In what seems to be a significant merger, two Hanoi-based payment startups Vimo Technology JSC and Vietnam mPOS Technology JSC are combining their businesses under one entity NextPay Holdings.

Vietnam mPOS Technology CEO Nguyen Huu Tuat is set to take over as the chief executive of the combined entity, while Nguyen Hoa Binh, who founded the two startups, will be the chairman. Vimo CEO Do Cong Dien will take over as NextPay COO.

The consolidation and rebranding exercise will help the startups strengthen their operations in the country’s burgeoning cashless payments market, thereby creating a one-stop payment solution for merchants. What’s more, the move will also help the combined entity raise capital to scale its operations.

NextPay is currently in talks with as many as five foreign investors to raise about $30 million, Tuat told DEALSTREETASIA, adding, the round will be closed in July or August this year. 

“We want to take advantage of both companies to promote the development of payment products. We consolidate strategy, shareholders and the business team of 500 people,” said Tuat. “By merging these two businesses, we provide a one-stop payment solution for merchants.’

Both these startups are backed by a slew of foreign investors who will continue to stay after the proposed fundraising exercise. The capital will be used for expanding the company’s merchant network and help its expansion plans into Myanmar and Indonesia in 2020. The combined entity will be able to take on competition and e-payment applications that have mushroomed in the country over the past few years. These include prominent names such as MoMo, Moca, Viettel Pay, Zalo Pay, AirPay, and ePay.

The sector has been witnessing increased action pertaining to M&A over the past few years. Recently, VinID Joint Stock Company, that is 80 per cent owned by Vietnamese business major Vingroup, has completed the acquisition of e-wallet platform MonPay.

NextPay, that has a combined presence in 11 cities across Vietnam with over 35,000 acceptance points, however, focuses on offline payment. Vietnam has a young, tech-savvy population where as much as 70 per cent people use smartphones. In addition, the government is trying to promote the use of digital payments, in an attempt to reduce the amount of US dollars in circulation thereby establishing the dominance of the Vietnamese dong.