so sánh hình thức thanh toán sử dụng công nghệ mới là mobile banking và hình thức thanh toán sử dụng công nghệ cũ là tiền mặt. Bài viết sẽ phân tích chi tiết về khái niệm, ưu nhược điểm, cách thức hoạt động, tác động của hình thức thanh toán mới lên hình thức thanh toán cũ, đưa ra những nhận xét về xu hướng thanh toán trong tương lai
MINISTRY OF EDUCATION & TRAINING THE STATE BANK OF VIETNAM BANKING UNIVERSITY OF HO CHI MINH CITY - - FINAL EXAMINATION SUBJECT: BANKING OPERATIONS TOPIC: MOBILE BANKING PAYMENT VS CASH PAYMENT Student's name: Nguyen Duy Nam Long Student code: 050607190242 Class: BAF301_2111_7_L02_TA Lecturer: Nguyen Thi My Hanh Ho Chi Minh City January 20th, 2022 ABSTRACT The ubiquity of smartphones, together with the rapid expansion of the internet and mobile networks, has drastically altered people's lives in the 4.0 technology age People nowadays are always looking for the quickest and most convenient services, which means that sluggish and uncomfortable services will be phased out in the future Although cash payment is a wonderful innovation of mankind, it appears to be out of date since it does not suitable for people's demands nowadays As a result, a new form of payment that is both convenient and quick is required To keep up with the trend of the times, banks throughout the world, as well as commercial banks in Vietnam, have been attempting to develop new sorts of services Mobile banking is one of the most prominent services, which is the direction of long-term strategic development of banks because it not only provides a full range of banking services but also acts as a new type of payment – cashless payment Focusing on Vietnam, this article will contain three main parts First, it will introduce the payment method using old technology (cash) and payment method applying new technology (mobile banking) Then, the article will look at the advantages and disadvantages of these two new and old forms of payment Finally, the author will analyze whether these new payment providers have a negative impact on the old payment providers IMAGE LISTS Picture 1: SMS Banking Picture 2: Mobile version of bank's website Picture 3: Mobile banking app Picture 4: Steps making modern coins TABLE OF CONTENT Introduction Old and new types of payment 2.1 Mobile banking payment 2.1.1 Definition of mobile banking 2.1.2 Types of mobile banking 2.1.3 The technology used to create mobile banking apps 2.2 Cash payment 2.2.1 The definition of cash 2.2.2 The brief history of cash 2.2.3 The technology used to make cash Advantages and disadvantages of mobile banking and paper money 3.1 Mobile banking benefits and drawbacks 3.1.1 Benefits of using mobile banking in payment 3.1.2 Disadvantage of mobile banking in payment 3.2 Advantages and disadvantages of cash payment 3.2.1 Advantage of using cash in payment 3.2.2 Disadvantages of using paper money in payment The providers of the new and old types of payment 4.1 Mobile banking providers 4.2 Cash provider 10 4.3 The impact of mobile banking providers on the cash provider 11 Conclusion 11 References 12 Introduction Since ancient times, mankind has known how to transact in the form of bartering goods, using cash in the form of valuable commodities, and then evolved to paper money Cash payment has existed for a long time, contributing to the development of the world economy until today However, in the era of advanced technology which requires fast and convenient transactions, cash payment is gradually losing its place As society develops as well as science and technology, the form of payment must also change to be able to adapt to the new era - the 4.0 technology era Therefore, the born of new payment methods is inevitable According to WeAreSocial and Hootsuite statistics, by the end of 2021, up to 68.72 million Vietnamese people have internet usage (accounting for 70.3% of the total population), of which 94.7% are connected by phone with the average download speed of mobile internet connections is 34.51 MB Especially, the number of phones with network connections in Vietnam is 154.4 million units (accounting for 157.9% of the total population) Therefore, it can be seen that the number of phone users in Vietnam is extremely large and that is also the field that many types of services target In order to adapt to the development of the mobile information network and the popularity of smartphones, many commercial banks in Vietnam have launched Mobile Banking products that not only provide banking information via mobile phones but also act as a new form of payment Old and new types of payment 2.1 Mobile banking payment 2.1.1 Definition of mobile banking From my personal point of view, mobile banking is a modern service provided by banks as it is a facility that enables customers to initiate and/or perform banking tasks on their mobile devices with internet connections such as smartphones and tablets Depending on the type of mobile banking, customers can perform simple to complicated tasks ranging from viewing their account balance to making transactions, paying bills, etc Mobile banking is built on the mobile platform combined with the latest technology, applies the most advanced techniques, has a fast, accurate, and highly secure information processing process (Vu Hong Thanh and Vu Duy Linh, 2016) It is built on a mobile platform combined with the latest and most advanced technologies such as AI, Big Data, Blockchain to allow the fastest, most accurate, and safest information processing (VNPAYQR, 2021) Furthermore, the mobile banking system employs Private Key technology, which sends an authentication request to a device based on its IMEI to confirm its uniqueness When data is sent from a phone or mobile device to a server system and vice versa, it is encrypted with a secure communication certificate (SSL certificate), certified by a security brand such as VeriSign or Entrust This allows data to be transmitted encrypted, avoiding revealing information about the customer's account (VNPAYQR, 2021) 2.1.2 Types of mobile banking When it comes to the various sorts of mobile banking, there is a wealth of information available from many sources After conducting some study, I've discovered that in Vietnam, there are three primary forms of mobile banking: The first type is mobile banking over SMS (Short Message Service), also known as SMS Banking It is the most basic type of mobile banking (Thanh Ngoc, 2021) This service is useful for those who not have smartphones and/or internet connections, it means that customers with old mobile Picture 1: SMS Banking phones such as Nokia can use this type of mobile banking as old mobile phones can receive mail The contents of the SMS message are usually the bank’s notifications about the Picture 2: SMS Banking amount of money withdrawn or receive, the current balance, etc The next type of mobile banking is the mobile web browser This service is a website designed to be suitable for smartphones or can be said, the mobile version of the bank's online site From this website, users can monitor activity, request account transfers, and make payments Accessing the mobile version of the bank’s website can be time-consuming and not convenient as customers have to go to the browser app and then search for the bank’s site Low speed and ugly interface are the most common problems that most mobile Picture 3: Mobile version of bank's website web browsers suffer The last type of mobile banking, which is the most advanced one among these types, is mobile banking service over mobile Picture 4: Mobile version of bank's website applications or can be called mobile apps This is the technology that most of the world's leading banks are using because of its safety, security, and ability to work continuously Unlike mobile web browsers, this new type of mobile banking is fast, convenient, easy to use, and eye-catching interface It also has high compatibility with Android and IOS With just a Picture 5: Mobile banking app mobile phone with an internet connection, customers can easily make transactions such as: + Query account information, balance in the account Picture 6: Mobile banking app + Look up banking transaction history + Internal and interbank transfers + Pay the bill + Buy scratch cards, recharge phones + Use other utilities (depending on the bank): book movie tickets, book hotels, recharge services, send congratulatory money, shop online, receive remittances, etc 2.1.3 The technology used to create mobile banking apps According to Vadim Struk (2021), there are three types of the technology stack for mobile banking app development: + Native app development suitable for banking app solely for IOS or Android When it comes to IOS-based mobile banking software solutions, the best technology includes Swift, Xcode, and iOS SDK If the mobile banking app is designed only for Android users, then Java, Kotlin, Android Studio, and SDK are the tools of choice + Cross-platform app development is a winning approach that allows banking app developers to use a single code base for different operating systems React Native, Flutter, Xamarin will aid in building cross-platform apps + Hybrid app development: Hybrid mobile apps blend native mobile app development and web development They are usually built using HTML5, CSS, JavaScript, and PhoneGap and then run inside a container, making it possible to be embedded in native apps 2.2 Cash payment 2.2.1 The definition of cash Cash (money or coins) is legal tender that may be used to exchange products, debts, or services It might also contain the value of assets that can be quickly turned into cash, as stated by a business (Will Kenton, 2021) In Vietnam law, according to Clause 1, Article of Circular 33/2017/TT-BTC, cash means paper money and metal coins issued by the State Bank of Vietnam It is the most liquid universal equivalent used in exchange for goods and services and is usually issued by the State Cash can have initial value or only represent the value of something else such as gold, other precious metal, bonds, foreign currency, etc Money is a common benchmark against which the value of goods and services can be compared According to the same law, cash is divided into two broad and narrow meanings Cash in the narrow sense is the money issued by the central bank and in the hands of the public or outside the banking system In the broadest sense, cash is understood as anything that can be used directly to pay for transactions and includes deposits at banks 2.2.2 The brief history of cash Cash is an old form of payment and is still used today Before cash, people acquired and exchanged goods through a system of bartering, which involves the direct trade of goods and services Realizing the inconvenience in exchanging goods or services, cash was born, contributing to making the pricing and trading of goods much more convenient The initial cash is seashells, seashells, salt, sugar, etc depending on the country Then in 600 B.C, Europe was the first region in the world that can manufacture coins The Chinese were the first to devise a system of paper money, in approximately 770 B.C Paper money was then used more commonly than coins, whose value depended on gold, silver, or other metals Going through the silver standard, gold coin standard, bullion standard, gold exchange standard, foreign currency standard, and finally non-convertible paper money standard The paper money system with the standard of purchasing power for goods and services is the system that all countries are using today 2.2.3 The technology used to make cash The methods used to make coins have evolved over the years The coins were first made in the ancient kingdom of Lydia well over two thousand years ago and the process was very simple Nowadays, the process of making coins has been more complicated There are steps to making modern coins in the US including Mining raw material; Refining, Melting, and Casting; Rolling; Blanking; Riddling; Annealing and Cleaning; Upsetting; Picture 7: Steps making modern coins Stamping or Striking; Distribution (James Bucki, 2020) Picture 8: Steps making modern coins The technology used to make cash is simpler than making mobile banking apps as this is an old kind of technology However, the production of modern U.S paper money is still a complex procedure involving highly trained and skilled craftspeople, specialized equipment, and a combination of time-honored printing techniques merged with sophisticated, cutting-edge technology There are steps to making paper money: special paper and ink, offset printing, intaglio printing, inspection, overprinting, cutting and trimming, shrink-wrapping and delivery (Littleton Coin Company) Advantages and disadvantages of mobile banking and paper money 3.1 Mobile banking benefits and drawbacks 3.1.1 Benefits of using mobile banking in payment Mobile banking is a new type of technology applied by commercial banks in Vietnam in recent years It is this new operating model that has brought numerous benefits to both consumers, and at the same time overcomes the limitations of the traditional form of payment – paper money Convenience Mobile banking offers users the convenience of completing transactions over the Internet that have been traditionally conducted within a local bank branch and direct payment Not only provide many interesting banking services but it also makes the payment much more convenient Customers nowadays don’t have to go to the shop and then hand out their cash to buy something, they can sit at home or anywhere else, surfing online shops and then make payments via mobile banking apps Easier to use The interface of mobile banking apps is designed in a very professional manner, creating maximum ease for users Not as complicated as paying in cash when both the buyer and the seller sometimes have to bargain with each other, calculate the change, fear that the money the customer gives or the change from the seller is fake money, old money, etc Customers using payment services by mobile banking only need a few simple touches to make payments and transactions successfully Cost-saving The fees charged when customers make some financial transaction at the bank branches are more expensive than on mobile banking app Moreover, customers don’t have to spend money on the travel cost, the time they spend to go to the shops for buying products or bank branches for financial services Wide range of services The features of the mobile banking application are developed by the bank based on the needs of customers such as money transfer, prepaid phone top-up, foreign exchange rate lookup, interest rate, purchase online, bill payment, healthcare payment, tuition fees payment, etc The most special thing about mobile banking is that it also links to electronic wallets such as Shoppe Pay, Zalo Pay, Momo making online shopping much more convenient 3.1.2 Disadvantage of mobile banking in payment It is undeniable that mobile banking is overwhelming for cash payment transactions because the benefits that mobile banking brings are enormous However, it also has some disadvantages Need internet connection and electronic devices The problem of losing internet connections or not having smartphones with network connections is also a barrier for unwealthy customers However, this is not an issue worth worrying about because today as Vietnamese people nowadays always have at least one smartphone for themselves Besides, the wifi and 4g or 3g network are very common in Vietnam Not friendly with elderly customers There is a large number of older customers (aged 60 and up) who are not interested in this new type of technology They not know how to use it and find it difficult to learn new things, especially new technologies For them, using the traditional payment method like cash will be simpler and more familiar Risk of leaking information One of the reasons that banks as well as customers are most concerned about the disadvantages of mobile banking is its ability to secure information The more digitized society is, the more it has to face the potential threat of hackers Cybercriminals can infiltrate the mobile banking systems of banks to steal data, at worst, steal customers' money In public places, customers who use mobile banking but if others see their passwords, are also very dangerous Some fake mobile banking websites are very similar to real websites, tricking customers and then taking away all important information 3.2 Advantages and disadvantages of cash payment 3.2.1 Advantage of using cash in payment Although mobile banking offers far more benefits than traditional methods of transactions, to this day and even in the future, the direct cash payment method may not have completely disappeared Direct payment still brings benefits that current internet banking cannot No overspending Psychologically, it is more difficult for someone to hand over cash than just putting the finger on the buy button It is because the amount of money in customers’ wallet make them aware of how much they have spent Besides, the amount of time taking money out of the wallet and giving them to the sellers can make buyers change their minds During that time, they are thinking about whether to buy or not No security breaches When paying by cash, no hackers can attack you to steal our money or personal information as there is no personal information or details involved in the process The customers just have to hand over the cash themselves without the interference of the third party Suitable for old people and shops that only accept direct payment Most old people in Vietnam don’t understand who to make online payments, or more specifically, mobile banking apps They even don’t know how to use smartphones proficiently and it is very hard for them to learn how to use new technology So cash payment is the easiest way for them to make purchases Many small shops only accept cash payments as sellers of these shops don’t have bank accounts or they are old people that don’t know how to use mobile banking apps 3.2.2 Disadvantages of using paper money in payment About the disadvantages of using cash in payments, there are many things that we should take into consideration Inconvenient Arguably the biggest disadvantage of paying with cash is the inconvenience Firstly, cash payment forces buyers and sellers to meet in person, creating a huge geographical barrier, especially when it comes to buying something from abroad Secondly, having to go directly to the store also generates travel costs and wastes customers' time Thirdly, rummaging through the wallet to get enough money to pay is also quite inconvenient and annoying During the current Covid-19 epidemic, direct payment in cash also increases the risk of being infected Part of the reason is due to direct contact, the other part is because money can contain the Covid-19 virus It is also for that reason that stores in Vietnam have gradually converted, prioritizing payment by wire transfer Easily lost and damaged Cash exists in a physical form and because of that it can easily be lost somewhere or taken by someone easily Surely, we have all had the experience of being pickpocketed, accidentally dropping a few coins on the ground, trying to find the wallet Moreover, cash is also very susceptible to damage, wear and tear over time Almost everyone has gone into a situation where they forget their paper money in their pocket and accidentally took them to the laundry Even with careful preservation, cash will gradually degrade over time The providers of the new and old types of payment 4.1 Mobile banking providers The main purpose of making commercial banks in Vietnam race in developing mobile banking applications is because this new type of service attracts a lot of new customers, especially young people By bringing mobile banking applications into the market, commercial banks in Vietnam have gained lots of benefits from revenue to competition over other commerical banks For instance, mobile banking transaction fees are lower than traditional transaction fees, thus increasing the revenue of the banks Banks that have mobile banking apps can attract lots of new customers, especially young generations as they spend lots of time using smartphones and prefer shopping online so having a bank account that can be used on the phones is very necessary Moreover, banks no need to waste money paying employees’ wages at the transaction counter or branch maintenance costs This new type of payment is very convenient and easy to use, which will allow customers to purchase products and use services more The banks then charge some fees on the services they provide on the banking apps, the more customers use, the more money they can gain Expanding the scope of operations is also much easier because banks not need to spend the cost of opening more branches as well as recruiting more employees The banks with the best mobile banking apps will be the winners as they can attract more customers than other banks Here are some examples of mobile banking apps in Vietnam VCB-Mobile Banking app of Vietcombank with many interesting features, not only serves normal banking services but also supports payment for purchase and sale of external goods and services Specifically, VCB-Mobile Banking has services of money transfer, payment by QR code, transaction report, phone top-up, bill payment, airplane order, exchange rate lookup Another example of mobile banking can be mentioned as Eximbank Mobile Banking of Nam A Bank with countless interesting features, the pinnacle of non-cash payment The services provided are many, including some examples such as bill payment, savings deposit, money transfer and receipt, phone card top-up, etc 4.2 Cash provider The State Bank of Vietnam (SBV) is the only agency that issues banknotes and coins The State Bank is responsible for designing the coin's denomination, size, weight, drawings, patterns, and other features and organizing the printing and minting of money at money printing and minting establishments Banknotes and coins issued by the State Bank of Vietnam are legal means of payment in the territory of the Socialist Republic of Vietnam The purpose of printing money is not printing as much as they can, and printing is not for that state organization to spend, but the purpose of money printing is to stabilize the 10 economy of an entire country The State Bank controls the cash supply in order to stabilize interest rates and exchange rates, creating the best conditions for the economy to develop So, it can be said that making cash doesn’t bring revenue to the central bank 4.3 The impact of mobile banking providers on the cash provider As we know, payment through mobile banking applications is much more beneficial than cash payment, especially during this Covid-19 epidemic Young people today also prefer online payment over direct payment Therefore, in the future, payments through mobile apps will gradually replace traditional payment methods Commercial banks owning mobile banking or financial intermediaries with e-wallets such as Zalo Pay, Momo, Shoppe Pay will grow rapidly and the central bank will no longer have to print money or make coins This also benefits the central bank because they not have to pay the cost of printing money, don’t have to pay the cost of recovering damaged money, preserving money, etc In addition, commercial banks also not have to pay the cost of preserving cash deposited by customers too Thereby, it can be affirmed that the new form of payment - mobile banking apps, will bring benefits not only to the organizations that create these applications but also to the central bank In this case, both sides benefit Conclusion The form of payment by mobile banking apps has brought much more benefits than the form of payment in cash With a developing economy like Vietnam today, non-cash payment has great potential for development and is likely to completely replace cash payment in the future Usually, when a service using new technology replaces a service using old technology, the old service providers will suffer losses and even lead to bankruptcy However, mobile banking, as a representative form of non-cash payment, brings countless benefits not only to customers, the commercial banks providing this new service but also the central bank which holds the responsibility of making cash With a lot of effort and time spent on research, I hope my essay will have a commensurate value as well as help readers better understand the benefits that mobile banking brings to society 11 References Akers, H (n.d.) What Are the Different Types of Mobile Banking Technology? Retrieved from EasyTechJunkie: https://www.easytechjunkie.com/what-are-the-different- types-of-mobile-banking-technology.htm Barone, A (2020, December 30) Paper Money Retrieved from Investopedia: https://www.investopedia.com/terms/p/paper_money.asp Beers, B (2021, June 14) Internet Banks: Pros and Cons Retrieved from Investopedia: https://www.investopedia.com/articles/pf/11/benefits-and-drawbacks-of-internetbanks.asp Bucki, J (2020, August 27) How Are Coins Made? Retrieved from The spruce craft: https://www.thesprucecrafts.com/how-are-coins-made-4589253 Doyle, A (2019, September 12) What Does a Bank Teller Do? Retrieved from The balance careers: https://www.thebalancecareers.com/bank-teller-job-description-salary-andskills-2061707 Frankenfield, J (2020, May 04) Online Banking Retrieved from Investopedia: https://www.investopedia.com/terms/o/onlinebanking.asp Hằng, T (2018, October 04) Tiền mặt gì? Lịch sử tiền mặt Retrieved from VietNam Finance:https://vietnamfinance.vn/tien-mat-la-gi-lich-su-cua-tien-mat20180504224213735.htm How Paper Money Is Made (n.d.) Retrieved from Littleton Coin Company: https://www.littletoncoin.com/shop/How-Paper-Money-Is-Made Huy, N (2019, December 17) lưu ý quan trọng dùng Internet Banking để tránh tiền Retrieved from Thế giới di động: https://www.thegioididong.com/tin-tuc/5luu-y-quan-trong-khi-dung-internet-banking-de-tranh-mat-tien-1226965 Huy, P T N (2016, April 06) Có thể bạn chưa biết: Tìm hiểu quy trình cơng nghệ sản xuất tiền Retrieved from Thegioididong: https://www.thegioididong.com/tintuc/cong-nghe-san-xuat-tien-giay-va-tien-polymer-ban-co-biet-812578 12 Kenton, W (2021, January 17) Cash Retrieved from Investopedia: https://www.investopedia.com/terms/c/cash.asp Mobile Banking (2021, June 14) Retrieved from paisa bazaar: https://www.paisabazaar.com/banking/mobile-banking/ Ngoc, T (2021, September 02) Mobile Banking thúc đẩy chuyển đổi số ngành ngân hàng nào? Retrieved from Viet Times: https://viettimes.vn/mobile-bankingda-thuc-day-chuyen-doi-so-nganh-ngan-hang-nhu-the-nao-post149986.html Phát hành điều hòa tiền mặt (n.d.) Retrieved from Ngân hàng nhà nước Việt Nam: https://www.sbv.gov.vn/webcenter/portal/vi/menu/rm/pbkt/ndpbktcd/tvnndbnb/ph vdhtm?_afrLoop=44207204929256224#%40%3F_afrLoop%3D442072049292562 24%26centerWidth%3D80%2525%26leftWidth%3D20%2525%26rightWidth%3 D0%2525%26showFooter%3Dfalse%26showHeader%3Dfalse%2 Scott, S (n.d.) What are the Advantages & the Potential Risks of Online Banking? Retrieved from CHRON: https://smallbusiness.chron.com/advantages-potentialrisks-online-banking-2251.html Thanh, V H., & Linh, V D (2017, February 24) Hướng phát triển dịch vụ “mobile banking” cho ngân hàng Việt Nam Retrieved from Tạp chí ngân hàng: http://tapchinganhang.com.vn/huong-phat-trien-dich-vu-mobile-banking-cho-cacngan-hang-viet-nam.htm Thanh, V H., & Linh, V D (2017, February 24) Hướng phát triển dịch vụ “mobile banking” cho ngân hàng Việt Nam Retrieved from Tạp chí ngân hàng: http://tapchinganhang.com.vn/huong-phat-trien-dich-vu-mobile-banking-cho-cacngan-hang-viet-nam.htm Thống kê Internet Việt Nam 2021 (2021, 12 March) Retrieved from VNETWORK: https://www.vnetwork.vn/vi/news/thong-ke-tinh-hinh-internet-viet-nam-nam-2021 Tiến, N H (2019, May 16) Thành tựu hạn chế triển khai sử dụng giải pháp ngân hàng di động Banking Administration Reform – Benefits for Businesses and Citizens in Banking Transaction, 122-134 Retrieved from 13 https://www.academia.edu/44828934/Th%C3%A0nh_t%E1%BB%B1u_v%C3%A 0_h%E1%BA%A1n_ch%E1%BA%BF_trong_tri%E1%BB%83n_khai_s%E1%B B%AD_d%E1%BB%A5ng_c%C3%A1c_gi%E1%BA%A3i_ph%C3%A1p_ng%C 3%A2n_h%C3%A0ng_di_%C4%91%E1%BB%99ng_m_banking_t%E1%BA%A 1i_c%C3%A1c_ng%C3%A2n_h%C Vadim, S (2021) 10 Steps to Creating a Mobile Banking App in 2021 Retrieved from Relevant: https://relevant.software/blog/10-steps-creating-mobile-banking- app/#Best_technology_stack_for_mobile_banking_app_development 14 ... 2.1 Mobile banking payment 2.1.1 Definition of mobile banking 2.1.2 Types of mobile banking 2.1.3 The technology used to create mobile banking apps ... disadvantages of mobile banking and paper money 3.1 Mobile banking benefits and drawbacks 3.1.1 Benefits of using mobile banking in payment 3.1.2 Disadvantage of mobile banking in payment... three primary forms of mobile banking: The first type is mobile banking over SMS (Short Message Service), also known as SMS Banking It is the most basic type of mobile banking (Thanh Ngoc, 2021) This