Vietnam payment card industry speeds up for 2011

Increasing service revenue is the focus of many banks in 2011. In that direction, payment card is the number 1 priority.

Maximising the competitive advantage and existing shareholder alliance are the solutions many banks are looking at.

According to BanknetVN, the current banking network has 11,000 ATMs, 42,000 POS terminals and over 40 issuing banks, with 27m payments card issued.

Card owners can use the ATM/POS network coverage over all the banks, instead of just conducting transactions at their bank ATM/POS.

3 largest card processing networks are BanknetVn, Smartlink and VNBC have succeeded in interconnecting its members, forming a payment network consisting of 42 member banks, over 8000 ATMs, which represent 90% of ATMs in the market.

The speed of development and the potential of the payment card industry is highly regarded. VCB currently has 4m domestic debit card, Dong A Bank has 3m card accounts. Just with a minimum account balance of 50k VND, banks have recruited a very large cheap deposit source through card service. Many later coming banks also have rapid growth in card issuance.

According PG Bank statistics, up until 31/10/2010, after a year of Flexicard introduction, the bank has issued 424,580 cards. Petrol card payment reaches 3629b VND.

However, even though there are more and more cards issued but the results have not been satisfying. According to a Nielsen survey, there are 23% debit cards users and only 1% credit card users, while 100% knows what ATM card is. This survey shows the ratio of credit card use is very low.

From mid 2010, SBV has pushed card processing through POS network, creating support for banks' card service. VCB, Eximbank, ACB, PG Bank... have carried out many promotion programs to develop card service and encourage their customers to pay by card. Foreign banks like HSBC and ANZA also stepped into the retail banking competition scene through promotions over web, email and direct calls to invite their customers to open card accounts.

In the race for card issuance, banks use their strategic alliance with mother companies. Petrolimex, a major shareholder of PG bank, has allowed their customers to buy petrol, withdrawal and deposit cash through card terminals at over 1800 petrol stations and more than 60 PG Banks transactional offices national wide. Flexicards are not only issued at the bank branches and transactional offices but also at Petrolimex petrol stations.

Currently ATMs are mainly used for cash withdrawal. To reduce the cash payment flow, there needs to be a wide adoption of POS networks. Petrolimex and PG Bank have indicated that they will join effort to develop POS network.

At the same time, banks will add more functionalities to the existing service and expand card payment service to department stores, supermarkets, schools, hospitals, taxi, bus and other public places...

Nguyen Quang Dinh, PG Bank Managing Director, says cash usage habit and the stiff competition from other banks require the bank to strive to stay ahead. Petrolimex also establishs that petrol card payment is one of their largest programs to encourage cashless payment and create a platform for unmanned petrol sale.

The join effort between the banks and retails creates the condition for the development of card payment industry in Vietnam. Together with the improved service, the consumers will benefit in their search for the better and convenience payment service.