According to the Vietnam Card Association, the spending turnover of cards of different kinds had reached 32 billion dollars by the end of 2011. However, the report of the association also pointed out that the transactions of withdrawing cash still accounted for 80 percent of the transactions.
Co-op Mart, Big C, Citimart and Maximark, the big supermarket chains in Vietnam, have reported that non-cash payment just accounts for one percent, and no more than five percent of the total turnover of the retailers.
Using cards more favorable
While the majority of the population still keep the habit of making payment in cash, a lot of consumers, especially urbanites, now bring cards with themselves when going shopping, instead of cash.
Dong A Bank has been known as the issuer of a big volume of cards with 6.066 million cards issued by the end of 2011. The total spending turnover via cards in 2011 increased significantly by 40.64 percent in comparison with 2010.
The issued cards include 7155 international credit cards, or 0.12 percent of the total number of cards issued. However, the spending turnover of the cards reached 141.573 billion dong, or 21 percent of the total revenue.
According to Trinh Thuong Thuc, Head of the Card Division of Vietcombank HCM City Branch, in 2011, the monthly spending turnover of domestic cards of the branch was 30 billion dong, through direct payment channels, Internet, and POS. The spending of credit card owners at Vietcombank HCM City Branch was 200 billion dong a month.
To date, Vietcombank has six million domestic cards and one million international cards with the total spending via cards increasing by 30 percent per annum on average.
Thuc said that credit cards can be accepted everywhere in the world, while card owners can make payment after 45 days without having to pay interest rates. Therefore, the turnover of the cards was big, according to Thuc.
Godfrey Swain, a senior executive of HSBC Vietnam, has also reported a significant growth rate in the bank’s credit card business. The total spending via credit cards witnessed the average growth rate of 90 percent in the last three consecutive years. He said that the majority of HSBC’s credit card holders are Vietnamese, while more than 50 percent of the spending with credit cards is carried out in foreign countries, including Singapore, the US, Hong Kong, the UK and Australia.
Also according to the senior executive, money has been mostly spent on meal services, clothes, tourism and retail. HSBC has also realized a rapid growth in the number of payment transactions and the number of POS in Vietnam.
A report released by the US Research & Markets in late 2011 showed that Vietnam is considered one of the most dynamic markets in the world with the high growth rate of 18.5 percent per annum to be expected until 2014. Currently, 20 banks are running Internet Banking, and 8 banks running Mobile Banking at different levels. To date, 40 million cards have been issued, 13,000 ATMs and 70,000 POS have been installed.
In fact, cards now still cannot bring profits to commercial banks. General Director of Dong A Bank (DAB)Tran Phuong Binh said the competition among banks has become fiercer than ever. Therefore, while other banks are collect fees from inter-network transactions, DAB does not.
“Therefore, DAB is incurring loss in this field,” Binh said. Other banks are attempting to collect fees from the ATM transactions, but Binh thinks that this might not be a wise decision. Once consumers think that banks are trying to collect different kinds of fee, their plan to make payment with cards may be canceled.
Though incurring loss, Binh said that his bank would get long term benefits. Once the bank can attract more clients with its card services, it would be able to provide other services as well to the card holders.
“When we try to develop cards, we also try to develop services for clients. This is our benefit,” Binh said.
Source: SGTT
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