“In the coming time, in order to promote cashless payment and develop e-payment in Vietnam, the credit institutions and all relevant entities should continue to coordinate closely, focus on investing in and providing diversified and modern products, expand the infrastructure for payment, develop an integrated ecosystem to facilitate the access of people and businesses to banking services, especially those in the rural and remote areas, so that they can have access to formal banking and payment services, thereby helping to enhance financial inclusion and restrict black credit”.
SBV Deputy Governor Pham Tien Dzung at the Workshop
This was the ideas shared by Deputy Governor Pham Tien Dzung of the State Bank of Vietnam (SBV) at the Workshop on “Promoting the development of the e-payment market in Vietnam” held on September 15, 2023 by the Lao Dong (Labor) Newspaper in coordination with the Payment Department of the SBV, NAPAS and other related entities.
At the Workshop, the participants discussed about possible solutions to promote the development of e-payment, including the development of the infrastructure for bank card payment acceptance (bank cards, QR code, etc.) and the development of domestic credit cards in order to accelerate the implementation of the National Financial Inclusion Strategy, promote cashless payment and restrict black credit.
An overview of the Workshop
According to the statistics announced by the SBV Payment Department, as of the end of 2022, 77.41% of Vietnamese adults possessed payment accounts at the banks. The cashless payment operations in seven months of 2023 had obtained a high growth rate as compared to that of the same period in 2022, up by 51.14% in terms of transaction numbers; transactions via the Internet increased by 66.46% and 4.01% in terms of the numbers and the value of transactions respectively; transactions via the mobile phone channel increased by 63.09% and 8.79% in terms of the numbers and the value of transactions respectively; transactions via the QR code channel increased by 124.15% and 16.12% in terms of the numbers and the value of transactions respectively. Opening payment accounts online was first enabled in late March 2021, as of June 2023, nearly 27 million payment accounts had been opened and been activated via eKYC, and 10.8 million bank cards had been issued via eKYC.
Domestic credit cards – an effective tool to restrict black credit
Mr. Pham Anh Tuan, Director General of the Payment Department of the SBV
Regarding the market of domestic credit cards, Mr. Pham Anh Tuan, Director General of the Payment Department of the SBV, shared that by end of July 2023, there had been 15 card issuers of domestic credit cards (with such brands as Loc Viet cards issued by Agribank, 2Card issued by Vietinbank, Easy Card issued by Sacombank, etc.); as of July 2023, the number of domestic credit cards had reached 811,400 (up by 42.5% as compared to that of the same period of 2022). During the 2018-2022 period, the number of issued domestic credit cards reached an average growth rate of 29.6% p.a., higher than the growth rate of international credit cards (17.72% p.a.). It can be acknowledged that the card issuers have proactively and creatively researched, issued and provided domestic card products and services which are linked to Vietnamese card brands, including domestic credit cards. Those efforts of the card issuers were aimed to promote cashless payment and accelerate the implementation of financial inclusion.
Mr. Pham Anh Tuan also highlighted the benefits and potentials of domestic credit cards, with their dual uses both as a payment tool and a means to meet the credit demands.
First, in terms of financial inclusion, a lot of Vietnamese people, especially in the urban areas, have currently accessed and regularly used credit card products and services. However, there are still many people living and working in the rural areas who cannot access these useful products and services in spite of their stable income, their ability to pay debts and their needs for accessing those products and services, etc. These are potential customers for the card issuers.
Second, domestic credit cards can contribute to improving the product and service portfolio, and developing the payment ecosystem of card issuers and financial switching and electronic clearing institutions.
Third, when issuing domestic credit cards, card issuers are allowed to set their own fees, suitable to their targeted customers. Therefore, the development of domestic credit cards can contribute to reducing the use costs for customers, for example related to issuance fees, annual fees (free of charge or competitive fees as compared to international credit cards). The above cost benefits are the basis for card issuers and card payment organizations to consider and develop incentive and promotional programs for their customers, with a view to attracting more customers to open and use domestic credit cards.
Fourth, developing domestic credit cards is another step to affirm Vietnamese card brands using domestic technologies and payment infrastructure, and the domestic currency (the Vietnamese Dong) for the connection and processing of payments in a safe and smooth manner in all situations for card issuers and card payment institutions in Vietnam.
Currently, the legal frameworks for card issuance and payment activities in general, including domestic credit cards and regulations on card issuance via eKYC, have been issued and regularly amended and improved by the SBV.
In the discussion session at the Workshop, the participants assessed that domestic credit cards are products that are suitable to Vietnam's economic conditions. This is also a solution to promote cashless payment, heading towards financial inclusion and preventing black credit. However, the actual implementation results have not been up to the expectations, not commensurate with the role and the potentials of this product line. The number of domestic credit cards accounts for a low proportion as compared to the total number of credit cards in circulation (about 8.7% of the total number of credit cards in circulation).
Promoting e-payment and developing domestic credit cards can contribute to restricting black credit
Deputy Governor Pham Tien Dzung requested that, in the coming time, in order to promote cashless payment and develop e-payment in Vietnam, the credit institutions and the relevant entities should continue to coordinate closely, focus on investing in and providing diversified and modern products, expand the infrastructure for payment, develop an integrated ecosystem to facilitate the access of the people and businesses to banking services, especially those in the rural and remote areas, so that they can have access and use formal banking and payment services, thereby helping to accelerate the financial inclusion and restrict black credit.
Mr. Pham Anh Tuan, Director General of the SBV Payment Department, suggested that in the coming time, the credit institutions should consider and develop modern and safe domestic credit card products to meet the diversified needs of their customers. Moreover, card issuers and the relevant entities need to promote the expansion of card payment acceptance networks, including domestic credit cards, connecting payment systems with the public services, as well as the transportation, health, insurance, etc. sectors; research, develop and apply innovations in the field of payment based on the domestic chip card technology; strengthen the communication, education and promotion of domestic credit cards on the mass media and the social networks to help customers understand the benefits of domestic credit cards.
For financial switching and electronic clearing institutions, they are requested to initiate policies to support the card issuers in the issuance of domestic credit cards as well as the acceptance of payments by domestic credit cards, especially in e-commerce and online transactions, etc.
Le Hang