On 15 May 2024, the Government officially issued the new Decree No. 52/2024/ND-CP to regulate cashless payments (“Decree No. 52“). Decree No. 52 takes effect from 1 July 2024 and replaces the previous Decree No. 101/2012/ND-CP on cashless payments, as amended from time to time (“Decree No. 101“).
Among other things, Decree No. 52 sets forth regulations mainly on opening and using payment accounts, cashless payment services and intermediary payment services (IPS). Decree No. 52 aims to promote non-cash payments, facilitating the digital transformation of the banking industry and developing superior payment products and services.
Decree No. 52 provides a number of significant changes and novel provisions, some of which are highlighted below.
Decree No. 52 imposes stricter requirements on entities wishing to provide the services. In addition, electronic money remittance support services are no longer considered a kind of IPS.
Decree No. 52 provides more detailed guidelines on how payments in foreign currencies and international payments are made. It also sets forth the conditions for entities wishing to participate in the international payment system.
The definition of electronic money (e-money) is introduced for the first time, and e-wallets and prepaid cards are accordingly regulated as a mean to store e-money.
1. Changes in regulations on IPS
(a) Changes in the classification of IPS
Support services for electronic money remittance are no longer considered a kind of IPS.1 IPS providers offering support services for electronic money remittance as permitted by their existing IPS license issued before the effective date of Decree No. 52 (i.e., before 1 July 2024) may continue performing the services as agreed upon by the relevant parties.2
In addition, there is a key change in the definition of “support services for entrusted payment and entrusted collection.” Particularly, this definition was revised to include the process of making payment, as follows: “receiving and processing electronic data, calculating collection and payment results, and cancelling collections and payments for customers with payment accounts and bank cards, and making payments to the relevant parties.3“
(b) Stricter conditions to provide IPS
In general, there are some stringent changes in the requirements for providing IPS, some of which are highlighted below.4
The IPS provider must not be currently undergoing any spin-off, split-up, consolidation, merger, transformation, dissolution or bankruptcy under a decision issued during the process of applying for a license to provide IPS.
As for providing financial switching services (FSS) or electronic clearing services, the IPS provider must ensure that it does not engage in any other business operations other than providing IPS.
The IPS provider must possess a minimum paid-up or allocated charter capital of VND 300 billion to provide FSS, international FSS and electronic clearing services (compared to VND 50 billion as stipulated in the previous Decree No. 101).
The legal representative and general director of the IPS provider must hold a university degree or higher in economics, business administration, law or information technology, and they must have at least five years of experience as a manager or operator of the provider in finance and banking (compared to three years of experience as stipulated in the previous Decree No. 101).
IPS providers allowed to provide IPS before the effective date of Decree No. 52 (i.e., 1 July 2024) may continue to operate according to the IPS license issued by the SBV until it expires.5
2. Conditions to participate in the international payment system
Under Decree No. 52, international payment systems refer to those established abroad that permit the implementation of international payment transactions. To participate in the international payment system, Decree No. 52 requires that commercial banks, foreign bank branches and FSS providers comply with certain regulatory requirements.
(a) Conditions applicable to commercial banks and foreign bank branches
Decree No. 52 sets out the specific requirements that commercial banks and foreign bank branches must satisfy, as follows:6
Obtaining permission to conduct basic foreign exchange activities in both domestic and international markets
Adopting policies and risk management protocols on anti-money laundering, counter-terrorist financing and combating the financing of the proliferation of weapons of mass destruction in compliance with the respective laws
Maintaining an IT system that meets the requirements on monitoring, security and confidentiality according to Vietnamese laws and having internal regulations on selection standards when connecting to international payment systems
Connecting to international payment systems whose operators are legally established and operating abroad
Commercial banks and foreign bank branches must obtain the SBV’s written approval to participate in the international payment system after satisfying the conditions set out above.7
On a related note, an offshore organization providing payment services and/or IPS to non-residents and foreigners residing in Vietnam to make payment for goods and services in Vietnam must operate via a commercial bank or a foreign bank branch approved by the SBV to participate in the international payment system of that offshore organization.8
(b) Conditions applicable to FSS providers to participate in the international payment system
FSS providers must meet the following conditions to connect to the international payment system to provide international FSS:9
Holding a valid license to provide FSS
Utilizing a clearing organization to settle the clearing results among the parties involved
Issuing internal regulations for selecting connections to international payment systems to process international FSS
Issuing internal regulations on the technical and operational processes of the international FSS to be licensed
Connecting to international payment systems whose operators are legally established and operating abroad
3. Other key provisions
(a) New concept of electronic money (e-money)
Under Decree No. 52, e-money is defined as the value of Vietnamese currency stored electronically and provided based on an equivalent amount prepaid by customers to banks, foreign bank branches or IPS providers offering e-wallet services.10 In addition to prepaid cards, e-wallets are now recognized as a means to store e-money, although their fundamental nature remains unchanged compared to the current Decree No. 101.11
(b) Additional requirement on foreign currencies and international payments
Besides complying with the provisions of Decree No. 52, payments in foreign currencies and international payments must also comply with the laws on user data protection, cyber security, tax management, anti-money laundering, counter-terrorist financing, combating the financing of the proliferation of weapons of mass destruction, the regulations on foreign exchange and the international agreements and treaties to which Vietnam is a contracting party/member.12
(c) Public postage service providers providing payment services without payment accounts
Public postage service providers are allowed to provide payment services that do not go through the customers’ accounts, i.e., remittance, payment and collection services, after satisfying the technical and personnel requirements set out under Decree No. 52 and obtaining the SBV’s written approval.13 Public postage service providers providing payment services that do not go through the customers’ accounts before the effective date of Decree No. 52 (i.e., 1 July 2024) must satisfy the requirements specified therein and follow the procedures for obtaining the SBV’s approval to provide non-account payment services within 24 months from 1 July 2024.14
(d) Prohibited acts under Decree No. 52
Decree No. 52 has provided certain amendments and supplements in connection with cashless payments to further prevent payment service providers or other related individuals from taking advantage of the vague provisions under Decree 101. For example, acts of illegally disclosing or providing information on the balances of account holders to payment service providers are amended to include acts of disclosing or providing information on payment account balances, bank card balances, e-wallet balances and payment transactions of customers to payment service providers or IPS providers.15 Besides, providing payment services without being a payment service provider, or providing IPS without the IPS license issued by the SBV or without complying with its requirements, is also specifically prohibited.16
1 Circular No. 39/2014/TT-NHNN, Article 2.2(b); Decree No. 52, Article 22.1.
2 Decree No. 52, Article 36.2.
3 Decree No. 52, Article 3.17.
4 Decree No. 52, Article 22.2.
5 Decree No. 52, Article 36.5.
6 Decree No. 52, articles 5.2 and 21.
7 Decree No. 52, Article 4.3.
8 Decree No. 52, Article 5.3.
9 Decree No. 52, Articles 5.4 and 22.2(h).
10 Decree No. 52, Article 3.12.
11 Decree No. 52, Article 6.1.
12 Decree No. 52, Article 5.1.
13 Decree No. 52, Article 3.4 and Article 18.2(dd).
14 Decree No. 52, Article 36.4.
15 Decree No. 52, Article 8.4.
16 Decree No. 52, Article 8.7 and Article 8.12.
