May 08 2023

The super app ambitions of MoMo

Vietnam is a unique fintech market. It may be the most fragmented of all the major ones in Southeast Asia, where dominant players have yet to emerge in most market segments. Because of the extreme fragmentation, Vietnam has produced fewer unicorns than Indonesia or the Philippines, and that makes the ones that do exist all the more notable. The one fintech firm in Vietnam that can realistically make a play for super app status is MoMo, which hit the US$1 billion valuation in December 2021 and has continued its steady ascent since.

The first figure MoMo likes to cite is the 23 million users of its e-wallet. By the company’s estimates, it is the largest e-wallet in the country. Vietnam has almost 98 million people, so MoMo has a 23% market share. If we go by the number of projected active e-wallet users – about 50 million by July 2024 – then the figure looks even more impressive. It is possible that 46% or more of them will use MoMo. A study by Decision Lab is even more bullish, estimating that 56% of Vietnamese were already using MoMo at the end of 2021.

Robocash reckons that MoMo will be the dominant e-wallet in Vietnam by 2030, with its competitors not even close. By July 2030, the market share of active users will likely be distributed as follows: Momo 47.3%, ViettelPay 30.2%, ZaloPay 16.5%, VNPT Pay 5.6%, Moca 0.4%.

Even if MoMo dominates e-payments, in developing countries that segment tends to be an especially low-margin business. It is not realistic to charge high transaction fees when the median user is low income, especially given the amount of competition MoMo faces. There are about 40 active e-wallets in the country. Subsidies are the traditional way to keep consumers coming back to your e-wallet, unless you build an ecosystem from which they find it hard to leave, like Kakao has done in Korea, or Alipay in China.

What MoMo needs to do – and has been doing – is build an ecosystem through which it can offer higher-margin services. The wallet is now a partner of more than 50 banks, and financial and insurance companies. In June 2022, it bought a 49% stake in local securities company Credit Viet Securities (CVS).

Most recently, it inked a deal with Western Union that will allow customers in Vietnam to receive remittances through the MoMo app. Remittances do not offer the same margins as businesses like lending or wealth management, but they nonetheless offer a solid opportunity to MoMo. Remittance inflow in Vietnam is expected to hit $19.56 billion in 2023, according to Insider Intelligence forecasts – about 2.5% of global remittance inflow. According to the World Bank, personal remittances in Vietnam contributed to 4.9% of the country’s GDP in 2021. Working with a legacy remittance provider to make receiving money transfers easier can help MoMo increase its value proposition.

Meanwhile, teaming up with MoMo can strengthen Western Union’s digital footprint in Asia vis a vis competitors like Wise and MoneyGram. Accelerating digital growth is a cornerstone of Western Union’s core goals for the Evolve 2025 strategy.