Always keeping cash in the wallet at a minimum level, Do Huong, an office staff, has now been familiar with non-cash transactions. Most of Huong’s payments for online transactions are now made via money transfer rather than paying cash directly to the shippers like before. The growing online payment ecosystem has allowed Huong as well as many other customers not to keep too much cash in hand.
Statistics of the State Bank of Vietnam (SBV) showed that in the fourth quarter of 2017 alone, there were 27.19 million low-value transactions and 4.77 million high-value transactions, increased by respectively 38.17 percent and 15.37 percent compared to the same period of the previous year. The number of transactions in the last quarter of 2017 also exceeded the previous record set earlier in the end of the third quarter 2017. The number of transactions carried out through the national payment system has recorded significant growth in the last two quarters.
According to data announced by banks in 2016, BIDV took the lead in net revenue from payment services with net profit from this segment reaching 1.595 trillion dong. Two other state-owned banks including VietinBank and Vietcombank respectively held the second and third positions. In the group of joint stock banks, Techcombank was the one that gain the largest payment service fees with over one trillion dong of net profit in 2016.
Up to the present time, the Scheme of developing non-cash payment has been issued by the government for more than one year. Recently, the prime minister has continue to approve the Scheme to promote payments via banks for public services with the goal of 80 percent of tax payment made through banks by 2020, and 100 percent of State Treasuries having POS equipment.
The market for banking payment services is receiving support from all parties, from customers using the services to the non-cash payment ecosystem.
As more banks move towards retail banking, individual customers become the target of many banks. However, for banking services in general and especially payment services, it is increasingly difficult to meet the demand of this group of customers as their requirements are higher and higher.
As a habit, after receiving salary through bank account at a large bank, the first thing done by Huong is to transfer all the money to her account at another bank which offer free internal and interbank transfer fees. This bank’s e-banking application is also considered by Huong to be convenient and have many useful features.
However, when this bank applies a new fee schedule, Huong is considering switching to using the services of a fairly well-known fintech which is offering free of charge for money transfer services in addition to many preferential policies to attract new customers.
The need to minimise transaction costs is practical when the need for making online transactions and money transfer between individuals has become increasingly popular. The payment service market for this group of customer is expanding, but not all credit institutions can take advantage of this growth to increase their market share.
It requires efforts and enthusiasm of banks in order to gain the loyalty from customers, especially individual customers. This is not unusual because the Vietnam’s banking system is home to more than 30 banks with competitive policies being constantly introduced in order to attract customers through quality, ecosystem linkages and close benefits which are charges and interest rates.
Certainly, the story will be different for banks with wide networks. Vietcombank, after many years maintaining the same fee schedule, has decided to change its service fees, in which SMS fee is raised by 20 percent, iBanking account management and money transfer via Mobile Banking are started to be charged, the money transfer fee is adjusted in the direction of lowering fees for small amounts and increasing fees for large amounts. Interbank transactions with large amounts are now charged at 0.02 percent of the transfer value. This change has received many negative reactions from the service users via social networks.
Nevertheless, the strength of the seller has been established as Vietcombank is having a huge customer base with the leading card service. Removing payment account at Vietcombank when most of the partners still use bank accounts of the bank may increase the costs for partners. For online shop owners, this may affect their number of customers. However, opening an account at another bank is not a bad choice.
An interesting information is that the number of cards has increased rapidly in the recent time. By the end of 2017, data of SBV showed that the number of bank cards increased by 1.5 time after three years, reaching approximately 132 million cards. Of the 71 million people aged 15 and above, on average, every Vietnamese adult uses 1.86 bank cards.
This market does not only have the participation of banks. By the end of October 2017, SBV has licensed 25 organisations providing non-bank payment services. In particular, many fintech have attracted a large number of customers such as Momo of Online Mobile Service Joint Stock Company (M_Service), VNPay, and Moca, etc. The products offered to customers have also been increasingly diverse which exploited the new demands of users. For example, the recent Lunar New Year season, many fintech and banks allowed online users to send online “lucky money” a service that had never existed in the previous years.
