Cash payments will make up less than 11 per cent of all transactions in Viet Nam by the end of 2015, down from the current 14 per cent, according to a Government plan approved by Prime Minister Nguyen Tan Dung earlier this week.
The plan also targets to double the number of people with bank accounts to 40 per cent of the population in the next four years.
"The rate of cash payments in Viet Nam is still very high," Vietnamese finance and banking expert Can Van Luc said.
Cash payments constitute a global average of only 5-7 per cent of transactions and the rate is even lower for the neighbouring economy of China, with 3-4 per cent.
"The cash payment rate shows the development status of a society," Luc said.
The world's leading non-cash payment market is the US, followed by the eurozone, while the developing economies are far behind, according to the World Payment's Report 2011.
The Government 2011-15 non-cash payment development plan was drafted by the State Bank of Viet Nam with the aim of reducing cash-related costs and improving the efficiency of the country's banking system and State management.
Luc said non-cash payments (bank transfers, internet banking, credit or debit cards) reduced cash-related risk from theft or fires, among other things.
Meanwhile, although the World Payment's Report stated that the global use of cash payments was endemic, especially for low-value retail transactions, it said cash was "costly to distribute, manage, handle and process" and that non-cash-payment growth would lower costs for banks and for the whole economic system.
Card payments services (credit and debit) will be the focus of Viet Nam's 2011-15 payments reform and the country expects to have some 250,000 points of sale (POS) which accept some 200 million card payments a year by 2015.
Continuing the expansion of wage payments to bank accounts in State-owned enterprises and organisations, the Government will also encourage non-cash payments to pay for utility bills.
Expert Luc said the Government plan was feasible, and that the time to implement such changes was right.
According to him, the country's fast development of the commercial banking system and non-cash payment support services in the past several years was key to the plan.
"And after such a difficult time, commercial banks have now given priority to retail banking and services, which will help develop a non-cash payment society," said Luc.
Vu Nguyet Anh, a specialist from Viet Nam International joint stock Bank (VIB) said the Government was now trying hard to pay State employees through bank accounts, while non-State enterprises of more than 50 workers had demonstrated an interest in non-cash payment.
However, the cash culture of Vietnamese people will be the biggest challenge for the plan, according to Luc.
Many fail to understand the upside of non-cash payment but only take costs into consideration, he said, adding that the current low cash management fees in the country also encouraged people to use cash.
Le Phuoc Tan, director of a small art company based in Ha Noi, said it was much more convenient for him to pay his staff in cash, given that "there are only a few of them (nine) and their salaries are not that big".
Ton Quoc Binh, deputy director of Bao Viet Bank, said the biggest worry was the fact that many people did not want "financial transparency", one of the major advantages of non-cash payments.
The uneven distribution of banking services across the country will be another disadvantage.
"While cities have a lot of banks and ATMs (cash withdrawal machines), these services can hardly be found in the countryside," said Luc.
The expert also said there were risks involved in using non-cash payments instruments.
"Remember Viet Nam is seen as one of the markets with high risks associated with credit and debit cards," he said.
Meanwhile Binh said: "Infrastructure and technologies are not a big deal".
Non-cash-payment systems could immediately be put in place as long as the demand was there, he said.