Since credit cards have gradually become popular means of people, domestic and foreign banks have been increasingly competing to launch new products and generous promotions for new and loyal cardholders.
Statistics of PwC showed that in the non-cash payment market of Vietnam by the end of 2018, only two percent of customers owned credit cards, 31 percent of customers had bank accounts, and only 10 percent of daily transactions were cashless.
The potential of the credit card market is therefore very huge. In order to compete on this segment, domestic and foreign banks have made efforts to attract customers, from competing on fees to offering promotions, giving valuable gifts such as travel suitcases, free annual fee for the first year, cash refund or from 45 to 55 interest free days.
However, the loyalty of customers with the bank depends on the ecosystem of the associated partners, specific promotions, or the quality of services.
Many years ago, it was the time of international banks’ credit cards. Some names such as Citibank, Standard Chartered Bank, HSBC, or ANZ created “fever”, particularly for office staff and entrepreneurs. To attract users, these banks often release a series of privileges such as credit limit reaching up to 900 million dong, business lounges at hundreds of airports, many card acceptance points worldwide, very low or free foreign currency exchange, etc.
In the recent time, the strategy of using privilege to gain market share has still continued to be effective. Typically, Shinhan Bank cooperates with the Korea Tourism Organisation to apply the programme of exempting Shinhan credit card holders from financial proof when travelling to South Korea. That has stimulated customer demand, particularly those who regularly travel to the land of Kimchi for business or tourism.
However, the credit card product lines of this foreign bank are not products for the majority. Customers have to prove their finance with an average salary statement of over 10 million dong per month. The lowest level among international banks is seven million dong, applicable for HSBC classic credit cards.
The card annual maintenance fee of international banks is also relatively high, ranging from 350,000 dong to 1.5 million dong. Obviously, the fee customers have to pay is not small if they want to own the privileges of foreign cards.
The attractiveness of the credit cards issued by international banks for a part of customers is undeniable. However, domestic banks have their own moves. An advantage of opening international credit cards of domestic banks is the low annual fees while customers do not have to have very high income.
For example, customers only need to prove their income of 4.5 million dong or more in order to be eligible to open a basic credit card line of Vietnam Prosperity Commercial Joint Stock Bank (VPBank), or only need to pay an annual fee from 75,000 dong to own a card issued by Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank). Most banks offer a maximum interest-free period of 45 days, some banks offer this period of up to 55 days, including Asia Commercial Joint Stock Bank (ACB), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Vietnam International Commercial Joint Stock Bank (VIB), and Vietnam Prosperity Commercial Joint Stock Bank (VPBank).
Considering domestic banks, VPBank is a notable name in the current credit card market. The bank has drawn attention of some international banks when announcing to hold a 9.7 percent market share of active cards by the end of 2018 with a growth rate of 66 percent per annum. There are two factors explaining for this strong growth of VPBank, including the ecosystem of partners and impressive promotions for customers.
VPBank’s strategy to attract users based on building a network of affiliated partners of up to 5,000 stores nationwide is starting to “bloom”. These shopping points not only attract customers with exclusive incentives to promote VPBank’s image but also offer a variety of payment methods other than cash.
The simple philosophy of offering VPBank cardholders the right to get discounts at any store is clearly proving its effectiveness. The report of the Vietnam Banking Association showed that the number of issued credit cards of VPBank in early 2018 accounted for 19 percent of the total issued cards in the entire market, ranking at the first position.
Promotional programme is also what makes customers choose to open credit cards. With the understanding of Vietnamese market and culture, domestic banks are not difficult to show the dominance when offering “huge” incentive programmes in the right time. VPBank’s representative said that in 2018, the bank organised 12 super-preferential programmes at very large scale. On average, every month the bank launched a promotion such as “Vi vu Singapore” on the summer period, or “Dua nhau don Tet” on the Lunar New Year holiday season, etc.
Thus, it can be seen that the strategy of gaining credit card market share of Vietnamese banks mainly aims at the segment of middle-income customers with discounts and promotions, while the credit cards of foreign banks use privileges to attract rich people or entrepreneurs.
In general, the card market in Vietnam is a fertile land that domestic and foreign banks will continue to exploit. Consumers are now very smart in choosing the card line in order to enjoy the most incentives.
