LUẬN văn THẠC sĩ strengthening card issuance and boosting income from card activities at joint stock commercial bank for foreign trade of vietnam

Rationale

Card is a multifunctional personal financial product based on the application of modern information technology, bringing many benefits to customers Card service contributes positively to improving the civilization of payment, increasing the competitiveness for the banks With the flexibility and utility that card services bring to all stakeholders, bank cards have been created, changing the ways of spending, transactions of social community and increasingly affirming the position in the business activities of commercial banks Therefore, strengthening the issuance and boosting income from card activities is indispensable and objective to the global integration trend; contributing to implementation of diversification of services and modernization of banking technology in the process of integration into the region and the world

Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is one of the leading commercial banks in Vietnam with a wide network of branches covering the whole country Being aware of the benefits that card operation brings to the bank, over the years, Vietcombank has been promoting the issuance, attracting card users, increasing the revenue of card services among all branches in Vietcombank system As one of the commercial banks that started to provide card services quite early compared to other banks, Vietcombank has obtained many positive results in the service business, particularly as follows: the number of customers using cards at the bank has been constantly increasing with 33,213 customers in 2018 (an increase of 21% compared to 2017); Income from card services at Vietcombank in 2018 reached VND 1,598 billion (an increase of 57.75% compared to 2017 and completed 112% of the assigned plan)

However, besides above achievements, the card issuance and business activities at Vietcombank still have many limitations that need to be overcome In the evaluation report of the Card department at Vietcombank, it is pointed out that customers mainly use cards at the bank to withdraw cash from branches or ATMs; Sales from goods and services at small merchants are not commensurate with the market potential

International card users are mainly business people who want to go abroad and tourists This has not met the desire of the bank's Board of Directors on creating a modern non-cash payment instrument to bring convenience to customers, reducing cash circulation This situation requires Vietcombank to promote marketing, advertising and propaganda about card services so that customers know and be more aware of the utilities that card services bring, from which helping the branch develop proper business plans for its card products and services, creating important conditions in promoting card issuance and increasing revenue from the bank's card services

From above situation, the author chose the topic “Strengthening card issuance and boosting income from card activities at Vietcombank” as the master thesis.

Research objectives

General objectives

The overall objective of the research is to find solutions to enhance card issuance and increase revenue from card activities at Vietcombank, from which contributing to improving the efficiency of business operations of the bank.

Specific objectives

- Systemize the theoretical basis for card issuance and business activities at the commercial banks

- Analyze the status of card issuance and business at Vietcombank

- Propose solutions to enhance card issuance and increase revenue from card activities at Vietcombank

Research questions

- What is the content of card issuance and business services at commercial banks?

- What is the actual status of card issuance and business activities at Vietcombank?

- What are the measures for Vietcombank to enhance issuing activities and increase revenue from card services?

Objects and scope of the research

- Objects of the research: Card issuance and business activities at commercial banks

+ About destination: Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)

+ About time: Data for the study was gathered during the period of 2016-2018.

Research methodology

Data collection methods

Summary, select and analyze information from textbooks, specialized books, previous researches related to card issuance and business activities at commercial banks; select information relating to bank card business activities

Summary and analyze data collected from Vietcombank to study the situation of card issuance and business at the bank, thereby proposing solutions to enhance issuance and increase revenue from card activities.

Data analysis methods

Statistical method: Data collected from Vietcombank's annual reports, financial statements, information disclosure, statistical offices, annual reports of the State Bank and some commercial banks, economic and financial magazines; Handle information on the status of card issuance and business at Vietcombank

Methods of analysis: Analyze the actual data through bank reports and documents Compare, analyze and synthesize the fluctuations of the figures over the years, from which summarizing current situation of the bank's card service business in the past, present and development directions in the future

Synthesis method: Screening and summarizing from facts and theory to propose solutions and steps to carry out research objectives.

Research structure

Chapter 1: Theoretical basis for card issuance and business at commercial banks Chapter 2: Actual situation of card issuance and business activities at Vietcombank

Chapter 3: Solutions to strengthen card issuance and boost income from card activities at Vietcombank

THEORETICAL BASIS FOR CARD ISSUANCE AND BUSINESS

Card service of the commercial banks

In Vietnam, the concept of bank card is specified in Article 2 of the Regulation on issuance, payment, use and bank card support services, which was issued together with Decision No 20/2007/ QD.-NHNN dated on May 15, 2007 of the Governor of the State Bank of Vietnam, in particular: Bank card is an instrument issued by a card- issuing organization for conducting card transactions under the conditions and terms agreed upon by the involved parties

Bank card service is one of the banking services Card services include all services attached to payment cards, creating the utilities for the payment cards and being provided to customers in order to satisfy payment, cash withdrawal, bank transfer needs via the customers’ carda At the same time, the banks shall charge this service (Frederic S.Mishkin, 1995)

Bank card services include all types of transactions between the banks and the customers (individuals or organizations), based on the process of processing and transferring digital data to provide banking products and services (Hoang Tuan Linh, 2003) Based on the concept of card services as above, the card service can be generalized as follows:

- Bank card services require high-tech service development, deployment and management system and inter-network coordination of an entire multinational network

- The payment card service provides customers with a safe and convenient cashless payment method

- Card service provides customers with a safe but flexible method to store money and perform financial transactions such as withdrawals, transfers, etc at ATMs and other transactions on the internet

- In order to provide this type of service to customers, banks have to spend huge investment costs in building a card issuance and payment system

- Bank card services are highly identical, with little product differentiation So to win the competition, the banks often focus on activities related to product marketing, after-sales services rather than researching to make a distinction in product characteristics

Card issued by a bank: a card issued by a bank to a customer so that the customer can use his account or a bank-issued account for payment or use of banking services

Cards issued by non-bank organizations: Cards issued by non-bank organizations with the same process and scope of payment as cards issued by banks such as Amex, JCB

Gold Card: is a card issued to customers who need to pay large amount of money, usually to merchants This type of card has different characteristics depending on the region and each country, through which limits for withdrawals and deposits will be set accordingly

Standard Card: This is the most basic and common type of card nowadays

According to statistics, up to 160 million people in the world use this type of card every day The limit depends on each bank

* According to the technology of card making:

Braille cards: Cards are made in braille engraving techniques, the necessary information is embossed on the card, so there is very little amount of information and it is easy to be counterfeit Therefore, currently, such cards are rarely used

Magnetic stripe card: A magnetic stripe card stores information and only stores information that is unencrypted, so it is less secure and easy to be counterfeited

Especially, very little information is stored

Smart card: The card has an electronic chip to store information that can store up to 200 latest transactions, and is highly secure and difficult to fake because it is encrypted

International card: Cards issued by a domestic bank but can be used for payment both inside and outside the territory of that country or issued overseas but used for payment inside the country such as ANZ Card, HSBC card, etc International card is a card issued by a card issuing bank in Vietnam, used and paid inside and outside of Vietnam or a card issued overseas but used and payment in the Socialist Republic of Vietnam

Domestic card: The card is issued by a local bank and is allowed to use local currency payment in local currency Domestic card is a card issued by a card issuing bank in Vietnam, used and paid within the Socialist Republic of Vietnam

* According to the payment characteristics:

Credit Card: also called deferred or late payment debit card in which the cardholder is allowed to use the card to pay for goods and services, withdraw cash within the credit limit approved by the card issuing bank under the contract

Debit Card: This card is directly related and attached to the cardholder's deposit account With this type of card, when buying goods and services, the money is immediately deducted from the cardholder's account and immediately credited to the account of the accepting unit There are two types of debit cards, including online and offline cards

Cash Card: a card used to withdraw cash at ATMs With the function of withdrawing money, transferring money in the same banking system and paying value- added bill services such as payment of airline tickets , electricity and water bills, phone card topup at the ATMs Each time the money is withdrawn or transferred, payment will be deducted immediately into the cardholder's account

* According to the object responsible for payment:

Personal card: card issued to individuals who need and meet the conditions to open the card at the banks The cardholder is responsible for making payment on the card with his/her own money or may issue additional cards

Cards of individuals authorized by the company: Cards issued to an individual of an organization or a company, in which the organization or company is the card holder and authorizes that person to use the card and be responsible for payment of expenses on the card with the funds of the company or organization

Currently, in the context that information technology is increasingly developed, the card becomes a means of payment with many advantages and superior features, and is becoming more and more common Particularly, card services have the following characteristics:

Issuing and trading card services at commercial banks

The issuance of a bank card must be based on the legal basis of the State, and must comply with the regulations of international card organization Besides, the rules issued by the bank management also play an important role There are many different types of card issuance, but generally there are 2 main types, including issuing new cards and reissuing cards Both types are implemented by the following procedures:

When customers want to use credit cards, they come to the issuing bank to complete some necessary procedures such as filling in card issuance application forms, submitting some other documents such as ID card or passport, etc Profile provided by customers must include information such as name, address, company, legal capacity,

(1) (2) (4) (3) etc Customers can request card issuance in the form of mortgage, credit mortgage or deposit, depending on the financial capacity and the bank's regulations

Based on customes’ application, the evaluation department will conduct verification of the application and issue a decision to accept or reject the application

The bank often reviews the application submitted, financial situation (with the company customer) or regular income of customers (with individuals) to consider customer solvency With accepted documents, the bank will proceed to sign a contract with the customer

Step 3: Customer classification for card isssuance:

If the application is considered to be completely appropriate, the bank may conduct customer classification and have a separate credit policy for each customer group

Step 4: The bank issues the card to the cardholder:

The bank requires the cardholder to sign and register the sample signature at the bank After that, depending on the card issuing bank, necessary information such as floating name of cardholder, card number, validity period, bank code, company name (if any), etc will be printed on the card At the same time, this information will be encrypted and a personal identification number (PIN) for the cardholder will be determined, from which the cardholder's data will be entered into the system for management

When the bank delivers the card to the customer, a PIN will also be provided

Cardholders are required to keep card information confidential If a loss occurs due to a leaked PIN, the cardholder is solely responsible

1.2.2 Card service business activities at commercial banks 1.2.2.1 Card issuance

Card issuance activities of a bank include management and implementation of card issuance, use and customer debt collection Each process is closely related to customer service and bank risk management Financial institutions and banks that issue cards must formulate regulations on card issuance, use and debt collection

After the procedure for issuing and delivering the card to the customer is completed, the bank will perform the management of customer information; manage customers’ use of cards, including handling all requests related to customers’ use of cards, updating all customer card use transactions into the system; collecting debt (for credit card): The bank will send customers the statement listing all card transactions periodically After that, the bank will collect the debt according to the amount announced on the statement; Providing services to customers; Clearing organization with international card organizations

When implementing card issuance activities, in addition to receiving card issuance fees collected from cardholders, collecting interest from late payment statements, banks are also entitled to exchange fees paid by card payment banks thanks to card payment fee via international card organization This is the most basic part of the financial institutions and card issuers Based on this revenue, financial institutions and card issuers will offer interest exemption and other incentives to customers, thereby increasing card usage as well as revenue from card using

The card payment activities of the bank include the following activities: (i) Building and managing the customer information system of the merchants: Performing the approval and signing of card acceptance contracts with units accepting cards, which specify the discount level with card payment acceptance transactions; (ii) Manage the operations of the card accepting network; (iii) Arrange payment for card usage transactions to merchants

The process of card payment at the bank when a transaction arises is carried out through the following steps:

Step 1: Cardholders use the card to pay for goods, services or withdraw cash at the merchants When receiving the card from the customer, the merchant is responsible for checking the validity of the card If the card is valid, the merchant will provide goods, services or cash to the customer

Step 2: The merchant conducts transactions with the customs clearance bank and sends the card payment invoice to the paying bank Card payment invoices are kept at the card payment bank This invoice will be used as the original document for checking and resolving the complaint (if any)

Step 3: The payment bank credits the account of the merchant

Step 4: Conduct payment with international card organization and other members Every day, the bank synthesizes all data of card-related transactions issued by other banks and transmits data to international card organizations

Step 5: The international card organization will notify the payment bank After receiving the data from the payment bank, the International Card Organization will credit the bank Data transmitted by the International Card Organization includes paid payment banks, fees payable to the International Card Organization, and transactions being searched

1- good and service purchase or cash advances

3 -ad v am ce p ay m en t

Step 6: The international card organization will transmit data to the issuing bank Step 7: The international card organization will issue a debit note to the issuing bank

Step 8: On that basis, the issuing bank will send the statement to the cardholder c : Cardholder pays debt to issuing bank: After receiving the statement, the cardholder will pay for the goods and services consumed

In some cases, the merchant must contact the issuing bank or international card organization (on behalf of the issuing bank) to apply for a credit card payment license Payment authorization means a bank issuing a card directly or notifying an international card organization to prepare a card transaction by providing a license number or with appropriate handling requirements for the license application

Card payment is a modern form of payment, mainly used by machines The main types of equipment used for card payment activities at commercial banks include: invoice scrubbers; automatic licensing machine; automatic teller machine

Factors influencing card issuance and business activities

Subjective factors affecting the commercial card issuing and trading activities of commercial banks include: bank brand; financial capability of the bank; distribution channel system; Bank customer policies These factors are presented in detail as follows:

Brand is a factor that directly affects the issuance and trading of card services by commercial banks Because the brand, image is the oil that the bank creates in the hearts of its customers and is the unique feature of each bank

The more a bank has a brand and a higher reputation, the more products it offers are appreciated by customers and the number of customers using it is increasing

This is a premise for the bank to expand business development Card services are similar This is a new type of service and customers do not have much understanding about the products and services In addition, products are also risky services

Therefore, customers will tend to choose reputable banks with high brands to use the service to ensure the safety of transactions The higher the brand's reputation is, the better the bank will have to develop, increase revenue from card services and vice versa

1.3.1.2 Financial capability of the bank

In order to enhance and increase revenue from card services, the banks need to have strong financial resources This factor plays a very important role in developing new card products to enhance the competitiveness of the banks Banks with financial strength can ensure scalability to invest in infrastructure systems for card business such as ATM networks, POS machines, etc

The financial potential also determines the trust of customers in the bank

Customers tend to believe in large, reputable banks with healthy financial capacity

They believe that these banks will provide better services, including card services

When in need, customers often look to the banks with stronger brands than the unknown banks Therefore, branding and increasing financial capacity are what any bank wants to achieve to develop business operations in general and increase revenue from card services in particular

The distribution channel is the direct means to bring card products to customers

The distribution channel plays an active role in capturing customers' needs, from which the bank can take the initiative in improving and perfecting products, creating favorable conditions for supplying products to customers

The bank's distribution channel system can be divided into two types, including traditional and modern distribution channels For traditional distribution channels, the bank distributes card products through branches, transaction offices or through correspondent banks With the strong development of modern technology, expanding the network does not necessarily need to establish new branches However, with the actual situation in our country and the level of knowledge as well as the habit of the majority of people, the expansion of the system of branches, transaction offices and correspondent banks is necessary to attract customers and brand promotion and revenue increase from card products business

Besides, modern distribution channels are necessary conditions for developing card products The application of modern technology has changed the bank distribution channel Modern distribution channels such as automatic teller machine (ATM) will facilitate customers to use th services Modern distribution channels will help to overcome the limitations of time and space of transactions between customers and banks, helping the bank to save money on each transaction and increase the bank's income As a result, the bank can boost its card service business

People are the center of all activities, the key to success or failure in all areas of the economy The card service management team is the one in direct contact with the card business and fraudulent activities in the card field Experience, a sense of vigilance, strict compliance with the bank's regulations on card business activities of the card service management staff will contribute to detect, prevent and limit risks and risks loss to the bank during the business process Since then, the management of card services shall be more effective

On the other hand, bank officers are the ones who directly make cards, manage cards, understand the cards so the cards fraud caused by these officials are the most sophisticated ones which are difficult to detect, causing great losses for the banks

Therefore, the ethics, experience and qualifications of the card service management staffs also have a great impact on business performance, risks in the bank's card business as well as on management of card services at commercial banks

1.3.2 Objective factor 1.3.2.1 Legal basis of the bank

The environment is considered to be an important factor affecting commercial card business of commercial banks A coherent, complete and effective legal environment can ensure the rights of all parties involved in the card issuance and payment process Thanks to that, the new bank shall have a solid basis to make investments to expand and develop card business

In any country, the card issuance and payment activities of banks are conducted within a certain legal framework That legal framework is expressed through specific regulations and regulations on card business Such rules and regulations may encourage the business and use of the card if they are reasonable to suit the actual situation, but they will have the opposite effects if they are too strict or too loose, not suitable with bank card business conditions

1.3.2.2 Competition among the commercial banks

Financial - banking market is growing strongly In a trend of the world where the proportion of services is increasing, there are many business organizations involved in providing financial services in general and card services in particular In particular, the participation of foreign banks and financial institutions in banking activities is making competition in this field increasingly fierce

About Joint Stock Commercial Bank for Foreign Trade of Vietnam

JSC Bank for Foreign Trade of Vietnam, formerly known as Bank for Foreign trade of Vietnam, was established on 01/04/1963 from the Foreign Exchange Bureau (of the State Bank of Vietnam) Being the first state commercial bank chosen for pilot privatization by the Government, Joint Stock Commercial Bank for Foreign Trade of Vietnam officially came in to operation on 02/06/2008, after successfully implementing the equitization plan through IPO Vietcombank (stock code: VCB) officially listed on the Ho Chi Minh Stock Exchange (HOSE) on 30/06/2009

During more than 56 years of growth and development, Vietcombank has contributed significantly to the stability and growth of national economy, upholding the role of a major foreign trade bank in facilitating efficient domestic economic growth as well as influencing considerably on regional and global financial community

Originated as a specialized bank for foreign trade, Vietcombank nowadays has become a multiple sector bank, providing customers with a wide range of leading financial services in international trade; traditional services such as capital trading, capital mobilization, credit, project financing…etc., and modern banking segment such as forex trading and derivatives, card services, e-banking and so on Vietcombank has many advantages of applying advanced technology into the automatic banking system, products development, e-banking services, based on its high technology foundation

Products such as Digital Lab, VCB Internet Banking, VCB Money, SMS Banking, Phone Banking have always attracted a great deal of customers by its convenience, promptness, safety, efficiency, helping to create the habit of non-cash payments amongst the mass

After more than a half-century operating in the market, Vietcombank, one of the biggest commercial banks in Vietnam, currently has more than 16,800 employees, more than 560 branches/ transaction offices/ representative office/ affiliates both in Vietnam and abroad, including Head Office in Hanoi, 111 branches, over 441 transaction offices all over the country, 04 subsidiaries in Vietnam, 03 subsidiaries in other countries (Vinafico in Hongkong, Vietcombank Money Transfer Company in US, a subsidiary bank in Laos),

01 representative office in Singapore, 01 representative office in Ho Chi Minh City, 01 representative office in US (officially coming soon), 03 administrative units (Training and Human Resources College; 01 Cash Processing Centre in Hanoi and 01 Cash Processing Centre in HCMC (officially launching in 2019) and 4 joint ventures.In addition, Vietcombank has also developed an Autobank system with over 2.536 ATMs and more than 60.000 [NMY(R-H1] merchants nationwide Bank's operations are supported by a network of more than 1.856 [NMY(R-H2] [NMY(R-H3] correspondent banks in 176 countries and territories around the world Vietcombank's team of professional employees with excellent ability in banking and finance have a good sense for modern and integrated business environment, etc Thanks to their contribution, Vietcombank remains the primary choice for large corporations, domestic and foreign enterprises as well as millions individual customers

Joint Stock Commercial Bank for Foreign Trade of Vietnam has the following functions and mission:

- Mobilizing short-term, medium-term and wild-term capital of all economic sectors and people in the form of demand deposits and term deposits; issue promissory notes after obtaining permission from the State Bank

- Receive investment trust and development capital from domestic and foreign organizations and individuals when permitted by the State Bank; Borrowing capital from the State Bank and other credit institutions

- Providing short-term, medium-term and long-term loans to organizations and individuals engaged in agricultural, forestry and fishery production and business and processing agricultural products in the area depending on the nature and ability of the sources

- Discount commercial bills, bonds and valuable papers; Contributing capital and joint venture in accordance with applicable laws; Perform services between customers; Providing foreign exchange services according to Decision No 194/QD- NHNN of the Governor of the State Bank of Vietnam on October 9, 2006

During the period of 2016-2018, Vietcombank had strong and comprehensive transformation Business activities in this period achieved impressive results with the rapid growth of total assets, capital mobilization and credit In 2018, Vietcombank was the first bank in terms of profit scale and budget contribution in the banking industry, being the first commercial bank in Vietnam to bring the NPL ratio to less than 1%, classified by Basel II capital safety standards During its operation, Vietcombank has increased its investment in modernized IT infrastructure and synchronously implemented transformation projects in order to gradually achieve the best standards and practices

Some targets of the bank's business results for the period of 2016-2018 are as follows:

Table 2.1: Business results of Vietcombank

Vietcombank's total assets continued to grow strongly, reaching VND 1,074,027 billion in 2018, an increase of 3.74% compared to 2017 The mobilized capital of the bank in 2016 was VND 601,994 billion and 726,734 billion VND in 2017, increased by 20.72% In 2018, Vietcombank's mobilized capital continued to grow, reaching VND 823,390 billion, increasing 13.3% compared to 2017 This result was thanks to the bank's flexible mobilizing capital in line with the market situation, ensuring capital sources for credit growth in the right direction; Strictly control the programs/groups of customers allowed to mobilize competitive interest rates on the basis of ensuring the overall benefits of Vietcombank; actively expanding payment and collection accounts for the State Treasury and the social insurance

Although the credit balance is constantly growing, the bank always controls the loan quality well Over the years, Vietcombank has stepped up checking and supervising credit activities at all branches; strictly abide by the laws and regulations of Vietcombank on credit extension; Assigning the members of the Board of Directors in charge of a number of branches with debts with big problems of the system such as Quang Nam branch; Hue; Bac Kan,etc.; strengthening supervising and directing debt collection for each branch Every year, the bank inspects 100% of branches in the whole system, 04 Divisions/Departments/Centers at its Head Office, 02 Subsidiaries and audits 22 topics across the whole bank to promptly detect and remove potential risks, propose solutions to violations at the units As a result, the NPL ratio at the bank over the years has decreased from 1.48% in 2016 to 0.97% in 2018, bringing VCB the first bank in Vietnam to control the NPL ratio to 1 % according to Basel II capital safety standards

In recent years, Vietcombank has stepped up its synchronous deployment of proactive and flexible operating solutions to adjust to the business environment, with the goal of becoming the number one bank in Vietnam, one of the 100 largest banks in the region, one of the 300 largest financial banking groups in the world and is governed by the best international practices by 2020 As a result, the bank's business results are constantly growing with many positive results This is a premise for the bank to effectively implement social security policies that contribute to the country's economic development

Card issuance and payment activities at Vietcombank is a professional activity of the entire bank Profits from card services at the bank have not been accurately calculated because some business service expenses have not been separately accounted and are still in the cost of international payment activities Therefore, at present, it is only possible to accurately assess the results of card business through the revenue from payment and issuance of banks

During card payment activities: Revenue from Vietcombank card payment is mainly from payment of fees from merchants and ATMs Specifical calculation for the transaction of goods and services is as follows:

Revenue from card payment activities

Total card payment turnover at the merchants

Revenues from transactions at ATMs

Revenues are allocated by international card organizations and card associations to payment banks

Analysis of the actual situation of card issuance and business at Vietcombank30

2.2.1 Card issuance activities at Vietcombank

Since the first days of card issuance, Vietcombank has built a smooth issuing process from the central to the branches The central government issues general regulations, limiting the maximum and minimum limits for each card class, fees and charges, and information to be collected fully from customers During the period of 2016-2018, card issuance activities at Vietcombank achieved the following results:

Table 2.4: Card issuance results at Vietcombank

With domestic debit cards: Connect24 is a domestic debit card issued by

Vietcombank to individual customers to use to withdraw money from personal accounts opened at banks With the international standard ATM transaction system developed on the basis of Vietcombank on-line online payment technology system, Connect24 card is increasingly attracting customers to use With Connect24 card, customers can perform automatic transactions at ATMs nationwide such as cash withdrawal, bank transfer, statement printing, account balance, etc and make payment during purchasing goods and services at Vietcombank's merchants Thanks to the diversity of utilities and the increasing level of population's knowledge and income, the number of Connect24 domestic debit cards isin 2016 and 798,573 cards in 2017, increasing by 18.39% Until 2018, the number of cards issued in the whole system reached 984,563 cards, increasing by 23.29% compared to 2017 Domestic debt cards are mainly issued mainly in big cities like Hanoi, Ho Chi Minh, Hai Phong which have developed economic conditions

With international debit cards: International debit cards being issued at Vietcombank include: MasterCard; Connect 24 Visa; UnionPay; Cashback Plus, American Express; Visa Platinum Over the years, the number of international debit cards issued at Vietcombank continued to increase, increasing from 166,832 cards in

2016 to 248,463 cards in 2018 This result was achieved by the whole system's efforts in developing international debit cardholders as well as the effectiveness of its marketing programs However, the most important reason is that in the current period, the international debit card product is increasingly suitable for the Vietnamese market thanks to its simple issuance procedures Without collateral, the cardholders can still use the cards to spend domestically and abroad In addition, out of the total number of international debit cards issued annually, MasterCard and Connect 24 Visa are the two cards with the highest number of annual issues because these are two prestigious card brands which play an important role in supporting, managing customer spending transactions

For credit cards: Since the first day of card issuance, Vietcombank has built a smooth issuing process from Headquarter to branches The headquarter sets general rules, limits maximum and minimum credit limits for each card class, fees and charges, and information to be collected from customers Most customers are required to mortgage or deposit to issue cards Thanks to various features and convenience as well as stable service quality, the number of international credit card products issued by Vietcombank is increasing day by day, bcoming a leading prestigious card product in the market and is very popular to the customers with brands of major card organizations in the world including Visa; Master Card; JCB; UnionPay; Amex Platinum; Visa Platinum; Vietnam Airlines; American Express; American Express In

2016, the number of credit cards issued at banks was 42,748 cards, increasing to 67,349 cards in 2018, contributing to improving the efficiency of card service business activities at banks

Thus, in recent years, although the competitive environment for card products has become increasingly fierce Most of the new banks participating in the card market have implemented many preferential policies for customers using cards such as fee waivers, discounts, and activation fees for customers when issuing cards, etc

However, with great efforts of all card officers from the Central to branches at Vietcombank, the number of card issued by the bank has increased over the years

Because from the time of making the plan for card issuance targets, Vietcombank's Board of Directors did not focus on promoting cardholder development but determined that the development of card products of the bank would be towards improving the quality of the card services, increasing utilities for customers, thereby increasing card usage sales, contributing to improving the number of cards issued annually

2.2.2 Card payment activities at Vietcombank

Card payment activity has always been Vietcombank's strength since the card service was started in Vietnam and this is also an activity that always plays an important role in Vietcombank's card business development plans in recent the years

In the 2016-2018 period, revenue from card payment activities at Vietcombank is as follows:

Table 2.5: Revenue from card payment at Vietcombank

In general, card payment sales at Vietcombank are constantly increasing, in 2016, the bank's card payment turnover reached VND 101,985 billion, in 2017 the figure was VND 123,265 billion, increasing 20.87% compared to 2016 In 2018, the bank's card payment sales continued to increase to VND 156,923 billion, an increase of 27.31% compared to 2017 In which, domestic debit card payment sales accounted for a major proportion of VND 79,856 billion This is because the Connect24 domestic debit card product can be considered as a product for the masses, suitable for the developing card market like the Vietnamese card market The issuance of Connect24 debit card with personal account service has helped Vietcombank to quickly access the working class, enabling the branch to diversify cheap sources of mobilized capital through deposit accounts Current customers' low cost Besides, with the increase in domestic debit card sales, the payment volume of international debit and credit cards has also increased incessantly In the period of 2016-2018, the completion of the system connection with PULSE international card organization has helped Vietcombank become an advantageous bank to accept payment of 6 types of international cards:

Visa, MasterCard, Amex, JCB, Diners , UnionPay, in which Vietcombank continues to be the exclusive bank for issuing and paying Amex brand cards in the territory of Vietnam, contributes to enhance the reputation and image of the bank in the eyes of customers, helping to increase payment sales International bank debit and credit cards of the years

Considering the card clearance sales according to the type of transaction, cardholders still mainly use the card to withdraw cash at ATM Payment transactions for goods and services by cards, especially domestic debit cards, are still limited The payment volume at ATM is still high at VND 98,493 billion, accounting for nearly 63% in 2018 This shows that cash withdrawal habit among the population is still very large This is a challenge that requires commercial banks in general and Vietcombank in particular to have a stronger and more effective strategy to expand the network of merchants, thereby contributing to the implementation of the Government's orientation on developing payment platform without cash

Thus, although the competitive environment is increasingly fierce, many banks have implemented policies to lower the fee for the merchants to zero to enhance their still maintain a large growth rate, especially international debit cards This achievement is thanks to the right direction of the Board of Directors on promoting card usage by cardholders, increasing card business in the direction of improving quality instead of focusing on cardholder development as well as pure increase in number In addition, the effective implementation of card marketing programs, successful implementation of online card payment services, expansion of ATM and POS network of Vietcombank branches across the system, as well as the continuous increase of the utilities for card products, creating the highest convenience for customers to use the card are also important factors contributing to the achievement

These contribute to creating satisfaction for customers using card services and premise to expand customer size and improve card payment sales of Vietcombank

2.2.3 Risks and risk management activities 2.2.3.1 Risks in card business of Vietcombank

At Vietcombank, the risks in card business often lie in card counterfeiting and technical risks

With the risk on card counterfeiting : This risk is usually focused at the end of the year because this is the time when cardholders make spending and purchase many goods, therefore, card counterfeiting transactions issued by Vietcombank also mainly arise at this point of time The card transactions are forged mainly because the cardholders’ actions are captured when they are using the cards in Southeast Asian markets such as Thailand, Malaysia, Singapore After being stolen, card information will be recorded by the criminals to make counterfeit cards and spend purchases of highly convertible goods and services The main reason is that Vietnamese workers who go to work abroad or travel abroad are stolen by information organizations and individuals and taken advantage of in the card sector

The situation of card counterfeiting risk at Vietcombank in recent years has fluctuated as follows:

Table 2.6: Risks on card counterfeiting Vietcombank

In terms of the card type structure, fake Visa and Master cards arise relatively frequently with the value in 2018 of VND 8.36 billion and 4.53 billion, respectively (increasing compared to the previous years) as Vietcombank have the highest number of Visa and Master cards issued, and the largest proportion of card use among bank cards Among the risks of card counterfeiting, the Amex card has the lowest risk of arising, in the period 2016-2018, the risk of Amex card counterfeiting only generated 1 transaction in 2018 with the translation value of VND 0.49 billion Amex Card is a VIP card for successful and socially successful people The Amex’ merchants selected by Vietcombank are usually large and reputable Merchants so the situation of card skimming as well not occur Amex fake card transactions incurred in 2018 of Vietcombank were due to the card's payment system error, when licensing the transaction, the system could not check the card number, so it accepted to pay for an American Express card that does not exist in Card system of Foreign Trade Bank issued American Express card fraud is very rare but when it happens, the value of it is very large, causing significant losses to the bank, so Vietcombank attaches great importance to risk management of this card

In general, in the period of 2016-2018, card counterfeiting transactions of Vietcombank continuously increased, the value of losses was increasing Facing this situation, Vietcombank Card Management Department decided to set up a risk management team under the Card Management department Every day, the team organizes the licensing transaction to detect fraudulent transactions, lock the cards and issue free replacement cards for cardholders from Malaysia as well as give advise customers safety card using methods, creating conditions for increasing the security level for cardholders, contributing to improving the bank's reputation, helping Vietcombank to increase revenue from card services

Analysis of factors affecting card issuance and trading at Joint Stock

2.3.1 Subjective factor analysis 2.3.1.1 Bank brand

Recognizing the importance of brand development to the development of banking services, including card services, Vietcombank brand name is now the choice of many economic organizations, businesses and individuals The bank is known and recognized by the population as one of the most prestigious and largest banking brands in the country This is reflected in the voting results of Forbes Vietnam 2018 In December 2018, Forbes Vietnam announced a list of 40 most valuable and most prestigious organization brands to customers with a total value of 40 brands over US $ 8.1 billion Accordingly, the top 10 brands leading the market today in Vietnam are as follows:

Table 2.12: Brand value of Vietcombank

Source: Forbes Vietnam Magazine With the goal of gradually changing customers' and public's awareness of Vietcombank's image and brand identity in providing banking services in general and card services in particular, Vietcombank has taken the quality of service, transaction style, reasonable price and a variety of card products to attract and retain customers, thereby improving Vietcombank's brand position in the market As a result, Vietcombank's brand is always in the top of the high-value brands in the market voted by Forbes Vietnam Magazine Currently, Vietcombank is ranked 9th on the list of 40 most valuable brands with a brand value of $ 177.9 million This creates opportunities and benefits to help the bank develop business activities in general and increase revenue from card business in particular.

2.3.1.2 Financial capability of the bank

The bank's financial capacity is reflected in the ratios of return on assets (ROA), return on equity (ROE), Net interest margin (NIM) and capital adequacy ratio (CAR)

These targets at Vietcombank in the period of 2016-2018 fluctuate as follows:

It can be seen that Vietcombank's financial indicators are quite high and continuously growing, showing Vietcombank's strong and increasingly strong financial capacity This creates favorable conditions for the bank to develop card products and services, increase revenue from card business, and contribute to improving the overall operational efficiency of the bank

During the operation, Vietcombank always focuses on investing in the development of distribution channel network, creating technical infrastructure to facilitate the convenience and ease of customers' payment and card usage With Vietcombank's ATM automatic transaction system, in addition to providing services for customers using Vietcombank Connect24 Debit cards, it is also able to provide services for customers using international cards bearing Visa, MasterCard, Amex and JCB with 2,409 ATMs installed mainly in commercial centers, convenient transaction

Năm 2016 Năm 2017 Năm 2018 points in most major cities and provinces across the country With its 24/24 customer service and diversified utilities, Vietcombank has provided a relatively large automated trading system with more advanced and modern services than similar systems of other banks in the Vietnamese market

Diagram 2.2: ATM, POS system at Vietcombank

By the end of 2018, Vietcombank managed 2,409 ATMs and 49,418 POSs, ranking third in the ATM network market (15.67% market share) and led the market in POS network (27.5% market share) Currently, Vietcombank is the first bank to deploy the connection with the three largest card switching organizations in Vietnam, Smartlink, Banknetvn and VNBC, allowing The increasingly expanded system of accepting merchants with suppliers of goods and services in areas such as hotels, restaurants, handicrafts and silk shops, ticket outlets, travel agencies, supermarkets, trade centers, etc have helped Vietcombank's card service constantly develop, increase service revenue, and meet the demand for card use of domestic people and foreigners coming to Vietnam for tourism and work However, the technology system and transmission lines at Vietcombank ATMs have not been invested synchronously, many ATM machines have been degraded and frequently incident Besides, the arrangement of ATM locations is not reasonable, many residential areas do not have ATMs, making access to customer services difficult This situation directly affects the business activities of increasing revenue of card services of the bank

Currently, the human resources at Vietcombank are of quite good quality, meeting the requirements and tasks set in each stage of development of the bank

Accordingly, the number of human resources in the bank in the period of 2016-2018 is as follows:

University degree 12,432 13,343 13,731 911 7.33 388 2.91 College and intermediate level 1,776 1,535 1,854 -241 -13.57 319 20.78

Source: Vietcombank The total number of officers and employees at Vietcombank until the end of

2018 was 17,216 employees, increasing by 6.09% compared to 2017 In particular, the number of postgraduate staff is 1,318 and staffs of university degree accounts for 13,731 staffs, the number of college and intermediate employees accounts for a lower proportion of 1,854 employees The increase in personnel over the years shows that Vietcombank constantly selects and recruits new employees to meet job requirements

Newly recruited employees at the bank are always standardizing the training content according to each job title to ensure new employees quickly grasp the job, promote their capabilities At the same time, the recruitment standards are always standardized so the recruited staff always shows a certain level and capacity, quickly adapt to the assigned jobs This is one of the advantages that helps Vietcombank improve the efficiency of card service management, limit the risks arising in card transactions, contribute to increase revenue from card business of the bank

In addition, during training to improve professional skills as well as management skills, business card services, Vietcombank has maintained investments in training programs throughout all departments related to card business Grouping and Career Development Projects, Leadership Development Program; TechcomLead,

TechcomFuture projects are implemented and achieved high efficiency The specific training content is summarized as follows:

Table 2.14: Some training activities for staffs involving in card operation at

Training customer management and exploitation skills Train skills to maintain relationships with partners who are companies, corporations, large enterprises

Training skills to maintain relationships with partners who are companies, corporations, large enterprises

Training skills in selling and deploying new card products and services

Training exploitation skills, maintaining relationships with merchants / partners with high payment turnover (Key Account)

Training exploitation skills, maintaining relationships with merchants / partners with high payment turnover (Key Account)

Develop skills to build promotions in combination with media

Improve the skills to handle alerts related to cardholders' spending activities

Improve the ability to detect suspected fraudulent card cases, collect, analyze and propose remedies

Train and develop risk management capabilities in card business

Develop the ability to operate and monitor the operation of ATM, POS and intermediary devices

Training skills in handling technical errors in card operations

Develop the ability to operate and monitor the operation of ATM, POS and intermediary devices Training expense 4,283 million dongs 6,235 million dongs 7,256 million dongs

Sourcen: Vietcombank After summarizing the training activities to develop human resources for managing and trading card services at Vietcombank, the author recognized that the process of developing and improving the quality of the card service staff of the bank has been perform in depth to each specific group of officials:

Thus, with a series of organized training activities, contributing to improving professional skills in business, card management for employees with an investment budget for training in 2016 of 4,283 million VND, 6,235 million VND in 2017 and 7,256 million VND in 2018 It can be seen that investing activities for staff development training is Vietcombank's proper investment strategy in improving card service business efficiency, increasing service revenue

2.3.2 Analysis of objective factors 2.3.2.1 Legal policy

Currently, Vietnam's card market is operating spontaneously, lacking long-term strategy and macro orientation, leading to unfair competition among the banks

Therefore, the card market needs to have a timely lead and direction from the authorities However, at present, there are no official regulations of the State Bank of Vietnam on cards, credit cards and especially the foreign exchange control policy for international cards

The application of VND in accepting payment at POS based on the spirit of the Government's Decree No 160/2006/ND-CP on December 28, 2006 (Article 29:

Provisions on restricted use of foreign exchange) and the State Bank's Decision No

20/2007/QD-NHNN on May 15, 2007 (Article 5: Currency of payment on cards) faced many difficulties not only for Vietcombank in particular but also for other domestic banks in general The payment between the merchants and the payment bank is made in Vietnamese Dong, regardless whether the cardholder has paid in cash in US dollars or Vietnam dong Meanwhile, foreign banks can still make payments to the merchants in US dollars, but Vietcombank and the local banks can not pay in US dollars for these merchants Even, currently, in Vietnam, there are two foreign bank branches,including Hong Kong and ANZ allowing the customers to withdraw money in USD at ATMs, which partly limits the competitiveness and interests of Vietnamese banks

In addition, there has not been any other legal document in dealing with disputes, violations in card issuance and payment in Vietnam This situation gives rise to inadequacies between current regulations and governance regulations on handling foreign exchange, credit with card issuance and payment facilities, making it difficult for the banks to expand their international card business In addition, the policy to control credit growth of the State Bank also significantly affects the development and increase revenue from card services of Vietcombank

The card market is a potential market for development, the card issuance and trading will bring the Bank idle capital from the balance on card accounts, contributing to increasing business capital and bringing profit back to the Bank In recent years, many banks have participated in issuing cards and competed quite fiercely with Vietcombank, so the business operation of increasing revenue from the card services of the bank face many challenges However, with the available advantages such as facilities, technology, capital, traditional customers, Vietcombank still maintains its leading position in card business and continues to strive to maintain its position

Evaluation of card issuance and trading activities at Joint Stock Commercial

- Income from card services of the bank is constantly increasing both in card issuance and card payment income The number of cards issued annually is big and continuously increasing, helping the bank maintain its market share position in card issuance services compared to other competitors

- Vietcombank is currently the only bank in the market issuing and applying payments to all 6 leading international card brands: Visa, MasterCard, Amex, JCB, Dinners, UnionPay As for Amex cards, Vietcombank is exclusively issued on the Vietnamese market

- With specific card issuance and payment process, Vietcombank's card payment processing speed is fast, reaching international standards, which has helped increase the number of payment cards and annual number of cards issued by the bank, contributing to meet the increasing needs of customers

- During card business risk management, Vietcombank has established a risk management system and issued uniform security and card security regulations throughout the system At the same time, the bank proactively set aside the risk provision fund for card service at 10% of revenue from card business, enabling the bank to promptly cope with losses when risks arise

- In marketing activities, Vietcombank has implemented many promotion programs, introducing attractive products, and the bank has built up separate incentive policies for each customer segment by card class: Special cards, golden card and Classic card

- Currently, Vietcombank's brand and image are highly appreciated by customers, creating a reputation for the community The brand value of the bank is also always in the top of high-value businesses, creating favorable conditions for the bank to develop business, increase revenue from card services

- The bank's distribution network has been constantly increasing over the years, which is an important premise for the bank to develop a large-scale card service business in the near future Moreover, ATMs and transaction offices of the bank are equipped with cameras, air conditioners to make the customers feel comfortable during the transaction, some ATMs are also equipped with mirrors so that customers can follow and track behind, preserving personal vehicles while performing transactions

In addition to the above results, Vietcombank's card business still has many limitations that need to be overcome, specifically as follows::

- The bank's card products are not diverse compared to the region Vietcombank currently pays and issues six card brands, much lower than foreign banks With flexible financial management mechanisms and marketing policies for cards, foreign banks (such as ANZ, HSBC ) have nearly 30 types of card products In addition to international credit cards of Visa, Master, Amex, JCB, Dinner, they constantly launched new domestic credit card products in the form of associated cards such as in conjunction with travel companies, with large supermarket chains, taxi companies, transportation companies, insurance companies, Beauty & Spa, general hospitals, etc

Customers using the above cards are entitled to a discount from 1% to 20% when purchasing goods and services at the branded units associated with the card There are also international prepaid cards (prepaid cards) like Prepaid Visa, Prepaid Master

- Currently, the process and procedures for card issuance of Vietcombank are quite strict and paperwork Customers who want to issue credit cards must have collaterals equal to 125% of their spending or mortgage limits However, the procedure for carrying out documents to confirm is still quite complicated, it takes a lot of time for customers In addition, inadequate customer assessment standards make branches hesitant in providing credit to customers, limiting credit card development

- The structure of Vietcombank's card payment is still uneven, the volume of payment via ATM accounts for a large proportion, showing that the population is not familiar with the form of non-cash purchases at merchants, this remains challenges to bank card business

- Every year, risks in card business arise and cause many losses to the bank The bank's risk prevention measures are not diversified, the bank provides risk financing through provisioning which partly affects the business performance as well as profit of the whole system

- Investment budget and information technology system for card business at Vietcombank are still low There is no uniform investment between software technology, hardware and gray matter resources so exploitation of the use of technological features is limited Some wasteful investment technologies have a direct impact on the bank's business profits

- Marketing programs are not diverse, incentives and promotions are mainly applied to Vip customers and special card customers, so the bank has not attracted the small customer group

2.4.3 Cause of the limitations Fierce competitive environment: When starting to participate in the card market,

Vietcombank is a pioneer bank in this field However, Vietcombank faced fierce competition from other commercial banks that joined this market, including ACB, Tecombank, Dong A, etc In recent years, more and more banks have been involved in card issuance and payment in the Vietnamese market with many advantages in terms of technique and customer relations, causing market share sharing and creating difficult and challenging in increasing revenue from bank card services

No comprehensive and stable legal corridor: Vietnam's card market still operates spontaneously, lacking long-term strategy and macro orientation, leading to unfair competition among the banks At the same time, at present, the legal documents have not fully provided for card security, card security, dispute resolution, risks, violations in card payment and setting up risk provisions in card business create a lot of difficulties for the banks during business operation

SOLUTIONS TO STRENGTHEN CARD ISSUANCE AND BOOST

Orientations and objectives of card business development at Joint Stock

International payment is an important activity and a great support for international card issuance Therefore, the orientation of the card business is set by Vietcombank, which is to continue strengthening and maintaining the No 1 market share in the market of international card payment and maintaining the market share of international credit cards in Vietnamese card market as well as exploiting and promoting the development of domestic card field Vietcombank aims to develop in- depth in addition to expanding its scale of operation, especially increasing card usage, saving resources in cardholder development On that basis, card activities that are sustainable and profitable in the long run shall be implemented accordingly

Diversify card products with advanced and modern features along with added utilities to meet the needs of card use of many different customer segments in order to attract maximum customers to participate in card issuance

When researching and launching new products, Vietcombank will offer a synchronous solution to promote customers Because the card service is still relatively new, not many people know it, it is necessary to have strong propaganda and advertising on the mass media and improve the marketing level of the customer staffs

Expand card alliances, associating with other card alliances, with domestic and foreign banks Constantly expand the network of new merchants and continue to expand the acceptance of branded cards of new international card organizations

Technology development: In order to keep up with technological developments of the times, to meet the demands of customers more and more, Vietcombank constantly researches and upgrades the card handling system, overcomes existing problems at the same time access to new technologies in the world market

To develop the card in the direction of safety, confidentiality, ensuring the interests of the cardholder as well as the interests of the bank, fully preparing the technical staff with strong political and competent professional qualification to supplement the current force

Thus, in order to achieve the above objectives, a specific solution system suitable to Vietcombank is needed to enhance business, increase revenue as well as continuously improve the competitiveness in Vietnamese card market.

Some solutions to enhance card issuance and increase card revenue at

3.2.1 Completing distribution channel system Firstly, expand the merchant network, encourage the merchants to make card payments

Vietcombank needs to try to maintain the exclusive Amex card payment contract to promote its competitive advantage, acquire merchants that have not accepted Amex card payment In addition, promoting the marketing program and customer care program to maintain and expand the merchants, thereby promoting payment sales as well as the number of issued cards The development of merchants to provide consumer goods to people is essential, so Vietcombank needs to constantly expand its network of merchants

In order for cardholders to have more spending points, it is necessary to promote the network development to all types of units that are not traditional in the city market such as electronics stores, fashion clothes, cosmetics stores, foreign language centers, especially restaurants, etc In the beginning, the performance of these types of merchants could not be as high as those of foreign merchants such as hotels, souvenir store But Vietcombank must conceive that investing in the merchants is to serve cardholders in the country, encourage the development of the domestic card market and increase the number of card customers

Besides extensive development, the depth development policy also needs attention Firstly, it is also important to focus on the high-turnover merchants The Bank needs to have reasonable customer policies so that all these merchants will only pay via Vietcombank in stead of using the services from other banks, ensuring not to invest more while significantly increase revenue For example, the bank should give them incentives in different transactions with the bank such as incentives in lending, payment when signing a contract with the merchant, the discount can be applied with a specific percentage for customers to use the card issued by Vietcombank as a program for the "Golden preferential" satellite merchants The image of the unit is also appeared on the promotional leaflets about the preferences when paying card In addition, based on the summary of monthly, quarterly and annual spending of the units, Vietcombank can classify its units and have specific incentive policies for each unit or its employees with high and stable sales such as bonuses, giveaways, free tours, and bonus points with efficient merchants, thereby encouraging the unit to accept Vietcombank card payment more

For sales using domestic cards, apply sales increase programs, especially sales at POSs, accelerate the connection of domestic POSs, online domestic card payment routes, developing interbank money transfer service

In addition, Vietcombank also needs to periodically send the staffs to the merchants to survey, check and maintain the machine, promptly repair the damage to extend the use time and to see actual effectiveness of the merchant using equipment It is also necessary to arrange training for the staffs of the merchants on how to use the machines, update new information on the situation of fake cardsto improve the effectiveness of the merchants

Second, develop the ATM system

One of the methods to compete effectively is using ATMs with self-service banking services providing customers with many utilities and support the banks to take advantage of modern technologies, strengthening operational efficiency and meeting customers’ needs At present, Vietcombank's ATM system is often overloaded

Therefore, in the coming time, Vietcombank needs to focus more on improving the operational efficiency of the ATM system

First of all, it is necessary to expand the ATM network to avoid focusing too many transactions on some machines The bank must plan carefully for the ATM deployment, how many machines it will deploy, choose effective locations such as densely populated areas, supermarkets, commercial centers, large places where there are a large number of buyers and sellers In addition, it is also needed ensure the electricity, weather, traffic for smooth operation of ATMs

About maintenance service: Most ATMs handle very large transactions and need proper maintenance to ensure the accuracy of customer transactions Care should be taken to ensure that the cash distribution modules, communications systems, card systems, monitors, keyboards are properly maintained, defective devices should be detected and replaced early, and ensure the network is maintained and works well

Regarding the handling of ATM-related incidents: Sometimes ATMs may encounter problems that prevent them from working like congestion, running out of operation status of ATMs to promptly take corrective measures to ensure smooth operation at the ATMs

In addition, the Bank also needs to pay attention to the safety of cardholders when making transactions on ATMs The bank should invest in building a compartment around the ATM with glass doors, especially those located at supermarkets with crowded people to ensure information safety for the customers so that PIN numbers are not captured and the customers are protected from being stolen money in their cards, as well as make sure the ATMs are not vandalized The bank also needs to regularly check the status of ATMs to promptly detect card readers attached to the device (if any)

3.2.2 Strengthen the prevention of card service risks, especially in card counterfeiting

Currently, in the world, the card business generates tens of billions of dollars of profit every year for the parties involved This is a relatively stable source of revenue and tends to increase However, besides that, the risks have been happening, including the potential risks such as the overdue payments of the cardholders This situation causes reduction in profits or losses for participating entities, especially issuing bank

One of the top goals of the business is profit, so the risk of loss is inevitable In recent years, although the number of risks during Viecombank's card business is not too much, it still causes significant losses to the bank In the current period, when Vietnam's card market is still in the stage of completion and there are many gaps in card payment activities, it has created conditions for foreign frauds to steal Cardholder's information to take advantage of self-seeking Especially, today with modern development technology, the phenomenon of "skimming" (stealing card data) and "fishing" (deceiving personal information) is increasingly popular Therefore, Vietcombank should take measures to limit risks such as:

- Strictly follow the regulations of international card organization on issuance, payment and regulations relating to risk management and control; Good use of risk control tools such as the installation and maintenance of security devices at places where cards are accepted

- Pay attention to the card payment operations for the merchants, especially how to identify fake cards; Actively coordinate with the banks to promptly notify the fraud cases and regularly arrange discussions for employees to exchange experience in risk management and control

- Vietcombank can buy insurance for card operations (if any), preferably the Bank should increase the risk provisioning rate to be able to actively compensate for risks arising from card operations

Besides, ATM is one of the places with many potential risks when customers use the card, to minimize risks arising from Vietcombank ATMs, the Bank can apply the following solutions.:

Recommendations

3.3.1 Recommendations to the Government 3.3.1.1 Promulgate a system of legal documents to protect the rights of entities involved in card payment

The Government should promulgate legal documents soon to protect the legal rights of card business banks, merchants and cardholders, creating a basis for law enforcement and judicial authorities to impeach and judge criminal organizations with counterfeit payment cards as well as individuals who commit frauds and use illegal cards to appropriate other people's property

Currently, frauds through credit cards have appeared in Vietnam, this is a new type of crime which is very sophisticated and clever To handle this problem, the Government needs to continue promoting the development of laws and sub-laws on economy, supplementing the existing laws and at the same time, imposing penalties for crimes related to cards such as manufacturing, consuming and using fake cards, stealing codes

Technical and infrastructure investment to modernize banking technology is not only a problem for the banking industry but also for the whole country, in line with the country's economic development strategy Therefore, the State needs to invest in this field so that Vietnamese banks can modernize technology and keep pace with other countries in the world In particular, in the field of Bank cards, currently to participate in card business, Vietnamese banks have to import modern machinery, equipment, software used in card technology from abroad Meanwhile, the Government has not paid much attention to the investment support shown by the high taxation policies on equipment and software used in card technology This makes the bank's investment cost even higher So in the coming time, the Government should encourage banks to invest in technology and infrastructure by reducing import tax on these goods

Another problem is that the current communication line is unstable, the congestion problem often happens together with the high cost of the communication system, which greatly affects the efficiency of the results of card issuance and payment activities Therefore, in the coming time, the Government needs to invest in upgrading and developing telecommunication networks to reduce congestion and reduce costs for the bank

3.3.2 Recommendations to the State Bank of Vietnam Complete the legal documents on the card

In order to develop card issuance and payment activities in Vietnam, a synchronized and stable legal corridor is required for this activity Currently, the current legal documents related to the card operations of the banks are still for general guidance, Vietnamese banks must rely on the operational guidelines of international credit institutions without any regulations specifically applied in Vietnam; Besides, there is also an inadequacy between the bank's card business and the current foreign exchange management regime as mentioned above, causing confusion for banks in general and Vietcombank in particular in card business strategic planning Therefore, the State Bank should soon supplement the legal documents specifying how to perform bank card operations, amending and supplementing legal documents related to cards, to avoid conflicts with the State's current foreign exchange management regime

Establish an interbank payment center on card issues

Currently, in the card payment market, there are 4 card switching organizations, including Smartlink, BanknetVn, VNBC, and ANZ-Sacombank Each switching system has its own rules, payment rules, and utilities and a separate payment network for card products issued by a union bank As such, this is consistent with the capital, technology, and business functions of each bank But the fact also shows that restrictions when domestic cards issued by this union bank are not accepted for payment at a bank other than the union

Therefore, it is necessary to set up a central bank for card payment This center is the focal point for processing licensing and payment transactions to check card transactions of commercial banks without having to go through payment centers of international card associations, ensuring the acceptance of payment of all types of cards Other bank release system Interbank payment center for card issuance will accelerate payment speed, solve the problem of exchange rate difference, unified payment currency, the cost of payment between banks creates a healthy competitive environment in card business In addition, through this hub, banks will be updated with information about counterfeit, stolen and misplaced cards, thereby limiting risks for banks

3.3.3 Recommendations to Vietnam Bank Card Association

The Vietnam Bank Card Association was established on the basis of ensuring a favorable condition for banks to participate in the competitive card market in a healthy manner But the card market is becoming more and more active, the competition is fierce and there are many potential risks Therefore, in order for the card market to develop healthily, banks to conduct effective card business, the Vietnam Card Association should further promote its activities such as::

Organize propaganda to the public on utility cards, improve people's awareness about non-cash payment activities; Establish a framework agreement for the price policy in card activities, reducing competition with discounts, free of charge causing bad image to the bank's card brand

Actively open training courses, gaining experience in card payment and card issuance operations for members, better completing the card's operation process In addition, the the Bank Card Association must be the core to continue leading the way in improving the mode of operation Recently, the Association has frequently worked with the State Bank and maintained close relationships with international card organizations to facilitate and further promote card business development in Vietnam

The Bank Card Association should stand out to gather member banks to share information about card business activities, together build warning lists (Blacklist) to coordinate together to prevent and limit risks ro The Vietnam Bank Card Association should promote its role as a focal point for studying and issuing regulations for member banks in sharing information on card business activities, together developing warning lists ( Blacklist), coordinating action in preventing card fraud In addition, regular training courses to improve the qualifications of member banks' staff to raise awareness of risk prevention in this area

Investment in card business is an indispensable orientation and trend of commercial banks in the modern economy Over the past years, along with the process of development, international economic integration, Vietnamese financial enterprises, especially banks, have gradually implemented card business activities In addition to the undeniable advantages such as the benefits for cardholders, the card market also attracts idle capital from the population, provides short-term credits, reduces the amount of cash circulation in the international economy

This research on: “Strengthening card issuance and boosting income from card activities at Vietcombank ” has helped to handle below matters:

- Systematize a number of general issues regarding card issuance and card business at commercial banks Presentation of contents in card issuing and payment activities and factors affecting card business activities of commercial banks

- Research results of Vietcombank's card issuance and card business show that Vietcombank's achievements in card business are not commensurate with the development potential of the market and Vietcombank

- Provide practical solutions to enhance the issuance and increase revenue from card business at Vietcombank At the same time, the thesis also proposes a number of recommendations to create a favorable environment for card business activities in Vietnam in general and at Vietcombank in particular

Although many research efforts have been made, the costs of card business at Vietcombank have not yet been determined in detail as well as the amount of benefits gained from card activities for business activities has been quantified Other causes of the bank have not yet calculated the exact profit as well as the actual contribution from the card business to the bank's profits, so the thesis cannot avoid mistakes Therefore, I hope to receive the comments from teachers, experts in this field to continue to improve the topic

1 Tran Linh Chi (2013), Development of card business activities at commercial banks, master's thesis in National Economics University

2 Frederic S Morgankin (1995), Monetary - Banking and Financial Markets,

Science and Technology Publishing House, Hanoi

3 The State Bank of Vietnam (2007), Regulations on card issuance, use and payment issued under the Decision No 20/2007/QD-NHNN of the Governor of the State Bank of Vietnam, Hanoi

4 Joint Stock Commercial Bank for Foreign Trade of Vietnam (2019), Summary report on card business activity - Achievements and Strategy for 2016-2018 of Joint Stock Commercial Bank for Foreign Trade of Vietnam

5 Joint Stock Commercial Bank for Foreign Trade of Vietnam (2019), Report on development trend of payment services in the world and development orientation of Vietcombank

6 Joint Stock Commercial Bank for Foreign Trade of Vietnam (2019), Business process for card issuance, use and payment

7 Peter S Rose (2001), Commercial Banking Administration, Finance Publishing House, Hanoi

8 Nguyen Huu Tai (2007), Theory of Finance - Monetary, Statistical Publishing House, Hanoi

9 Nguyen Thi Thu Thao (2005), International payment operation, Finance

10 Hoang Tuan Linh (2003), Solutions to develop card services at Vietnamese commercial banks, doctoral thesis on economics

11 Tran Nguyen Linh (2013), Basic theory of card payment activities at commercial banks, https://voer.edu.vn/profile/288

Le Van Tu (2003), Commercial Banking, Statistics Publisher, Hanoi

APPENDIX Appendix 1: Card issuance procedures at Vietcombank

(Source: data provided by Vietcombank’s card center)

Step 1: Customers come to Vietcombank branches to apply for card issuance, register for card identification and submit a copy of ID card or other necessary documents