As fintech and online consumer lending continue to grow rapidly across Asia, Vietnam has emerged as an increasingly attractive market for investors. However, unlike some jurisdictions that allow fully digital lending models to operate entirely online, Vietnam’s legal framework still imposes strict requirements regarding licensing, business models, and risk management. This article analyzes the legally viable options available to fintech companies seeking to deploy online consumer lending models in Vietnam, while also highlighting key regulatory risks and practical trends.

1. Regulatory Authority and the Overall Licensing Landscape

In Vietnam, the State Bank of Vietnam (SBV) is the central regulatory authority overseeing banking, credit activities, consumer lending, and foreign exchange. Any consumer lending model involving financial or credit activities is subject to the direct or indirect supervision of the SBV.

Currently, the SBV applies a highly restrictive policy toward the issuance of new licenses for non-bank credit institutions, particularly consumer finance companies. In this context, fintech enterprises and foreign investors typically consider one of the following three approaches:

• Establishing a finance company;

• Operating a pawnshop business;

• Adopting a fintech/sandbox model or partnering with a licensed credit institution.

2. Finance Companies: Broad Scope, High Entry Barriers

From a legal perspective, finance companies offer the broadest operational scope. They are permitted to provide consumer loans, including unsecured lending, with interest rates determined under market mechanisms and reported to the SBV.

Notably, although finance companies may, in practice, operate nationwide through a single head office using electronic means and digital platforms, current regulations require that, at the licensing stage, applicants submit a network development plan, including proposed branches and representative offices.

In reality, compared to applying for a new license for a financial company, mergers and acquisitions (M&A) are now more common and feasible. As a result, mergers and acquisitions (M&A) have become the predominant market entry route. Vietnam currently has approximately 17 finance companies, some of which have received SBV approval for foreign investors to acquire equity interests. M&A transaction values in this sector typically range from tens to hundreds of millions of USD, depending on factors such as outstanding loan portfolios, license scope, and existing branch networks. A notable example is the acquisition of Home Credit Vietnam by a Thai investor, with a transaction value of approximately EUR 800 million.

It should be noted that where an investor acquires a finance company that already has an established branch network, any intention to operate a fully online consumer lending model will require prior approval from the SBV for the closure or termination of any branches after the M&A transaction. Such approval must be accompanied by a detailed plan addressing the handling of all related assets, as well as the rights and interests of customers and employees.

3. Pawnshops: Easier Entry, but Limited by Legal Nature

Compared with finance companies, pawnshop services are procedurally easier to establish. While Vietnamese law does not prohibit customer outreach through online platforms, the legal nature of pawn transactions still requires collateral and physical premises for storing pledged assets (Article 312 of the Civil Code).

Accordingly, a purely online pawnshop model that neither receives nor safeguards pledged assets would be inconsistent with the Civil Code. Providing unsecured loans under the guise of pawn services may be considered a mischaracterization of business activities and could expose the operator to regulatory sanctions upon inspection.

In terms of procedures, obtaining a pawnshop license is relatively straightforward and low-cost. However, businesses must strictly comply with security and order, fire prevention, and business location requirements. For foreign-invested pawnshops, Vietnamese law requires a Vietnamese individual who meets residency and background criteria to be appointed as the person responsible for security and order.

In M&A transactions, most deals are commercially meaningful only where investors acquire a well-operated pawnshop chain with an established brand and actual loan portfolio.

4. Interest Rate Caps and Legal Risks: A Critical Issue

One of the most critical legal considerations for online lending in Vietnam is the 20% per annum interest rate cap under Article 468 of the Civil Code.

For pawnshops and personal lending (including P2P lending), if the total borrowing cost including interest exceeds this statutory cap, the excess portion may be declared invalid. Furthermore, where the effective interest rate exceeds five times the statutory cap, the lender may face criminal liability for usurious lending in civil transactions.

For finance companies, interest rates may be determined based on market supply and demand, but they remain subject to SBV supervision and periodic reporting obligations..

5. Cooperative Fintech Models: A Practical Path Forward

In Vietnam, several digital banking models have emerged based on cooperation between fintech companies and licensed banks. In these models, the bank holds the regulatory license, while the digital banking platform is primarily developed, operated, and managed by the fintech company. Examples include:

• Cake: “Cake is the first digital bank in Vietnam integrated into a ride hailing application, with day-to-day operations managed by beFinancial, a member company of Be Group.”

• Timo Plus: “The Timo digital bank was rebranded as Timo Plus after Lifestyle Project Management Vietnam Co., Ltd. the entity owning the application, partnered with Viet Capital Bank.”

• Liobank: “The Liobank digital banking platform is owned, managed, and operated by OCB, with exclusive technology advisory and project development support from Fintech Farm Vietnam Co., Ltd.”

• Viettel Money / ViettelPay: “ViettelPay was previously known as a digital banking style payment application, developed by Viettel Group and backed by MB Bank.”

At present, P2P lending models in Vietnam have not been granted official operating licenses; instead, they are only eligible to obtain a Certificate of Participation in the regulatory sandbox, which is valid for a period of two years (and may be extended). Notably, this sandbox mechanism does not apply to enterprises with foreign investment. Accordingly, based on these regulatory constraints, foreign fintech companies may consider adopting a similar partnership approach. Specifically, foreign fintech companies may enter into a cooperation agreement with a licensed finance company operating in Vietnam. Under such an agreement:

• The finance company would act as the legally licensed entity and provide regulatory sponsorship for consumer lending activities;

• The fintech company would provide the digital platform and be responsible for its management and operation;

• This cooperation model mirrors the way traditional banks partner with fintech companies to develop and operate digital banking platforms in Vietnam.

This approach would help ensure legal compliance while enabling fintech companies to participate in the market through a structure that is more legally appropriate.

Conclusion

For fintech companies seeking to enter Vietnam’s unsecured online lending market, partnering with an existing licensed finance company is generally a more feasible and lower-risk option than independently applying for a new license.

Vietnam’s online consumer lending market offers significant growth potential, but it is accompanied by a stringent legal framework and substantial compliance risks. Choosing the appropriate business model, whether through M&A involving finance companies, pawnshop operations, or fintech - finance company partnerships, requires careful evaluation of business objectives, risk appetite, and long-term strategy. Under current conditions, cooperation with licensed consumer finance companies is widely regarded as the practical and legally secure entry pathway for fintech companies.