Vietnam’s financial landscape is set to further transform on July 1, 2024, when the government’s long-awaited Decree No. 52/2024/ND-CP dated May 15, 2024 (“Decree 52”), will officially replace Decree No. 101/2012/ND-CP dated November 22, 2012, on non-cash payments (“Decree 101”).

Decree 52 marks an important milestone by introducing the country’s first-ever legal definition of e-money. In addition, the decree brings forth new updates to regulations governing payment and intermediary payment services, laying the groundwork for more comprehensive guidance that will be provided in draft circulars now being developed by the State Bank of Vietnam (SBV).

Non-Cash Payment Instruments

The new definition of non-cash payment instruments under Decree 52 expands upon the previous definition in Decree 101. Notably, it clearly specifies the issuing entities as payment service providers, financial companies licensed to issue credit cards, and e-wallet service providers. Additionally, the new definition further clarifies that bank cards include debit, credit, and prepaid cards, and adds e-wallets to the list of non-cash payment instruments. Unlawful non-cash payment instruments are still defined as those that are not otherwise specified.

E-Money

Prior to Decree 52, the concept of e-money lacked a precise legal definition, despite its growing prevalence in forms like prepaid cards and e-wallets. The absence of a clear framework for e-money led to confusion with terms like “cryptpcurrency” and “virtual currency” and left significant ambiguity on whether e-money includes certain instruments, such as online game cards and mobile money. Decree 52 addresses this issue by clearly defining e-money as value in Vietnamese dong (VND) stored electronically and prepaid by customers to banks, foreign bank branches, and e-wallet service providers. It also specifically designates e-wallets and prepaid cards as types of storage mechanisms for e-money.

Non-Cash Payment Services

Decree 52 categorizes non-cash payment services into services with and without client payment accounts. Payment services with client accounts involve various financial transactions like money transfers and card payments, while services without client accounts focus on transactions not requiring such accounts. The decree also expands the range of entities providing these services to include not only banks and financial institutions but also public postal service providers (as defined by the Law on Post). So far, regulations for non-cash payment services provided by public postal service providers have been outlined in Circular No. 38/2019/TT-NHNN dated December 31, 2019. Decree 52 now further formalizes the inclusion of public postal service providers, a move that emphasizes expanded access to financial services, particularly in underbanked areas.

In a bid to further clarify and regulate these payment services, the SBV is currently working on a draft circular that will replace Circular No. 46/2014/TT-NHNN dated December 31, 2014, on non-cash payment services. This circular aims to offer updated guidance on all aspects of non-cash payment services under Decree 52 to address the new practical challenges in the current non-cash payment landscape.

Intermediary Payment Services

Decree 52 defines intermediary payment service (IPS) providers as non-bank organizations licensed by the SBV to provide IPSs, which encompass financial switching services, international financial switching services, electronic clearing services, e-wallet services, collection and payment support services, and payment gateway services. Compared to the old IPS regime under Decree 101 and Circular No. 39/2014/TT-NHNN dated December 11, 2014 (“Circular 39”), Decree 52 removes electronic money transfer support services from the list of IPSs.

The decree also sets stringent requirements for obtaining an IPS license, encompassing capital adequacy, technical capabilities, and personnel qualifications. The most notable requirements for organizations applying for an IPS license include the following:

• The organization must not be in the process of division, separation, consolidation, merger, conversion, dissolution, or bankruptcy.
• For financial switching services and electronic clearing services, the organization must provide only IPSs.
• The organization must fulfill minimum charter capital requirements of either (1) VND 50 billion (approx. USD 1,964,560) for e-wallet services, collection and payment support services, and payment gateway services, or (2) VND 300 billion (approx. USD 11,787,360) for financial switching services, international financial switching services, and electronic clearing services.
• The organization must comply with information system security level 4 requirements for financial switching services and electronic clearing services, or level 3 for other IPSs.
• The organization must meet specific technical and personnel requirements.

Decree 52 also introduces new regulations for the provision of IPSs with international elements. These affect:

• Foreign service providers providing IPSs to nonresident customers and foreigners residing in Vietnam to perform payment transactions for goods and services in Vietnam; and
• Providers of IPSs that customers use to perform payment transactions for foreign goods and services.

The SBV is currently preparing a draft circular that will replace Circular 39 on IPSs and is expected to be issued soon.

Safety and Security of Non-Cash Payments

Under Decree 52, payment service and IPS providers are responsible for ensuring the safety and confidentiality of transactions, conducting inspections of payment-accepting units, and actively managing risks to prevent the misuse of their services for illegal activities. IPS providers specifically must adhere to information system security requirements with varying levels of compliance depending on the specific services offered (level 4 for financial switching services and electronic clearing services, and level 3 for other IPSs). IPS providers should therefore also carefully review relevant regulations under the Law on Network Information Security and Decree No. 85/2016/ND-CP dated July 1, 2016, on the security of information systems by levels, for full compliance in this regard.

In addition to these requirements, payment service and IPS providers should also pay attention to the new, stringent requirements under Decision No. 2345/QD-NHNN dated December 18, 2023, on security measures for online payments and bank card transactions. To solidify the compulsory measures set out under this decision, the SBV is currently drafting a circular to replace Circular No. 35/2016/TT-NHNN dated December 29, 2016, which will further guide the requirements on safety and security for online banking services.

Other Notes

In addition to the above, Decree 52 also has the following key points:

• Monitoring Activities: Decree 52 grants the SBV extensive supervisory powers over payment systems, payment services, and IPSs. The SBV is authorized to promulgate regulations, conduct remote and on-site supervision, and request information from relevant entities. Payment service providers and IPS providers must comply with these regulations and provide the requested information. Notably, the SBV has the authority to determine and supervise economically important payment systems to maintain their stability and security. To provide more guidance in this regard, the SBV is also currently working on a draft circular that will replace Circular No. 20/2018/TT-NHNN dated August 30, 2018, on supervision of payment systems.
• Payment Agents: The SBV is developing a draft circular on payment agents for non-cash payment services as regulated under Decree 52. This initiative aims to enhance financial inclusion by enabling banks and foreign bank branches to expand their customer base and service reach without incurring the costs associated with expanding their physical networks. By partnering with payment agents, banks can offer basic financial services in remote areas, reducing travel time for customers and improving overall service efficiency.
• Transitional Period: Decree 52 provides various transitional periods for different stakeholders to align with its new regulations, as follows:
  • Commercial banks and foreign bank branches have 24 months to comply with Decree 52 for international payment system participation;
  • IPS providers licensed for money transfer support services under Decree 101 can continue operations as agreed between the parties;
  • Financial switching service providers connected to international payment systems have 24 months to comply and apply for a new license under Decree 52;
  • Public postal service enterprises have 24 months to apply for approval to provide payment services other than through customer payment accounts; and
  • IPS providers licensed before Decree 52’s effective date can operate until their licenses expire, unless they apply for new licenses under Decree 52’s regime.

Outlook

Decree 52 introduces significant changes to the non-cash payment landscape in Vietnam, including the country’s first legal definition of e-money and expanded regulations for non-cash payment and IPS services. In light of the new regime under Decree 52, the SBV is also developing a number of new circulars to provide further guidance on implementing these regulations. Payment and IPS providers should therefore closely follow legal developments in this field to ensure full compliance with the fast-evolving regulatory framework.