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Vietnam has made a significant regulatory advancement by defining electronic money (e-money) for the first time under Decree 52, which will take effect on July 1, 2024. This decree provides a comprehensive framework for e-money, differentiating it clearly from virtual currencies, which are excluded from its scope as they remain unregulated by the country’s financial authorities.
Definition and Scope of E-Money
Decree 52 defines e-money as the value in Vietnamese Dong (VND) stored electronically, based on pre-paid funds provided to banks, foreign bank branches, and payment intermediary service providers offering electronic wallet (e-wallet) services. This value can be stored and managed through e-wallets and prepaid cards.
E-Wallet Services
E-wallet services in Vietnam are provided by banks, foreign bank branches, and payment intermediary service providers. These services enable customers to deposit, withdraw, and conduct payment transactions digitally. As of April 2024, the country boasts over 40 e-wallet providers and approximately 36 million active e-wallets, reflecting the robust adoption of e-payment services.
Exclusion of Virtual Currencies
The decree specifically excludes virtual currencies from its definition of e-money, emphasizing that these are not regulated by the State Bank of Vietnam (SBV). This distinction aims to prevent and eliminate illegal payment methods issued by unauthorized organizations and supports competent agencies in combating related legal violations.
Operational and Compliance Requirements
Under Decree 52, banks and foreign bank branches are authorized to issue and provide e-wallets and prepaid cards. These institutions must adhere to SBV regulations regarding the provision, issuance, and usage of these digital financial instruments.
Payment intermediary service providers offering e-wallet services must ensure that the total balance in all bank accounts supporting payments for their e-wallets is not less than the total balance of all e-wallets issued to customers. These services can only be offered to e-wallets linked to customers’ payment accounts or debit cards.
Payment intermediary service providers licensed under Clause 5, Article 3 of Circular 39/2014/TT-NHNN to provide e-money transfer support services can continue operating under existing agreements until Decree 52 takes effect. This transition period is designed to allow these providers to adjust to the new regulatory environment.
Decree 52 also reinforces anti-money laundering efforts by regulating wire transfers or electronic funds transfers. Entities involved in transactions exceeding a certain value must report these to the SBV. Additionally, entities must adopt risk management policies to monitor, reject, or suspend suspicious transactions and ensure that all transaction information is accurate and complete.
International Payment Regulations
The decree also addresses international payments, outlining:
- The concept of international payments and systems.
- The SBV’s management role is overseeing international payments.
- Regulations on service provision from and to Vietnam, including international financial switch services.
- Approval processes for commercial banks and foreign bank branches to participate in international payment systems.
- Responsibilities of involved parties in providing timely and complete information to state management agencies.
Amendments and Supplements to Payment Account Regulations
Decree 52 introduces several amendments and supplements to payment account regulations to better align with current practices. These include:
- Regulations on opening and using payment accounts.
- Authorization for using payment accounts.
- Blocking and handling payment accounts after blockades.
- Closure of payment accounts and handling the remaining balance.
Additionally, the decree introduces regulations for providing payment services without using customers’ payment accounts for businesses offering public services and amends regulations related to payment intermediary services.
Decree 52 marks a significant step in Vietnam’s financial regulatory landscape by clearly defining e-money and establishing a robust framework for its management. By excluding virtual currencies, the decree aims to streamline digital financial transactions while safeguarding against illegal activities. This move is expected to enhance the efficiency and security of electronic payments in Vietnam, supporting the country’s growing digital economy.
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