those are the two issues that intrigue outsiders,” Huynh said. Nevertheless, “Clearly, e-commerce is working in Vietnam, despite what outsiders see as problems.”

Mobile drives growth

Nielsen reported in August that 58 percent of Vietnamese internet users shop online with their mobile phones, compared with a global average of 44 percent.

“The Philippines, Indonesia, Vietnam and Thailand rank in the top 10 markets globally for use of a mobile phone to shop online,” Nielsen said in a press release, “and all Southeast Asia markets scored above the global average.”

Mobile shopping here is likely to beat rates in developed countries like the United States, where the recent unveiling of Apple Pay stirred questions about whether people would warm to the idea of shopping on their phones.

The New York Times reported in September that Americans use mobile devices for just 11 percent of e-commerce spending.

“The rest is on desktop computers, largely because it is easier to enter payment information on a desktop than a smartphone,” the paper said.

Phones are vital in Vietnam -- where mobile subscriptions outnumber people -- because fewer citizens have computers, and most are not entering their payment information anyway.

Nation of entrepreneurs

Despite the dearth of credit cards, Vietnam is a prime target for e-commerce because it is both a nation full of internet fanatics and a very mercantile society. Vietnamese people have a reputation for entrepreneurship.

It shouldn’t have been such a surprise, then, when a reporter approached Nguyen Hoang My Khanh to ask her about virtual marketplaces. Not only does this college student shop online -- as it turned out, she also sells her own products.

My Khanh uploads pictures of her wares, mostly clothes and handicrafts, to Facebook. After buyers contact her, they meet to complete the transaction.

“I used to sell things in person,” she told VOA. “But then there was Facebook. And I saw a lot of people selling there.”

With at least 22 million users out of a population 90 million, Facebook in Vietnam is popular for online shopping. But plenty of indigenous sites have popped up, including Zalora, Tiki, Mua Chung, and Lazada, which is the 15th most popular website in the country.

Web developer Huynh predicted “huge potential” for growth in e-commerce because unlike the U.S. market, which is saturated, Vietnam still has more than 50 million citizens offline.

That follows a trend across Asia-Pacific, according to Dezan Shira & Associates. The law firm wrote in a May report that consumers in the region are “set to dominate e-commerce spending this year and lead global e-retail growth through the end of the decade.”