E-commerce is growing and has become a global trend in recent years. Vietnam is not excluded from such trend. As a result, the growth of e-commerce is paving the way for the development of cashless payment services. In Vietnam, cashless payment services are not unfamiliar to the legal system as the Government enacted regulations to govern this kind of business, particularly Decree 101/2012/ND-CP on non-cash payments issued by the Government dated 22 November 2012, as amended by Decree 80/2016/ND-CP dated 01 July 2016 (“Decree 101”). Under Decree 101, cashless payment services are provided as intermediary payment services, including e-wallet, e-payment portal, e-offset, and others. However, foreign investment is not mentioned in Decree 101.

In July 2018, the State Bank of Vietnam (“SBV”) introduced to the public an outline of a draft decree that aims to replace Decree 101 (the “Draft”). Among others, the Draft proposes specific provisions on foreign investment for intermediary payment services. The Draft clearly indicates that foreign investors can make the investment through contributing capital or purchasing shares or equity in the existing intermediary payment service providers. The Draft goes one step further by proposing a foreign investment cap applicable to such services. However, the cap is not specified yet as the Draft is just an outline with limited specific provisions.

Vietnam has not committed to open the market of intermediary payment services for foreign investment; however, there is also no provision to restrict foreign investment in this business sector. In fact, foreign investment in intermediary payment service providers has been recorded, and in some companies, foreign investors even have the majority shareholding. However, recently, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) took into effect and became enforceable in Vietnam in January 2019. For CPTPP member countries where it already entered into force (such as Canada, Australia, Japan, Mexico, New Zealand, and Singapore), Vietnam made a commitment that in case it wants to reserve any restriction for foreign investment, it must clearly state the reservation as a non-conforming measure.

In particular, Article 9.4 of Chapter 9 (on Investment) and Article 11.3 of Chapter 11 (on Financial Services) of the CPTPP, Vietnam commits that it shall apply the national treatment for investors of the CPTPP member countries. The national treatment shall only be waived when there is a circumstance classified as a non-conforming measure provided in Annexes I and II (applicable to Chapter 9), and Annex III (applicable to Chapter 11) of the CPTPP according to, respectively, Article 9.12.1 and Article 9.12.2 of Chapter 9 and Article 11.10.1 and Article 11.10.2 of Chapter 11 of the CPTPP. These may imply that, other than the services provided in Annexes I, II and III of the CPTPP, Vietnam shall have no restrictions and conditions applicable to foreign investors from CPTPP member countries.

Other than the reserved restrictions as discussed above, there should be no other restriction or limitation applicable to foreign investment. Since “intermediary payment service” is not included in Annexes I, II and III of the CPTPP and not reserved as a non-conforming measure in the CPTPP, this means that Vietnam allows 100% foreign investment for this business sector. Thus, the Draft’s proposal on the foreign investment cap may not comply with Vietnam’s CPTPP commitments. In addition, it is uncertain how the Draft will deal with intermediary payment service providers having foreign investment exceeding the cap.

It is too early to formulate a conclusion about the effect of the Draft. Given that the Draft was introduced prior to the CPTPP coming into effect, the SBV may consider the above points and revise the next version of the Draft accordingly.