Uber, the US ride-hailing technology company has announced its first E-wallet strategic agreement in Southeast Asia with MoMo, the Vietnamese financial technology company. The agreement, which will go in to effect immediately, will allow Vietnamese passengers to use MoMo’s e-wallet to pay for rides.
Uber has chosen Vietnam for its first e-wallet partnership since the country is one of Uber’s fastest growing markets and the deal with MoMo, which already has more than 5 million app users will better position it to take on its main competitor, Grab, which has its own e-wallet service.
Vietnam has one of the highest cash dominated economies in the world and only 30% of citizens have a bank account. With low banking penetration, lack of ATMs and cashless systems, complexities of digital payment systems, and lack of consumer trust, consumers are compelled to fall back to cash based transactions. The Vietnamese government has a goal to move to a 90% cashless economy by 2020 by reducing cash transactions and increasing electronic payments. However, with 90% of current transactions conducted in cash, the government faces an uphill task to achieve its goal.
In 2016, Goldman Sachs and a private-equity division of Standard Chartered Bank invested $28 million USD in “FinTech” company MoMo in order to tap into Vietnam’s young, tech-savvy population and the strategic agreement with Uber is seen as a validation of their investment.