Online markets consider payment fee exemptions

Shopee, one of the three biggest marketplaces in Vietnam, has announced the termination of the payment fee exemption policy, now charging 1-2 percent of bill value for payment service. Lazada is also applying a similar policy. The retailers at Tiki still enjoy the payment fee exemption, but for only two years, commencing May 4, 2019.

Sendo is one of the very few marketplaces that offer payment fee exemptions. Explaining the company’s policy, Le Anh Huy, deputy CEO of Sendo, said the increasingly stiff competition in the e-commerce sector forced Sendo to apply preferential policies to both retailers and sellers to attract them.

Exemption from payment fee means that Sendo has to prop up VND10,000-20,000 for every bill worth VND1 million.

E-commerce began booming in Vietnam two years ago, but sales have not been as high as expected. The fee exemption policy is necessary to encourage consumers to shop online.

Hoang Anh, the owner of a stall on Tiki.vn, said the 1-2 percent fee exemption will allow her to save tens of million of dong a year.

Thanks to the money, retailers can lower selling prices to attract more online consumers. Marketplaces’ owners won’t lose money because they will attract more retailers and increase their income.

However, experts believe that the fee exemption policy won’t last for a long time. Shopee, announcing the fee collection from April 1, said that now is the right time to apply a new policy.

Luu Thanh Phuong, an e-commerce expert, said large e-commerce firms all have incurred accumulated losses of hundreds of billion or trillions of dong because they accepted to sell products at a loss to lure more customers. In exchange for this, they obtained a high number of loyal clients.

However, once they can no longer accept losses, they will begin collecting fees, sometimes even higher than the current levels.

Removing the fee exemption is a ‘daring’ move for now. Truong Vo Tuan, founder and chair of Mua Ban Nhanh JSC, which is running muabannhanh.com, recalled the failure of a well-known market platform. Soon after the It began collecting fees, it started to go downhill.

“It’s difficult to change consumers’ habits. If they get used to use a service for free, it’ll be difficult to tell them to pay a fee,” he said.