Card payment system yet to become popular in Vietnam

According to the State Bank of Vietnam estimates the number of cards issued in the country reached about 28.5 million, over 11,000 ATMs and nearly 50,000 card acceptance device (POS) were installed in late 2010.

Although there was no official data on transaction statistics of individual customers through ATM and POS, according to commercial banks, most transactions were made in mainly cash (80 percent -85 percent), while the payment card accounted for less than 5 percent.

Cause of limited POS use

The card payment is a very civilised and convenient form. Everyone acknowledges this, but why this form is not developing in Vietnam?

First is due to the technical infrastructure, namely ATM networks and the connection of the POS card payment through the banking system is not complete. So far, though the card payment system of commercial banks in the country has connected (though not very smoothly), only eight banks have participated in networking for the merchants in the area of Hanoi and HCM City.

Second, card acceptance units (CAU) including of supermarket, shops, malls, hotels, hospitals, railway stations, train stations, cars and others are not much interested in car payment due to a psychological problem and fear for sales controlled and tax evasion by the CAUs. Another part is merchants do not want to pay charges for banks. According to international principles, fee payable to banks is 3 percent/swiped card sales amount.

Also, in Vietnam, no CAU would accept to pay this rate, they want to be free or pay at best between 1 percent -1.5 percent of total card-based sales. Currently, only those units with a payment transaction for foreigners (hotels, gate…) are ready to accept installation of POS because foreigners have a habit of using the cards.

Third is the habit of people wishing to use cash for payments, and psychological problem is fear when paying through the use of banking transactions.

Accept losses to catch up

Most commercial banks are now investing with big losses to build the POS card payment system. But not so that the race for network development POS is less exciting. With a population of 87 million people, there are over 20 percent of the population using payment cards, the card market is very potential for Vietnam.

Despite the limitations and inadequacies in the coming years, certainly some people using bank cards and card payment through POS will increase continuously (the phenomenon will be almost similar growth of the mobile phone market).

Many solutions have been proposed in terms of infrastructure, communication behavior change, policy mechanisms to encourage this market. However, the trend of life is also an important force to push people to use debit cards through POS.

The banks know that they are looking for workable solutions on the nature spread. First is to coordinate with other units providing public services for card payment. For example, Vietinbank is piloting “non-stop service fees to station” in Can Tho (a charge card to pay traffic stations).

Vietinbank also has recently collaborated with the State Treasury to deploy the state budget by 3 banking channels, which have been collected over the ATM… Maybe, in 5 years, non-cash payment will be fairly common in Vietnam and then to replace it with the wallet full of money, people will bring their small wallet bearing 5-6 payment cards. – Laodong

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial