Small banks, big deals
Recently, many small banks had entered the credit card market and continuously launched many outstanding features and incentives to compete for market share in this fertile segment.
In particular, the ‘battle’ to reduce credit card costs was to the point of suspense. Because at present, what customers cared about when using a credit card first was the annual fee. The second was the interest rate, and the third was the spending limit. Card issuance fee was currently mostly free for customers.
For the annual fee, many banks were giving customers free of charge for the first year. However, from the 2nd year onwards there would be a fee. The price would be omitted if customers had transactions.
For example, the Vietnam International Commercial Joint Stock Bank (VIB) only waived the annual fee for the second year for VIB Financial Free cardholders when it generated at least one transaction per month in the preceding year. Or Vietnam Prosperity Joint Stock Commercial Bank (VPBank) would waive annual fee for the first year for cardholders when there was at least one transaction in the early 30 days after opening the card, then yearly pay would be free in the following year when the total value of card payment transactions in the previous year reached 12 million dong for a Number One credit card…
For some small banks newly launching credit cards, such as Kien Long Commercial Joint Stock Bank (Kienlongbank) in 2018, customers were also attracted by free annual fees, but only for the first year, from the second year and onwards, customers had to pay 700,000 dong for Platinum card (for Visa card) or 399,000 dong (for Japan Credit BureauJCB card). To be free for the following year, customers must have at least 80 million dong in total financial transactions for the first year.
The competition on fees was ‘ace’ to entice customers when the same banks applied the preferential terms depending on the card class. Therefore, recently, Viet Capital Commercial Joint Stock Bank (Viet Capital Bank), a small bank, decided to compete strongly with large banks, going ahead on credit cards by breaking through incentives for customers to open cards at this bank with lifetime free annual fee.
According to Ngo Quang Trung, general director of Viet Capital Bank, apart from the simultaneous launch of a set of JCB three international Vietnamese credit cards, including Standard, Gold and Platinum, the bank also offered a repayment period of up to 55 days. With those incentives, Viet Capital Bank wished to surpass the number of cards completed in the first nine months of the year, such as the number of newly opened cards increased by approximately 5.6 times, income from card activities increased by 150 percent compared to the same period in 2018.
The playground was no longer the solo of the big
For a long time, people using credit cards often believed in cards of foreign banks or big companies in the country, which were shown as a high class, such as Citibank, Australia va New Zealand Banking Group Limited (ANZ), HSBC Private International Bank (HSBC), Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), etc. However, ‘card flow’ was continually changing as the market pie was being shared with smaller banks with an equally premium strategy of fees and incentives.
Terrific limits of many big banks were popularly offering 1 billion dong to 2 billion dong for platinum cards, for example, at HSBC, Vietnam Export Import Commercial Joint Stock Bank (Eximbank), Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank), Vietcombank. Particularly, the limit of up to 10 billion dong was currently exclusive of Eximbank with international credit card class Eximbank One World MasterCard.
Although there was no considerable limit, the luxury card of a small bank was also entitled to many top-class privileges, such as high-class golf, business lounge, and 1-year free resort in luxurious places, global insurance of up to 20 billion, and so on.
However, a customer with a VIP credit card said that with the limit of 1 billion dong, those cardholders were so busy that they were not able to time on free luxurious services given by banks because only the owner could use incentives. Therefore, banks gave incentives, and how much the service would be enjoyed depended most on customers.
In addition to many incentives for credit cardholders, the credit card interest story seemed to fade away when the interest free period increased to 55 days. When the credit card holder maintained all advances from the credit card, the interest rate would be zero, in addition to free annual fee. Customers could use banking services and credit cards without any expanses. That was such a fierce competition to attract customers.
