MoMo: The E-Wallet War and the Cost of Winning It

MoMo won Vietnam’s e-wallet war and then had to work out what the prize was worth. For most of the 2010s the assumption in Vietnamese fintech was that whoever owned the payment habit of a cash-based population would own its financial future, and MoMo pursued that prize more aggressively than anyone. It succeeded, and in doing so demonstrated both the power and the limits of subsidised growth in a market where banks and regulators move faster than startups expect. This article explains how the company built its lead, what the war actually cost, why the QR revolution changed the economics, and how MoMo is now trying to turn a payments app into a financial-services platform. It is part of the Vietnam Company Stories hub.

How did a mobile-money experiment become MoMo?

MoMo began in 2007 as M_Service, a company offering mobile top-ups and money transfers through a SIM application in partnership with a state mobile operator. It became an app-based e-wallet in 2014, obtained a State Bank licence in 2015 and grew from there. The founders had spent years learning what a cash economy would and would not do on a phone.

The founding team, including Nguyễn Mạnh Tường, Phạm Thành Đức and Nguyễn Bá Diệp, came from telecoms and consumer finance rather than banking. Their first product was a SIM-toolkit service with VinaPhone that let users buy airtime and send small amounts of money by text menu, in the manner of M-Pesa in Kenya. It reached a modest user base and showed the founders two things: that Vietnamese consumers would trust a phone with small sums, and that a feature-phone product would never reach the scale of a smartphone app.

The relaunch as a smartphone wallet in 2014 coincided with the collapse in Android handset prices and the arrival of cheap 3G data. MoMo positioned itself as the app that could pay for anything a young urban Vietnamese person needed: phone credit, electricity bills, movie tickets, food delivery and later e-commerce. The State Bank of Vietnam issued M_Service one of the first intermediary payment service licences in 2015, formalising a category that had previously operated in a grey zone.

Early capital came from Goldman Sachs, which invested $5.75 million in 2013, and Standard Chartered Private Equity, which put in $28 million in 2016. Those investors bought a thesis, not a business: at the time MoMo had a few million users and negligible revenue. The thesis was that Vietnam, with a population of 95 million, bank-account penetration of under 40 percent and one of the highest smartphone adoption rates in emerging Asia, was the last large cash economy in the region without a dominant wallet.

Why did the e-wallet war become so expensive?

The war became expensive because every serious player had the same thesis and the same tactics, and because merchants and consumers could switch wallets at zero cost. Cashback on transactions, vouchers, referral bonuses and free merchant terminals were the only levers, and each rival matched the other.

By 2019 the field was crowded. ZaloPay had the distribution of VNG’s Zalo behind it. ViettelPay had the country’s largest telecom and its retail network. AirPay, later ShopeePay, had the largest e-commerce platform and its parent Sea’s cash. Moca was Grab’s wallet, embedded in every ride and food order. VNPay, which had won a $300 million round from SoftBank’s Vision Fund and GIC in 2019 and became the country’s second fintech unicorn, took a different route, supplying QR and payment technology to banks rather than fighting for consumers. Dozens of licensed smaller wallets existed, most of them barely used.

MoMo’s response was to outspend on two fronts. On the consumer side it ran near-constant promotions: discounts on bills, cashback on first transactions, a lucky-money campaign each Tết that became a cultural event, and vouchers for cinema, coffee and convenience stores. On the merchant side it built a field sales force that visited street-food stalls, motorbike repair shops and wet-market traders, gave them printed QR codes and taught them to accept payments. By 2021 MoMo claimed more than 140,000 merchant acceptance points and a majority share of wallet transactions.

The financial cost was substantial. Public filings by the company and disclosures by investors indicate annual losses on the order of VND 800 billion to VND 1.1 trillion in 2021 and 2022, roughly $35 million to $50 million, with cumulative losses well in excess of that. Revenue grew, driven by fees on bill payments, merchant transaction charges and commissions on services sold in the app, but every dong of revenue was bought with a subsidy somewhere.

What happened when the banks launched free QR payments?

When NAPAS, the national payments switch, launched the VietQR standard in 2021, every bank app in the country could scan a merchant’s code and transfer money instantly and free of charge. Within two years bank-app QR transfers dwarfed wallet transactions, and the e-wallet’s core advantage disappeared.

The shift was fast because the banks had every incentive to make it so. Vietnam’s lenders, described in the analysis of Techcombank’s retail strategy, had spent the late 2010s building mobile apps and abolishing transfer fees to win deposits from a young population. Once a common QR standard existed, a bank app did everything a wallet did without requiring the user to top up a separate balance. Small merchants began printing bank QR codes rather than wallet codes, because the money arrived directly in their account and cost them nothing.

The State Bank reinforced the trend. Rules issued in 2019 and tightened thereafter required every wallet to be linked to a verified bank account, capped wallet balances and monthly transaction values, and mandated electronic know-your-customer checks. From 2024 a biometric verification requirement applied to larger transactions across both banks and wallets. The regulator’s position, consistent with the tight control it exercises over credit, was that wallets should be a convenience layer on top of the banking system, never a substitute for it.

For MoMo this was a strategic inversion. It had spent years and hundreds of millions of dollars building a payment network in the belief that the network was the asset. The banks then gave the same function away. What MoMo retained was something different and arguably more valuable: a verified, engaged user base of more than 30 million people, many of them with no other digital relationship with a financial institution, and the data to understand how they spent.

How is MoMo trying to turn users into revenue?

MoMo is repositioning itself as a financial-services distributor, earning fees by originating consumer loans for partner banks and finance companies, selling fund units and gold-linked savings products, offering buy-now-pay-later credit and distributing insurance. The company said 2024 was its first profitable year, on revenue it does not disclose in detail.

Lending is the largest opportunity. MoMo does not hold a banking or consumer-finance licence and cannot lend from its own balance sheet, so it acts as an originator and servicer for partners, using its transaction data to score applicants who lack a credit history. Products include small cash loans, a pay-later facility launched with TPBank in 2021 that lets users settle purchases at the end of the month, and merchant credit for the small shops in its network. The economics are attractive when the credit performs and painful when it does not, and the company’s partners bear most of the balance-sheet risk.

Investment products followed. MoMo distributes open-ended funds from managers including Dragon Capital, allowing users to buy in for amounts as small as VND 10,000, and has added savings-style products, gold accumulation and a certificate-of-deposit marketplace. These are low-margin but sticky, and they extend the relationship with a user from daily payments to long-term money. Insurance, mostly simple travel, motorbike and health products, rounds out the offering.

Alongside the product shift came cost discipline. MoMo reduced headcount in 2023, cut back cashback programmes and replaced blanket subsidies with targeted offers driven by its data. The company has described itself as an AI-first financial assistant, which is marketing language, but the underlying change is real: the app now tries to increase revenue per user rather than user count, and the announcement of a first annual profit in 2024, if sustained, marks the end of the land-grab era.

Why did Mizuho pay $170 million for a stake?

Mizuho led MoMo’s Series E in December 2021, investing roughly $170 million of the $200 million round for a stake reported at about 7.5 percent, because Japanese banks were seeking growth in Southeast Asian consumer finance and MoMo offered the largest verified retail user base in Vietnam. The round valued the company above $2 billion, making it a unicorn.

The Japanese logic was strategic rather than financial. Mizuho, like MUFG and SMBC, had already taken stakes in Vietnamese banks and finance companies, and saw a digital distribution channel as the missing piece. For MoMo, a bank shareholder brought credibility with the State Bank, potential balance-sheet partners for its lending products and a signal to other institutions that the company intended to be part of the financial system rather than a disruptor of it.

The Series E capped an eight-year funding history that reads like a map of emerging-market fintech investing: Goldman Sachs in 2013, Standard Chartered Private Equity in 2016, Warburg Pincus leading a round in 2019 reported at about $100 million, and a Series D in January 2021 of more than $100 million from Goodwater Capital, Warburg, Affirma Capital, Tybourne, Macquarie and others. Roughly $430 million in total, according to company statements, against a valuation that had gone from tens of millions to more than $2 billion.

Valuation has been the quiet question since. The 2021 round closed at the peak of the global fintech cycle, months before rising interest rates cut the valuations of listed payments companies by half or more. MoMo has not raised a priced round since, and the company’s repeated references to profitability and to a possible eventual listing suggest management knows that the next mark will be set by earnings rather than by user growth. The state of Vietnam’s capital markets will determine whether that listing can happen at home.

What does the wallet war teach founders and investors?

The lesson is that a distribution advantage bought with subsidies is only worth what it can be converted into once the subsidies stop, and that in regulated markets the conversion depends on what the regulator allows. MoMo won the war it set out to fight and then discovered the terrain had moved.

For founders the first principle is to identify which part of the business the incumbents will eventually give away. Payments, in Vietnam as in most markets, turned out to be that part: banks made transfers free because they wanted deposits and data, and the state built the rails because it wanted a cashless economy. A wallet that had defined itself purely as a way to pay would have been stranded. MoMo survived because it had, in parallel, built a user relationship that could carry other products.

The second principle concerns the pace of spending. MoMo’s subsidy-driven growth was rational as long as capital was cheap and rivals were spending too, but it left the company with a cost base and a user expectation of free money that took two years to unwind. Companies in the same position in ride-hailing, described in the analysis of Xanh SM and Grab, faced the same reckoning. The founders who come out best are those who begin the transition to unit economics before the capital runs out rather than after.

For investors, the MoMo case is a reminder that user counts in emerging-market fintech are an input, not a valuation. Thirty million users who transact for free are a cost; thirty million users who each generate a few dollars a year in lending and distribution fees are a business. The gap between the 2021 valuation and the company’s current earnings is the price of learning that distinction, and the investors who backed the Series E are still waiting to find out whether it will close.

What could go wrong for MoMo from here?

The main risks are regulatory: a tightening of rules on wallet-originated lending, data use or foreign ownership could cut off the revenue lines MoMo is building. Competitive risks from bank apps, Viettel Money and the return of well-funded regional players are secondary but real, and the company’s valuation leaves little room for disappointment.

On regulation, the State Bank has shown that it will act quickly against practices it dislikes. The 2024 decree on cashless payments reaffirmed that wallets are intermediaries, not deposit-takers, and the ongoing tightening of consumer-finance rules following collection scandals in 2023 shows the regulator’s sensitivity to retail credit. A single high-profile case of predatory lending or data misuse originating through a wallet could produce restrictions that would take years to negotiate away.

On competition, the most serious long-term rival is not another wallet but the bank app. Vietnam’s largest banks each have tens of millions of app users, free transfers and the balance sheet to lend directly, and they are adding the investment and insurance products MoMo distributes. Viettel Money, backed by Viettel, combines a telecom-linked mobile-money licence with a nationwide retail footprint, and has the state’s blessing to reach rural users. MoMo’s advantage is focus and data; its disadvantage is that it owns no balance sheet and no licence beyond payments.

Finally there is the question of what MoMo is worth. The $2 billion valuation set in December 2021 has not been tested by a subsequent round or a listing, and comparable listed fintechs in Southeast Asia and India have repriced sharply since. If MoMo can sustain profitability and grow its financial-services revenue, the mark may hold; if not, a down round or a delayed exit would be the final cost of a war that was, on its own terms, won.

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