E-commerce Payment Gateway in Vietnam Part 3 - How Payment Gateways in Vietnam Generate Revenue from Small and E-Commerce Businesses

Payment gateways play a crucial role in the e-commerce and financial ecosystem in Vietnam, enabling businesses to accept payments securely and efficiently.

These gateways facilitate transactions between merchants and customers, handling the technical aspects of payment processing.

But how do these gateways make money? Let’s delve into the primary revenue streams for payment gateways in Vietnam.

First, Let’s delve into When Small and E-Commerce Businesses Recognize Charges by Payment Gateways in Vietnam

Here's a detailed breakdown of the moments you might recognize being charged by payment gateways in Vietnam.

1. During Transaction Processing

The most common point at which charges are applied is during the transaction itself. When a customer makes a purchase using a payment gateway, a transaction fee is deducted. This fee, typically a percentage of the transaction amount, is the primary way payment gateways make money.

Example: If you sell a product for 1,000,000 VND and the payment gateway charges a 2% transaction fee, you will be charged 20,000 VND.

2. At Account Setup

Many payment gateways charge a one-time setup fee when you first create an account and integrate their service with your website or application. This fee covers the cost of setting up your account and integrating the payment gateway into your system.

Example: A setup fee might be 1,000,000 VND for the initial integration process.

3. Monthly Maintenance

Payment gateways often charge a monthly maintenance fee to cover ongoing support, system updates, and other administrative costs. This fee is typically fixed and charged at the beginning or end of each month.

Example: A monthly maintenance fee might be 200,000 VND.

4. For Premium Services

If you opt for additional services such as enhanced security features, advanced fraud detection, or expedited settlements, you may incur extra charges. These premium services offer added value but come at an additional cost.

Example: Advanced fraud detection might cost an extra 0.5% per transaction.

5. Currency Conversion

For transactions involving different currencies, payment gateways often charge a currency conversion fee. This fee is applied when a customer pays in a currency different from the merchant’s base currency.

Example: If a customer pays in USD and you receive VND, a 2% currency conversion fee might be applied to the transaction amount.

6. Integration Services

If you require custom integrations with specific e-commerce platforms or business systems, payment gateways may charge for these services. This fee is for the development work needed to ensure seamless integration.

Example: Custom integration services might cost 5,000,000 VND.

7. Chargebacks

When a customer disputes a transaction and requests a refund through their bank or card issuer, the payment gateway charges a fee to process this chargeback. This fee compensates for the administrative work involved.

Example: Each chargeback might incur a fee of 500,000 VND.

8. Value-Added Services

Access to advanced analytics, reporting tools, and customer support might come with additional fees. These services help businesses optimize their payment processes and gain valuable insights into their transaction data.

Example: A premium reporting tool might cost an additional 300,000 VND per month.

9. Holding Period Interest

While this is not a direct charge to the merchant, payment gateways often earn interest on funds held temporarily before they are transferred to the merchant’s account. This holding period can generate interest revenue for the payment gateway.

Second, Let’s come to the Main Focus Issue- How Payment Gateways in Vietnam Make Money

Here are some ways for payment gateways in Vietnam to generate revenue:

1. Transaction Fees

The most significant source of revenue for payment gateways is the transaction fee. Every time a customer makes a payment through the gateway, a small percentage of the transaction amount is charged.

This fee typically ranges between 1% to 3% of the transaction value, depending on the volume and type of transaction.

2. Setup and Monthly Fees

Many payment gateways charge a one-time setup fee when a business first signs up for their services. This fee covers the initial costs of integrating the payment gateway with the merchant's website or application.

Additionally, there might be a monthly maintenance fee to cover ongoing support and infrastructure costs.

3. Service Fees

Some payment gateways offer premium services, such as advanced fraud detection, additional security measures, and faster settlement times.

Merchants opting for these enhanced services are charged additional fees. These services help businesses manage risks and improve their overall payment processing efficiency.

4. Currency Conversion Fees

For cross-border transactions, payment gateways often charge a currency conversion fee. This fee is applied when a customer pays in a different currency than the merchant’s default currency.

The payment gateway handles the conversion and charges a small fee for this service, usually around 1% to 3% of the transaction amount.

5. Integration Fees

Custom integrations with specific business systems or e-commerce platforms may require additional development work.

Payment gateways can charge for these bespoke integration services, ensuring that their systems work seamlessly with the merchant's existing infrastructure.

6. Chargeback Fees

Chargebacks occur when a customer disputes a transaction and requests a refund through their bank or credit card provider.

Handling chargebacks involves administrative work, and payment gateways typically charge a fee for processing these disputes. This fee can range from $15 to $30 per chargeback.

7. Value-Added Services

Payment gateways often provide additional services such as analytics, reporting tools, and customer support.

These value-added services help businesses gain insights into their transaction data, optimize their payment processes, and resolve issues more efficiently.

Payment gateways may charge a fee for accessing these advanced tools and support services.

8. Interest on Funds Held

Payment gateways hold funds temporarily before transferring them to the merchant’s account. During this holding period, gateways can earn interest on these funds. While this revenue stream might be relatively small, it still contributes to the overall profitability of the payment gateway.

How Small and E-commerce Businesses Recognizing and Managing These Charges

To manage these charges effectively, small and e-commerce businesses need to:

• Review Contracts: Always read the terms and conditions of your payment gateway provider to understand all applicable fees.
• Monitor Transactions: Regularly review your transaction records to identify and verify the fees charged.
• Optimize Services: Choose only the necessary services to avoid unnecessary costs.
• Negotiate Rates: If your transaction volume is high, you might be able to negotiate lower fees with your payment gateway provider.

Conclusion Regarding Payment Gateways Generate Revenue from Small and E-Commerce Businesses

In Vietnam, the rapid growth of e-commerce and digital payments has created a thriving market for payment gateways.

With increasing internet penetration and smartphone usage, more consumers are shopping online and using digital payment methods.

This trend has attracted several local and international payment gateway providers, leading to a competitive market landscape.

Payment gateways in Vietnam have a diverse range of revenue streams, from transaction fees to premium services and currency conversion charges.

As the digital payment ecosystem continues to evolve, these gateways are likely to innovate and introduce new ways to generate revenue while providing value to merchants and consumers alike.

Understanding these revenue models is essential for businesses looking to choose a payment gateway provider, as it helps them anticipate costs and evaluate the overall value offered by different gateways.

For consumers, it highlights the importance of selecting secure and efficient payment methods to ensure smooth and safe transactions.

This article was curated and authored by FinFan's market research and development team, alongside our marketing department.

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