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| Scanning the QR code to initiate payment at Phu Cat market, Ngo May township, Phu Cat district, Binh Dinh province__Photo: Le Ngoc Phuoc/VNA |
On May 15, the Government issued Decree 52/2024/ND-CP (Decree 52) regulating non-cash payment. The new regulation will take effect on July 1.
Compared to Decree 101/2012/ND-CP dated November 22, 2012, on non-cash payment, as amended by Decree 80 of 2016 and Decree 16 of 2019 (Decree 101), Decree 52 expands the coverage of subjects of application, including not only non-cash payment (NCP) service providers, payment intermediary service (PIS) providers, and organizations and individuals using NCP services and PIS as previously stipulated in Decree 101, but also organizations and individuals related to the provision of NCP services and PIS.
As stipulated in Decree 52, NCP service providers include the State Bank of Vietnam (SBV), banks, foreign bank branches, people’s credit funds, microfinance institutions, and public post service providers (instead of “other organizations” as provided in Decree 101).
Novel and notable terms
Decree 52 redefines and adds some terms as compared to those provided in Decree 101, such as PIS, electronic wallet services, and payment services provided not via clients’ payment accounts. It also gives new definitions, including electronic money and international switching services.
Specifically, PIS are redefined to include switching services, international switching services, electronic clearing services, electronic wallet services, authorized collection and payment support services, and electronic payment gateway services. These services are used instead of services of supply of electronic payment infrastructure, including: switching services, electronic clearing services, and electronic payment gateway services. PIS are also used in replacement of payment service support services, including: authorized collection and payment support services, electronic money transfer support services, electronic wallet services, and other PIS according to the SBV’s regulations as mentioned in Decree 101 and its guiding Circular.
Decree 52 also redefines electronic wallet services as services provided by banks, foreign bank branches or PIS providers to clients for them to top up their electronic wallets, withdraw money from electronic wallets, and make payment transactions. For comparison, Decree 101 defines electronic wallet services as services in which clients are provided with electronic identification accounts created by PIS providers on information carriers such as electronic chips, mobile phone SIMs, computers, etc., allowing the storage of deposit-guaranteed monetary values equivalent to amounts transferred from clients’ payment accounts opened at banks to payment guarantee accounts of electronic wallet service providers at a ratio of 1:1.
At the same time, Decree 52 adds payment services provided not via clients’ payment accounts, including not only money transfer services and authorized collection and payment services as provided in Decree 101 but also other payment services provided not via accounts, which must comply with the SBV’s regulations.
Worthy of note, the decree defines electronic money as Vietnam-dong monetary value stored on electronic media (including electronic wallets and prepaid cards) that is provided corresponding to the amount prepaid by clients to banks, foreign bank branches or PIS providers that provide electronic wallet services.
Another new definition provided in the decree is the term of international switching services, which means the connection to the international payment system to transmit and process electronic data of international payment transactions.
Conditions for provision of PIS
The decree specifies conditions for provision of PIS. While commercial banks and foreign bank branches are still allowed to provide electronic wallet services, institutions other than commercial banks or foreign bank branches are required to satisfy and maintain certain conditions in order to obtain a license for provision of PIS from the SBV.
General conditions
Regarding charter capital (actually contributed or allocated minimum amount), the decree sets a level of VND 50 billion for electronic wallet services, authorized collection and payment support services, and electronic payment gateway services; or VND 300 billion for switching services, international switching services, and electronic clearing services. Under Decree 101, this amount is VND 50 billion for all services). PIS providers have to take the entire responsibility for the legality of contributed or allocated capital sources.
As per the personnel condition, Decree 52 requires that an applying institution’s legal representative and chief executive officer must possess a university or higher degree in economics, business administration, law, or information technology (newly added major) and least five years’ experience (instead of at least three years’ experience as required by Decree 101) of working as a manager or an executive officer of the institution in the field of finance or banking, and must not fall into the cases of prohibition as specified by law. The institution must ensure that it always has at least one legal representative residing in Vietnam. When there is only one legal representative residing in Vietnam, this person must authorize in writing another person who is residing in Vietnam to exercise the rights and perform the obligations of the former when he leaves the country.
Meanwhile, chief operating officers and key staffs engaged in implementing the plan on provision of PIS (including heads of divisions or the equivalent and technical staffs) must possess a college or higher degree in economics, business administration, law, information technology, or specialized field which they are in charge of. It should be noted that Decree 52 replaces the two majors of finance and banking mentioned in Decree 101 with business administration and law.
With regard to technical requirements, the applying institution is required to provide a written description of technical solutions serving the provision of PIS, which has been approved by a competent authority stated in the charter of the institution. It must also satisfy the requirement on level-3 information system security assurance in accordance with law.
Specific conditions
For electronic wallet services and authorized collection and payment support services for clients having accounts at different banks and foreign bank branches, Decree 52 stipulates that PIS providers must hire a switching service and electronic clearing service provider licensed by the SBV to perform financial transaction switching and clearing of obligations arising in the process of provision of PIS.
For switching services and electronic clearing services, Decree 52, like Decree 101, requires that a PIS provider must have account-finalization of clearing results between related parties carried out by a capable organization. However, it additionally requires a PIS provider to enter into agreements on connection with at least 50 banks and foreign bank branches whose total charter capital in the year preceding the year of submission of a license application dossier exceeds 65 percent of the total charter capital of banks and foreign bank branches in the system of credit institutions, and with at least 20 other PIS providers. Furthermore, a PIS provider must have information infrastructure that meets the minimum requirements on level-4 information system security assurance, ensuring its integrability and connectability into/with the technical systems of participating parties to connection agreements; and have a server system that is capable of processing at least 10 million payment transactions per day. Participating parties are not allowed to connect more than two providers of switching services or electronic clearing services.
With respect to international switching services: In addition to the above-mentioned condition on account-finalization of clearing results between related parties, PIS providers are required to formulate internal regulations on criteria for selecting connections to international payment systems to perform switching of international payment transactions as well as internal regulations on technical processes for international switching services requested to be licensed. The new regulation also states that organizations operating international payment systems connected to international switching service providers must be those legally established and operating abroad.
Licenses for provision of PIS
License application dossier
In addition to the documents specified in Decree 101, Decree 52 requires additional papers for a dossier of application for a license for provision of PIS, including:
(i) A letter of commitment, and document of the owner, founding member or founding shareholder of the applying institution, proving its maintenance of the existing value of charter capital;
(ii) For switching services or electronic clearing services: a plan on provision of PIS with account-finalization of clearing results between related parties performed by a capable organization; an agreement on connection with the participating parties, containing a commitment that the participating parties are not allowed to connect more than two providers of switching services or electronic clearing services; and a document showing that the information infrastructure and server system meet the requirements stated in Decree 52; and,
(iii) For international switching services: internal regulations on criteria for selecting international payment systems to perform connection and switching of international payment transactions; internal regulations on technical processes with risk management measures for international switching services requested to be licensed; a copy of the document showing that the organization operating the international payment systems is legally established and operating abroad, which is issued by a competent authority of the country or territory where such organization is established or headquartered; and a plan on provision of PIS with account-finalization of clearing results between related parties performed by a capable organization.
Licensing procedures
Decree 101 says that, within 60 days after receiving a complete and valid dossier, the SBV will appraise the dossier and issue a license or state the reason for its refusal to issue a license. Decree 52 give more specific provisions on timing for license issuance.
Accordingly, within 90 working days after receiving a valid dossier, the SBV will appraise the dossier. Within 60 days after the SBV sends a request to the applicant for supplementing the dossier, if the applicant fails to submit a supplemented dossier, the SBV shall issue a written reply and return the dossier to the applicant. Within 90 working days after receiving a supplemented dossier, the SBV will appraise the dossier and issue a license under regulations. If refusing to issue a license, the SBV will send a written reply to the applicant, stating the reason.
From the date the SBV receives a valid dossier, the applicant may submit additional papers for completing the dossier no more than twice. The time limit for the applicant to submit additional papers is 60 days from after the SBV confirms its receipt of a valid dossier.
Regarding the validity duration of a license for provision of PIS, Decree 52 keeps it unchanged at 10 years as stated in Decree 101. However, particularly for international switching services, Decree 52 indicates that the validity duration of a license for provision of PIS must not exceed that stated in the license for provision of switching services.
Commencement of operation after being licensed
Compared to Decree 101, Decree 52 is more specific about procedures for an organization to commence operation after obtaining a license from the SBV. It says that at least 30 working days prior to the expected date of provision of PIS to the market and within six months after getting a license, an organization must provide the SBV with documents proving that its technical system meets the conditions specified in Decree 52; a copy of the minutes of acceptance testing for the licensed PIS with a cooperating bank, for electronic wallet services, authorized collection and payment support services and electronic payment gateway services; and a document proving that the account-finalization of clearing results between related parties is performed by a capable organization, for switching services, electronic clearing services and international switching services.
Within 15 working days after receiving the dossiers and documents as required, the SBV will conduct a physical inspection at the PIS provider and issue a notice stating whether or not the PIS provider satisfies the required conditions. In case of non-satisfaction, the SBV will consider revoking the license.
License modification
Decree 52 adds the following provisions on license modification:
In case of requesting additional connection to international payment systems, providers of international switching services must also provide the documents required for a dossier of application for a license for provision of PIS as mentioned above in the dossier of request for license modification.
Within five working days after receiving a dossier of request for license modification, the SBV will consider the validity of the dossier, and decide to modify the license within 30 working days after receiving a complete and valid dossier. In case of refusal to modify the license, the SBV will issue a written reply, stating the reason.
The validity duration of the modified license must not exceed that written in the original license for provision of PIS.
In case of being requested to stop the provision of PIS, the PIS provider must stop providing these services after the SBV modifies the license, and must, within 30 days after having its license modified by the SBV, send a notice to related organizations and individuals for liquidation of contracts and fulfillment of their obligations and responsibilities in accordance with law.
The PIS provider is not required to carry out procedures for requesting modification of its license in case its legal representative is replaced; its charter capital or the owner’s equity ratio is changed; or it undergoes division, separation, consolidation, merger or transformation during the validity duration of the license. However, the PIS provider must send to the SBV a notice thereof and supporting documents (if any) within 30 days from the date of occurrence of the above change.
License revocation
Decree 52 says that the SBV will consider revoking a license for provision of PIS in one of the eight cases listed in Article 27.1, including three cases similar to those provided in Decree 101 and five more cases.
The three similar cases in which a PIS provider will have its license revoked are specified below:
(i) It is detected through inspection, examination and supervision of PIS provision activities that the PIS provider fails to provide the licensed PIS to clients for six consecutive months;
(ii) The PIS provider cannot take remedial measures though three months have passed from the date the SBV sends to the PIS provider a notice stating the latter’s non-satisfaction of one of the conditions for PIS provision during the service provision process or non-satisfaction of the technical requirements; and,
(iii) The PIS provider is dissolved or goes bankrupt in accordance with law.
Decree 52 adds five more cases in which a PIS provider is subject to license revocation.
(i) The PIS provider submits an application for license revocation for the reason that it terminates the provision of the licensed PIS;
(ii) The legally effective judgment, judgment enforcement decision or administrative sanctioning decision issued by a competent state agency or criminal judgment enforcement agency has a content on revocation of the license of the PIS provider, or such agency issues a document requesting revocation of the license of the PIS provider;
(iii) The PIS provider uses or abuses payment accounts, payment instruments, payment services or PIS to gamble, organize gambling, swindle, illegally carry out business activities, carry out money laundering or terrorism financing, or finance the proliferation of weapons of mass destruction;
(iv) The PIS provider no longer meets one of the required conditions for provision of PIS; cannot provide supporting documents, or have provided the supporting documents but such documents do not comply with Decree 52, and the PIS provider fails to take remedial measures though three months have passed from the date the SBV issued a notice requesting the PIS provider to take remedial measures; and,
(v) The PIS provider repeats the violation of dishonestly reporting on the balance and number of electronic wallets under regulations.
Decree 52 also specifies conditions for requesting re-issuance of licenses for provision of PIS. It says that after three years from the date of license revocation, a PIS provider may apply for license re-issuance on the condition that it has fulfilled the obligations and responsibilities between related parties in accordance with law. Meanwhile, Decree 101 sets a time limit of six months from the date the service provider has entirely remediated the cause leading to license revocation for re-issuance of a license.-
Vision & Associates Legal
Attorneys at law
Unit 308-310, 3rd Fl., Hanoi Towers, 49 Hai Ba Trung Str., Hanoi, Vietnam
Te.: (84 24) 3934 0629 | Fax: (84 24) 3934 0631
