MINISTRY OF EDUCATION & TRAINING

THE STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY
----------

FINAL EXAMINATION
SUBJECT: BANKING OPERATIONS
TOPIC: MOBILE BANKING PAYMENT VS CASH PAYMENT

Student's name: Nguyen Duy Nam Long
Student code: 050607190242
Class: BAF301_2111_7_L02_TA
Lecturer: Nguyen Thi My Hanh

Ho Chi Minh City January 20th, 2022


ABSTRACT
The ubiquity of smartphones, together with the rapid expansion of the internet and mobile
networks, has drastically altered people's lives in the 4.0 technology age. People nowadays
are always looking for the quickest and most convenient services, which means that
sluggish and uncomfortable services will be phased out in the future. Although cash
payment is a wonderful innovation of mankind, it appears to be out of date since it does not
suitable for people's demands nowadays. As a result, a new form of payment that is both
convenient and quick is required.
To keep up with the trend of the times, banks throughout the world, as well as commercial
banks in Vietnam, have been attempting to develop new sorts of services. Mobile banking
is one of the most prominent services, which is the direction of long-term strategic
development of banks because it not only provides a full range of banking services but also

acts as a new type of payment – cashless payment.
Focusing on Vietnam, this article will contain three main parts. First, it will introduce the
payment method using old technology (cash) and payment method applying new
technology (mobile banking). Then, the article will look at the advantages and
disadvantages of these two new and old forms of payment. Finally, the author will analyze
whether these new payment providers have a negative impact on the old payment providers.


IMAGE LISTS

Picture 1: SMS Banking ....................................................................................................... 2
Picture 2: Mobile version of bank's website ......................................................................... 3
Picture 3: Mobile banking app ............................................................................................. 3
Picture 4: Steps making modern coins ................................................................................. 5


TABLE OF CONTENT

1. Introduction .................................................................................................................. 1
2. Old and new types of payment ................................................................................... 1
2.1. Mobile banking payment ........................................................................................ 1
2.1.1.

Definition of mobile banking ........................................................................ 1

2.1.2.

Types of mobile banking ............................................................................... 2

2.1.3.


The technology used to create mobile banking apps .................................... 3

2.2. Cash payment .......................................................................................................... 4
2.2.1.

The definition of cash .................................................................................... 4

2.2.2.

The brief history of cash ............................................................................... 4

2.2.3.

The technology used to make cash................................................................ 5

3. Advantages and disadvantages of mobile banking and paper money .................... 6
3.1. Mobile banking benefits and drawbacks ................................................................ 6
3.1.1.

Benefits of using mobile banking in payment ............................................... 6

3.1.2.

Disadvantage of mobile banking in payment ............................................... 7

3.2. Advantages and disadvantages of cash payment .................................................... 8
3.2.1.

Advantage of using cash in payment ............................................................ 8


3.2.2.

Disadvantages of using paper money in payment ........................................ 9

4. The providers of the new and old types of payment ................................................. 9
4.1. Mobile banking providers ....................................................................................... 9
4.2. Cash provider ........................................................................................................ 10
4.3. The impact of mobile banking providers on the cash provider ............................ 11
5. Conclusion .................................................................................................................. 11
References.......................................................................................................................... 12


1. Introduction
Since ancient times, mankind has known how to transact in the form of bartering goods,
using cash in the form of valuable commodities, and then evolved to paper money. Cash
payment has existed for a long time, contributing to the development of the world economy
until today. However, in the era of advanced technology which requires fast and convenient
transactions, cash payment is gradually losing its place. As society develops as well as
science and technology, the form of payment must also change to be able to adapt to the
new era - the 4.0 technology era. Therefore, the born of new payment methods is inevitable.
According to WeAreSocial and Hootsuite statistics, by the end of 2021, up to 68.72 million
Vietnamese people have internet usage (accounting for 70.3% of the total population), of
which 94.7% are connected by phone with the average download speed of mobile internet
connections is 34.51 MB. Especially, the number of phones with network connections in
Vietnam is 154.4 million units (accounting for 157.9% of the total population). Therefore,
it can be seen that the number of phone users in Vietnam is extremely large and that is also
the field that many types of services target.
In order to adapt to the development of the mobile information network and the popularity
of smartphones, many commercial banks in Vietnam have launched Mobile Banking

products that not only provide banking information via mobile phones but also act as a new
form of payment.
2. Old and new types of payment
2.1. Mobile banking payment
2.1.1. Definition of mobile banking
From my personal point of view, mobile banking is a modern service provided by banks as
it is a facility that enables customers to initiate and/or perform banking tasks on their mobile
devices with internet connections such as smartphones and tablets. Depending on the type
of mobile banking, customers can perform simple to complicated tasks ranging from
viewing their account balance to making transactions, paying bills, etc.
Mobile banking is built on the mobile platform combined with the latest technology, applies
the most advanced techniques, has a fast, accurate, and highly secure information
1


processing process (Vu Hong Thanh and Vu Duy Linh, 2016). It is built on a mobile
platform combined with the latest and most advanced technologies such as AI, Big Data,
Blockchain to allow the fastest, most accurate, and safest information processing
(VNPAYQR, 2021).
Furthermore, the mobile banking system employs Private Key technology, which sends an
authentication request to a device based on its IMEI to confirm its uniqueness. When data
is sent from a phone or mobile device to a server system and vice versa, it is encrypted with
a secure communication certificate (SSL certificate), certified by a security brand such as
VeriSign or Entrust. This allows data to be transmitted encrypted, avoiding revealing
information about the customer's account. (VNPAYQR, 2021)
2.1.2. Types of mobile banking
When it comes to the various sorts of mobile banking, there is a wealth of information
available from many sources. After conducting some study, I've discovered that in Vietnam,
there are three primary forms of mobile banking:
The first type is mobile banking over

SMS (Short Message Service), also
known as SMS Banking. It is the most
basic type of mobile banking (Thanh
Ngoc, 2021). This service is useful for
those who do not have smartphones
and/or internet connections, it means
that customers with old mobile

Picture 1: SMS Banking

phones such as Nokia can use this type of mobile banking as old mobile phones can receive
mail. The contents of the SMS message are usually the bank’s notifications about the
Picture 2: SMS Banking

amount of money withdrawn or receive, the current balance, etc.

2


The next type of mobile banking is the mobile web browser. This
service is a website designed to be suitable for smartphones or can
be said, the mobile version of the bank's online site. From this
website, users can monitor activity, request account transfers, and
make payments. Accessing the mobile version of the bank’s website
can be time-consuming and not convenient as customers have to go
to the browser app and then search for the bank’s site. Low speed
and ugly interface are the most common problems that most mobile
Picture 3: Mobile version of
bank's website


web browsers suffer.
The last type of mobile banking, which is the most advanced
one among these types, is mobile banking service over mobile

Picture 4: Mobile version of
bank's website

applications or can be called mobile apps. This is the
technology that most of the world's leading banks are using
because of its safety, security, and ability to work continuously.
Unlike mobile web browsers, this new type of mobile banking
is fast, convenient, easy to use, and eye-catching interface. It
also has high compatibility with Android and IOS. With just a

Picture 5: Mobile banking app

mobile phone with an internet connection, customers can easily make transactions such as:
+ Query account information, balance in the account.

Picture 6: Mobile banking app

+ Look up banking transaction history.
+ Internal and interbank transfers.
+ Pay the bill.
+ Buy scratch cards, recharge phones.
+ Use other utilities (depending on the bank): book movie tickets, book hotels,
recharge services, send congratulatory money, shop online, receive remittances, etc.
2.1.3. The technology used to create mobile banking apps
According to Vadim Struk (2021), there are three types of the technology stack for mobile
banking app development:

3


+ Native app development suitable for banking app solely for IOS or Android. When it
comes to IOS-based mobile banking software solutions, the best technology includes
Swift, Xcode, and iOS SDK. If the mobile banking app is designed only for Android
users, then Java, Kotlin, Android Studio, and SDK are the tools of choice.
+ Cross-platform app development is a winning approach that allows banking app
developers to use a single code base for different operating systems. React Native,
Flutter, Xamarin will aid in building cross-platform apps.
+ Hybrid app development: Hybrid mobile apps blend native mobile app development and
web development. They are usually built using HTML5, CSS, JavaScript, and PhoneGap
and then run inside a container, making it possible to be embedded in native apps.
2.2. Cash payment
2.2.1. The definition of cash
Cash (money or coins) is legal tender that may be used to exchange products, debts, or
services. It might also contain the value of assets that can be quickly turned into cash, as
stated by a business. (Will Kenton, 2021)
In Vietnam law, according to Clause 1, Article 3 of Circular 33/2017/TT-BTC, cash means
paper money and metal coins issued by the State Bank of Vietnam. It is the most liquid
universal equivalent used in exchange for goods and services and is usually issued by the
State. Cash can have initial value or only represent the value of something else such as gold,
other precious metal, bonds, foreign currency, etc. Money is a common benchmark against
which the value of goods and services can be compared.
According to the same law, cash is divided into two broad and narrow meanings. Cash in
the narrow sense is the money issued by the central bank and in the hands of the public or
outside the banking system. In the broadest sense, cash is understood as anything that can
be used directly to pay for transactions and includes deposits at banks.
2.2.2. The brief history of cash
Cash is an old form of payment and is still used today. Before cash, people acquired and

exchanged goods through a system of bartering, which involves the direct trade of goods
4


and services. Realizing the inconvenience in exchanging goods or services, cash was born,
contributing to making the pricing and trading of goods much more convenient. The initial
cash is seashells, seashells, salt, sugar, etc depending on the country. Then in 600 B.C,
Europe was the first region in the world that can manufacture coins. The Chinese were the
first to devise a system of paper money, in approximately 770 B.C.
Paper money was then used more commonly than coins, whose value depended on gold,
silver, or other metals. Going through the silver standard, gold coin standard, bullion
standard, gold exchange standard, foreign currency standard, and finally non-convertible
paper money standard. The paper money system with the standard of purchasing power for
goods and services is the system that all countries are using today.
2.2.3. The technology used to make cash
The methods used to make coins have evolved
over the years. The coins were first made in
the ancient kingdom of Lydia well over two
thousand years ago and the process was very
simple. Nowadays, the process of making
coins has been more complicated. There are 9
steps to making modern coins in the US
including Mining raw material; Refining,
Melting, and Casting; Rolling; Blanking;
Riddling; Annealing and Cleaning; Upsetting;

Picture 7: Steps making modern coins

Stamping or Striking; Distribution. (James Bucki, 2020)
Picture 8: Steps making modern coins


The technology used to make cash is simpler than making mobile banking apps as this is
an old kind of technology. However, the production of modern U.S. paper money is still a
complex procedure involving highly trained and skilled craftspeople, specialized
equipment, and a combination of time-honored printing techniques merged with
sophisticated, cutting-edge technology. There are 7 steps to making paper money: special
paper and ink, offset printing, intaglio printing, inspection, overprinting, cutting and
trimming, shrink-wrapping and delivery. (Littleton Coin Company)
5


3. Advantages and disadvantages of mobile banking and paper money
3.1. Mobile banking benefits and drawbacks
3.1.1. Benefits of using mobile banking in payment
Mobile banking is a new type of technology applied by commercial banks in Vietnam in
recent years. It is this new operating model that has brought numerous benefits to both
consumers, and at the same time overcomes the limitations of the traditional form of
payment – paper money.
Convenience
Mobile banking offers users the convenience of completing transactions over the Internet
that have been traditionally conducted within a local bank branch and direct payment. Not
only provide many interesting banking services but it also makes the payment much more
convenient. Customers nowadays don’t have to go to the shop and then hand out their cash
to buy something, they can sit at home or anywhere else, surfing online shops and then
make payments via mobile banking apps.
Easier to use
The interface of mobile banking apps is designed in a very professional manner, creating
maximum ease for users. Not as complicated as paying in cash when both the buyer and the
seller sometimes have to bargain with each other, calculate the change, fear that the money
the customer gives or the change from the seller is fake money, old money, etc. Customers

using payment services by mobile banking only need a few simple touches to make
payments and transactions successfully.
Cost-saving
The fees charged when customers make some financial transaction at the bank branches are
more expensive than on mobile banking app. Moreover, customers don’t have to spend
money on the travel cost, the time they spend to go to the shops for buying products or bank
branches for financial services.
Wide range of services
6


The features of the mobile banking application are developed by the bank based on the
needs of customers such as money transfer, prepaid phone top-up, foreign exchange rate
lookup, interest rate, purchase online, bill payment, healthcare payment, tuition fees
payment, etc. The most special thing about mobile banking is that it also links to electronic
wallets such as Shoppe Pay, Zalo Pay, Momo making online shopping much more
convenient.
3.1.2. Disadvantage of mobile banking in payment
It is undeniable that mobile banking is overwhelming for cash payment transactions
because the benefits that mobile banking brings are enormous. However, it also has some
disadvantages.
Need internet connection and electronic devices
The problem of losing internet connections or not having smartphones with network
connections is also a barrier for unwealthy customers. However, this is not an issue worth
worrying about because today as Vietnamese people nowadays always have at least one
smartphone for themselves. Besides, the wifi and 4g or 3g network are very common in
Vietnam.
Not friendly with elderly customers
There is a large number of older customers (aged 60 and up) who are not interested in this
new type of technology. They do not know how to use it and find it difficult to learn new

things, especially new technologies. For them, using the traditional payment method like
cash will be simpler and more familiar.
Risk of leaking information
One of the reasons that banks as well as customers are most concerned about the
disadvantages of mobile banking is its ability to secure information. The more digitized
society is, the more it has to face the potential threat of hackers. Cybercriminals can
infiltrate the mobile banking systems of banks to steal data, at worst, steal customers'
money. In public places, customers who use mobile banking but if others see their

7


passwords, are also very dangerous. Some fake mobile banking websites are very similar
to real websites, tricking customers and then taking away all important information.
3.2. Advantages and disadvantages of cash payment
3.2.1. Advantage of using cash in payment
Although mobile banking offers far more benefits than traditional methods of transactions,
to this day and even in the future, the direct cash payment method may not have completely
disappeared. Direct payment still brings benefits that current internet banking cannot do.
No overspending
Psychologically, it is more difficult for someone to hand over cash than just putting the
finger on the buy button. It is because the amount of money in customers’ wallet make them
aware of how much they have spent.
Besides, the amount of time taking money out of the wallet and giving them to the sellers
can make buyers change their minds. During that time, they are thinking about whether to
buy or not.
No security breaches
When paying by cash, no hackers can attack you to steal our money or personal information
as there is no personal information or details involved in the process. The customers just
have to hand over the cash themselves without the interference of the third party.

Suitable for old people and shops that only accept direct payment
Most old people in Vietnam don’t understand who to make online payments, or more
specifically, mobile banking apps. They even don’t know how to use smartphones
proficiently and it is very hard for them to learn how to use new technology. So cash
payment is the easiest way for them to make purchases.
Many small shops only accept cash payments as sellers of these shops don’t have bank
accounts or they are old people that don’t know how to use mobile banking apps.

8


3.2.2. Disadvantages of using paper money in payment
About the disadvantages of using cash in payments, there are many things that we should
take into consideration.
Inconvenient
Arguably the biggest disadvantage of paying with cash is the inconvenience. Firstly, cash
payment forces buyers and sellers to meet in person, creating a huge geographical barrier,
especially when it comes to buying something from abroad. Secondly, having to go directly
to the store also generates travel costs and wastes customers' time. Thirdly, rummaging
through the wallet to get enough money to pay is also quite inconvenient and annoying.
During the current Covid-19 epidemic, direct payment in cash also increases the risk of
being infected. Part of the reason is due to direct contact, the other part is because money
can contain the Covid-19 virus. It is also for that reason that stores in Vietnam have
gradually converted, prioritizing payment by wire transfer.
Easily lost and damaged
Cash exists in a physical form and because of that it can easily be lost somewhere or taken
by someone easily. Surely, we have all had the experience of being pickpocketed,
accidentally dropping a few coins on the ground, trying to find the wallet.
Moreover, cash is also very susceptible to damage, wear and tear over time. Almost
everyone has gone into a situation where they forget their paper money in their pocket and

accidentally took them to the laundry. Even with careful preservation, cash will gradually
degrade over time.
4. The providers of the new and old types of payment
4.1. Mobile banking providers
The main purpose of making commercial banks in Vietnam race in developing mobile
banking applications is because this new type of service attracts a lot of new customers,
especially young people. By bringing mobile banking applications into the market,
commercial banks in Vietnam have gained lots of benefits from revenue to competition
over other commerical banks. For instance, mobile banking transaction fees are lower than
9


traditional transaction fees, thus increasing the revenue of the banks. Banks that have
mobile banking apps can attract lots of new customers, especially young generations as
they spend lots of time using smartphones and prefer shopping online so having a bank
account that can be used on the phones is very necessary. Moreover, banks no need to waste
money paying employees’ wages at the transaction counter or branch maintenance costs.
This new type of payment is very convenient and easy to use, which will allow customers
to purchase products and use services more. The banks then charge some fees on the
services they provide on the banking apps, the more customers use, the more money they
can gain. Expanding the scope of operations is also much easier because banks do not need
to spend the cost of opening more branches as well as recruiting more employees. The
banks with the best mobile banking apps will be the winners as they can attract more
customers than other banks.
Here are some examples of mobile banking apps in Vietnam. VCB-Mobile Banking app of
Vietcombank with many interesting features, not only serves normal banking services but
also supports payment for purchase and sale of external goods and services. Specifically,
VCB-Mobile Banking has services of money transfer, payment by QR code, transaction
report, phone top-up, bill payment, airplane order, exchange rate lookup. Another example
of mobile banking can be mentioned as Eximbank Mobile Banking of Nam A Bank with

countless interesting features, the pinnacle of non-cash payment. The services provided are
many, including some examples such as bill payment, savings deposit, money transfer and
receipt, phone card top-up, etc.
4.2. Cash provider
The State Bank of Vietnam (SBV) is the only agency that issues banknotes and coins. The
State Bank is responsible for designing the coin's denomination, size, weight, drawings,
patterns, and other features and organizing the printing and minting of money at money
printing and minting establishments. Banknotes and coins issued by the State Bank of
Vietnam are legal means of payment in the territory of the Socialist Republic of Vietnam.
The purpose of printing money is not printing as much as they can, and printing is not for
that state organization to spend, but the purpose of money printing is to stabilize the
10


economy of an entire country. The State Bank controls the cash supply in order to stabilize
interest rates and exchange rates, creating the best conditions for the economy to develop.
So, it can be said that making cash doesn’t bring revenue to the central bank.
4.3. The impact of mobile banking providers on the cash provider
As we know, payment through mobile banking applications is much more beneficial than
cash payment, especially during this Covid-19 epidemic. Young people today also prefer
online payment over direct payment. Therefore, in the future, payments through mobile
apps will gradually replace traditional payment methods. Commercial banks owning mobile
banking or financial intermediaries with e-wallets such as Zalo Pay, Momo, Shoppe Pay
will grow rapidly and the central bank will no longer have to print money or make coins.
This also benefits the central bank because they do not have to pay the cost of printing
money, don’t have to pay the cost of recovering damaged money, preserving money, etc.
In addition, commercial banks also do not have to pay the cost of preserving cash deposited
by customers too.
Thereby, it can be affirmed that the new form of payment - mobile banking apps, will bring
benefits not only to the organizations that create these applications but also to the central

bank. In this case, both sides benefit.
5. Conclusion
The form of payment by mobile banking apps has brought much more benefits than the
form of payment in cash. With a developing economy like Vietnam today, non-cash
payment has great potential for development and is likely to completely replace cash
payment in the future. Usually, when a service using new technology replaces a service
using old technology, the old service providers will suffer losses and even lead to
bankruptcy. However, mobile banking, as a representative form of non-cash payment,
brings countless benefits not only to customers, the commercial banks providing this new
service but also the central bank which holds the responsibility of making cash.
With a lot of effort and time spent on research, I hope my essay will have a commensurate
value as well as help readers better understand the benefits that mobile banking brings to
society.
11


References
Akers, H. (n.d.). What Are the Different Types of Mobile Banking Technology? Retrieved
from

EasyTechJunkie:

/>
types-of-mobile-banking-technology.htm
Barone, A. (2020, December 30). Paper Money. Retrieved from Investopedia:
/>Beers, B. (2021, June 14). Internet Banks: Pros and Cons. Retrieved from Investopedia:
/>Bucki, J. (2020, August 27). How Are Coins Made? Retrieved from The spruce craft:
/>Doyle, A. (2019, September 12). What Does a Bank Teller Do? Retrieved from The balance
careers: />Frankenfield, J. (2020, May 04). Online Banking. Retrieved from Investopedia:
/>Hằng, T. (2018, October 04). Tiền mặt là gì? Lịch sử của tiền mặt. Retrieved from VietNam

Finance: />How Paper Money Is Made. (n.d.). Retrieved from Littleton Coin Company:
/>Huy, N. (2019, December 17). 5 lưu ý quan trọng khi dùng Internet Banking để tránh mất
tiền. Retrieved from Thế giới di động: />Huy, P. T. N. (2016, April 06). Có thể bạn chưa biết: Tìm hiểu quy trình cơng nghệ sản
xuất tiền. Retrieved from Thegioididong: />12


Kenton,

W.

(2021,

January

17).

Cash.

Retrieved

from

Investopedia:

/>Mobile

Banking.

(2021,


June

14).

Retrieved

from

paisa

bazaar:

/>Ngoc, T. (2021, September 02). Mobile Banking đã thúc đẩy chuyển đổi số ngành ngân
hàng như thế nào? Retrieved from Viet Times: />Phát hành và điều hòa tiền mặt. (n.d.). Retrieved from Ngân hàng nhà nước Việt Nam:
/>vdhtm?_afrLoop=44207204929256224#%40%3F_afrLoop%3D442072049292562
24%26centerWidth%3D80%2525%26leftWidth%3D20%2525%26rightWidth%3
D0%2525%26showFooter%3Dfalse%26showHeader%3Dfalse%2
Scott, S. (n.d.). What are the Advantages & the Potential Risks of Online Banking?
Retrieved from CHRON: />Thanh, V. H., & Linh, V. D. (2017, February 24). Hướng phát triển dịch vụ “mobile
banking” cho các ngân hàng Việt Nam. Retrieved from Tạp chí ngân hàng:
/>Thanh, V. H., & Linh, V. D. (2017, February 24). Hướng phát triển dịch vụ “mobile
banking” cho các ngân hàng Việt Nam. Retrieved from Tạp chí ngân hàng:
/>Thống kê Internet Việt Nam 2021. (2021, 12 March). Retrieved from VNETWORK:
/>Tiến, N. H. (2019, May 16). Thành tựu và hạn chế trong triển khai sử dụng các giải pháp
ngân hàng di động. Banking Administration Reform – Benefits for Businesses and
Citizens

in

Banking


Transaction,

122-134.

Retrieved

from
13


/>0_h%E1%BA%A1n_ch%E1%BA%BF_trong_tri%E1%BB%83n_khai_s%E1%B
B%AD_d%E1%BB%A5ng_c%C3%A1c_gi%E1%BA%A3i_ph%C3%A1p_ng%C
3%A2n_h%C3%A0ng_di_%C4%91%E1%BB%99ng_m_banking_t%E1%BA%A
1i_c%C3%A1c_ng%C3%A2n_h%C
Vadim, S. (2021). 10 Steps to Creating a Mobile Banking App in 2021. Retrieved from
Relevant:

tware/blog/10-steps-creating-mobile-banking-

app/#Best_technology_stack_for_mobile_banking_app_development

14