“We paid almost half in gold bars and the rest in cash,” Nhan, a 47-year-old shopkeeper, said of his new US$138,000 condo. “We did that because we and the flat’s owner didn’t want to do a bank transfer. We are so used to buying things with cash and gold.”
Prime Minister Nguyen Xuan Phuc is trying to drag his citizens into the modern era of digital payments, reduce the amount of United States dollars in circulation in the country and establish the dominance of the nation’s domestic currency, the Vietnamese dong. That also means introducing Vietnamese households to credit cards, bank transfers and digital payments rather than carrying around piles of cash and bullion for purchases.
Behind the push is growing frustration among Vietnamese officialdom about the cost of printing banknotes and the need for more transparent payment records in order to crack down on tax evasion and money laundering, a growing problem as the US$237-billion economy continues to expand dramatically.
Officials have their work cut out for them: Just 31 percent of Vietnamese adults have bank accounts and more than 95 percent of payments are made with cash and gold, according to the government.
“It’s embedded in the culture,” said Hanoi-based economist Nguyen Tri Hieu, senior adviser to National Citizen Bank. “It’s holding Vietnam back. The government recognises that to integrate Vietnam into the world economy, its cash-based economy has to change.”
The government has made modernising the nation’s payments a top priority. The prime minister is directing banks to reduce cash transactions to less than 10 percent by the end of 2020. E-commerce is being promoted at malls and supermarkets in major cities and the government wants at least 70 percent of Vietnamese aged 15 and older to have bank accounts.
An exasperated Phuc also ordered the central bank this year to convince more Vietnamese to use digital payment systems, such as QR codes. A new regulation in January mandated providers of public services – from hospitals to schools – to stop accepting cash by December.