It’s not a new challenge that global businesses frequently run into payout failures while sending money to Vietnam. The errors originate from small and large, totally unpredictable issues and small mismatches, lack of visibility and regulation oddities which cause a much bigger ruckus compared to the processes gone wrong. These failures cost time, trust and money much of what is non negotiable. Below is a breakdown of some of the common problems, ways Vietnam’s payments rails can fix it and reduce these errors as well as the associated implications. 

How do cross border payment rails work in Vietnam 

To understand the gaps and errors, it's important to first know about the rails and the rules that govern them in Vietnam;

1. Banking system and local rails - Vietnam has many commercial banks and a central domestic  banking network. Local Interbank clearing house, for domestic transfers, follow Vietnamese bank requirements (account no. formats, branch codes, etc). Some parts of this system are not able to accept foreign origin transactions as smoothly unless data is precise.

2. Remittance regulations and foreign exchange controls - cross border inflows like remittances and business payouts are regulated under State Bank of Vietnam. Purpose codes, remittance reasons and valid documentation are pre-requisites to these payments. 

3. Currency issues - the local currency of Vietnam i.e. Vietnamese Dong is expected in recipients' accounts. If payments are processed in other currencies like USD or EUR, there is a chance of forced conversions, higher fees and rejections. 

4. SWIFT/ Correspondent banking - Many cross border transfers rely on SWIFT, intermediaries add fees, while there are also risk of delays, rejections and holdings when details go wrong. 

5. Anti Money Laundering (AML)/KYC - Particularly for larger or voluminous business payments, extra scrutiny is common. Most of the time, a requirement of supporting documents. 

Common Payout Errors & Failures in Vietnam

Here’s a list of the most frequent payouts failures and errors and causes of occurrence - when doing business payments to Vietnam;

1. Incorrect of Incomplete beneficiary information

• Wrong spellings of names, missing diacritics commonly cause rejection.
• Using abbreviations, aliases or missing parts of legal names often run the payments into errors, banks require full legal name as there is on the bank record.

2. Wrong or outdated branch identifiers or bank codes  

• SWIFT/BIC codes may turn out to be wrong or non-specific. Sometimes a bank’s SWIFT code doesn’t directly relate to a Bank Branch.

• Bank account numbers require fixed length or inclusion of branch code. Incorrect or outdated branch code can lead to misrouting or rejection. 

3. Remittance reason codes/ missing or vague purpose  

• Regulations in Vietnam are such that you are required to specify the purpose of transfer (eg - invoice payment, freelance work, import of goods etc.) If left blank or vague code is specified when payments get held or rejected. 
• Associated documents are also required especially for large volume transfers. 

4. Currency conversion and currency errors

• If one sends funds in USD, EUR, or any other currency while the bank expects VND only, the bank tends to force conversion which leads to potentially heavy exchange rates and/or additional fees.
• These make up the hidden FX spreads which can eat into the payment amount.

5. Bank limitations and unsupported channels

• Not all Vietnamese banks are well connected under SWIFT or any international payment rails making the network irregular. Some may require manual processing and may not accept foreign remittance. 
• Using SWIFT wire transfers in turn, turns out to be slower, costlier and error prone compared to local partners and providers operating on local rails. 

6. Documentation gaps and regulatory compliance issues

• Missing or incomplete documents cause delays. Banks require a proof of purpose for business and other payments. 
• Remittance value thresholds often trigger extra costs.

7. Bank schedule and timing issues

• Payments which are close to weekends or public holidays are prone to delays as banks are closed or processing is paused.
• Cut off timings matter in the processing and often lead to next day payment processing.

8. Poor tracking of payments

• Delays are caused in diagnosing issues as it's not visible if the payments are accepted, held or rejected.
• There’s a lack of transaction history, missing logs and incorrect data and the resolution, hence, is slow and cumbersome. 

9. High fees and hidden costs

• Intermediary bank fees, forced conversions and international payment fees are higher for urgent and newer payout rails.
• Sometimes delays and deductions after the arrival often reduce the net amount. 

Payments and transactions are often prone to many errors, it needs to be taken into account - each of these aspects and details must be taken care of in all case scenarios.

Best Practices Reduce Payout Failures in Vietnam

Here are some of the actions global business should take so that their payouts to Vietnam are successful and error free;

1. Collect full legal Benefactory details.
2. Validate Bank Codes and account formats primarily
3. Acquire and use purpose codes and remittance reasons.
4. Use local payout partners operating on local rails.
5. Send VND wherever possible.
6. Take bank schedules into consideration.
7. Ensure regulatory and compliments readiness.
8. Implement strong error reporting on your end.
9. Seek for transparent FX rates and fee breakdowns wherever possible.
10. Relationships with local banks are helpful for resolutions. 

Now, one must think that a lot of these measures are in the hands of the local payment systems and not the businesses and parties making payments. Correct. While the government takes actions to fill in the gaps of the system, one can be careful and vigilant with the existing rails to make the most out of the payments made and funds transferred. 

Picking the right payment partner 

When choosing a payment partner in Vietnam, one must consider;

1. Local integrations and local use of payment rails and not just international rails.
2. Built in beneficiary and bank validation to verify and validate.
3. Compliance automation for avoiding regulatory issues.
4. FX transparency.
5. Real time tracking and customer support.
6. Reliable resolution systems for failed and delayed transactions. 

If you’re exploring payment partners with such capabilities, look no further, TransFi offers an infrastructure that is compliant with global payouts, rails and local systems. If your business is scaling in Vietnam or has business associations with the country, the right step is to opt in for a reliable provider and benefit from hassle free payment solutions. TransFi offers quick and accessible integrations with local payments rails, easy digital assets settlements and a worldview into currencies and payments methods used all across. TransFi is helping the many countries in the global realm embrace a better future with the ease of the best services and interface at power by connecting users with over 100+ currencies, 250+ local payment methods, and 80+ digital assets, giving both senders and receivers control, speed, and cost savings.   

Also read: Poland’s Payment Rails & How They Work – Elixir, BLIK & SEPA Instant

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Frequently asked questions (FAQs)

1. Is it possible to send USD instead of VND to Vietnam?

It is possible to send USD to Vietnam but it is prone to errors and high costs of conversion as many banks and receivers don’t directly accept USD leading to forced conversions. 

2. How does beneficiary name formatting affect payouts? 

Wrong spellings of names, missing diacritics commonly cause rejection while using abbreviations, aliases or missing parts of legal names often run the payments into errors, banks require full legal name as there is on the bank record.

3. Do I need additional documentation for sending money to Vietnam?

Regulations in Vietnam are such that you are required to specify the purpose of transfer (eg - invoice payment, freelance work, import of goods etc.) If left blank or vague code is specified when payments get held or rejected. Associated documents are also required especially for large volume transfers. 

4. How can one scale out payments and avoid errors while paying in Vietnam? 

One can scale out payments and make the most out of the transactions by opting in for the right providers which provide; 

• Local integrations and local use of payment rails and not just international rails.
• Built in beneficiary and bank validation to verify and validate.
• Compliance automation for avoiding regulatory issues.
• FX transparency.
• Real time tracking and customer support.
• Reliable resolution systems for failed and delayed transactions. 

5. How can TransFi help resolve payout errors in Vietnam?

TransFi offers quick and accessible integrations with local payments rails, easy digital assets settlements and a worldview into currencies and payments methods used all across. TransFi is helping the many countries in the global realm embrace a better future with the ease of the best services and interface at power by connecting users with over 100+ currencies, 250+ local payment methods, and 80+ digital assets, giving both senders and receivers control, speed, and cost savings.