Developing digital payment in ho chi minh city development joint stock commercial bank (hdbank)

BANKING ACADEMY ADVANCED PROGRAM ============ GRADUATION THESIS DEVELOPING DIGITAL PAYMENT IN HO CHI MINH CITY DEVELOPMENT JOINT STOCK COMMERCIAL BANK (HDBANK) Student Linh Class K20CLCB Course 2017-2021 Student ID 20A4010347 Thesis supervisor Ph.D Nguyen Minh Phuong Hanoi, 2021 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014126222121000000 ACKNOWLEDGEMENTS First, I express my sincere gratitude to Associate Professor, Ph.D Nguyen Minh Phuong for allowing me to conduct this research under her auspices I am especially grateful for her confidence and the freedom she gave me to this work As a thesis supervisor, Ph.D Nguyen Minh Phuong supported me in all stages of this word I am extremely thankful and indebted to her for sharing her expertise, and sincere and valuable guidance and encouragement extended to me She always gave me constant encouragement and advice, despite her busy agenda Without coherent and illuminating instruction, this thesis would not have reached its present form I extend my sincere thanks to all members of the Faculty of Banking, and all those who contributed directly or indirectly to the thesis Thanks to all of my friends, my company for helping all the time However, because of limited Professional knowledge and lack of practical experience, the limit of the content of the research is inevitable, I hope to receive comments and further advice from teachers i DECLARATION I declare that this Graduation Thesis has been composed solely by myself and that it has not been submitted, in whole or in part, in any previous application for a degree Except where states otherwise by reference or acknowledgment, the work presented is entirely my own Hanoi, May 23th, 2021 Signature Nguyen Ha Linh ii Table of Contents ACKNOWLEDGEMENTS i DECLARATION ii ABBREVIATIONS vi LIST OF TABLES AND FIGURES vii INTRODUCTION Statement of the problem and rationale for the study Literature reviews Objectives Scope of the study Methodology Organization of the thesis CHAPTER 1: OVERVIEW OF DIGITAL PAYMENT 1.1 PAYMENT ECOSYSTEM IN THE DIGITAL ECONOMY 1.1.1 The concept and characteristics of the payment ecosystem in the digital economy 1.1.2 Practices and development trends of the payment ecosystem in the digital economy in Vietnam 1.2 DIGITAL PAYMENT METHODS 13 1.2.1 Concept and characteristics of digital payment 13 1.2.2 Digital payment methods 13 1.2.3 Benefits, risks and safety assurance in digital payments 18 CHAPTER 2: DIGITAL PAYMENT ECOSYSTEM AT HDBANK 22 2.1 CURRENT LEGAL REGULATIONS ON DIGITAL PAYMENTS 22 2.1.1 Government regulations 22 2.1.2 State Bank regulations 23 2.1.3 Regulations of HDBank 24 2.2 OVERVIEW OF HO CHI MINH CITY DEVELOPMENT JOINT STOCK COMMERCIAL BANK 30 2.2.1 Formation and development of Ho Chi Minh City Development Joint Stock Commercial Bank 30 iii 2.2.2 Operational scale of Ho Chi Minh City Development Bank 33 2.3 CURRENT SITUATION OF DIGITAL PAYMENT SYSTEM AT HD BANK 39 2.3.1 Targeting 39 2.3.2 Existing forms of digital payment at HDBank 41 2.4 ASSESSMENT OF HD BANK'S DIGITAL PAYMENT SYSTEM 47 2.4.1 Achievements 47 2.4.2 Limitations 49 2.4.3 Causes of limitations 50 CHAPTER 3: IMPLICATIONS AND RECOMMENDATIONS 53 3.1 DEVELOPMENT ORIENTATION OF DIGITAL PAYMENT 53 3.1.1 General direction 53 3.1.2 HDBank's digital payment development orientation 53 3.2 SOME RECOMMENDATIONS TO DEVELOP DIGITAL PAYMENTS IN VIETNAM 54 3.2.1 Recommendations to the Government 54 3.3.2 Recommendations to the State Bank 55 3.3 RECOMMENDATIONS TO DEVELOP DIGITAL PAYMENT AT HDBANK 56 CONCLUSION 58 REFERENCES 59 iv ABBREVIATIONS Number Short Form Long Form HDBank Ho Chi Minh City Development Joint Stock Commercial Bank ATM Automated Teller Machine mPOS Mobile POS system eKYC Electronic Know your Client EFTPOS Electronic Funds Transfer at Point Of Sale EDC Electronic Data Capture NFC Near Field Communication (NFC) technology EMV Europay, Mastercard, and Visa v LIST OF TABLES AND FIGURES No Figure 1.1 Title Representation of two payment bases in non-cash Page No payment Figure 1.2 Transaction value via ATM, POS/EFTPOS/EDC over the years Figure 1.3 Data of personal payment deposit accounts 10 Figure 1.4 The number of people using NFC contactless payment 12 methods from 2012 to 2018 grew strongly Figure 1.5 Number of bank cards in circulation 14 Figure 2.1 Governance model and management structure of 32 HDBank Figure 2.2 HDBank's total assets over the years 34 Figure 2.3 Equity of HDBank over the years 35 Figure 2.4 Capital mobilization over the years 36 Figure 2.5 Credit activities over the years 37 Figure 2.6 Car capital asecurity ratio in accordance with Basel II 38 standards Figure 2.7 Ratio of bad debts over the years 38 Figure 2.8 Profit after tax of HDBank 39 vi INTRODUCTION Statement of the problem and rationale for the study The payment function of money is developing with diverse and modern forms which plays an increasingly important role in the production and circulation of goods and services Digital payment with the advantages of speed, convenience, safety, and efficiency has helped accelerate the concentration and distribution of capital flows in the socio-economy, contributing to limiting illegal transactions strengthening state management, etc., are being paid special attention by the whole society Developing digital payment services requires the efforts of the whole society, but first of all, the efforts of the banking industry In recent years, along with socio-economic development, digital payment services at Vietnamese commercial banks have made significant changes: Service quality has been improved in terms of processing speed, accuracy, etc However, compared to other countries in the region and the world, digital payment services still have many inadequate factors, lacking in quantity, weak in quality and lack of systematic linkage, etc., thereby reducing the utility provided to customers and affecting the development policy of non-cash payment However, the online payment method in Vietnam has not developed as expected Vietnamese people still have the habit of using cash Up to 90% of card transactions are simply withdrawals at ATMs and only 10% are used to pay via POS From 2011 to now, cash usage has fluctuated between 11% - 13%, although in absolute terms the amount of cash in circulation has more than doubled As of the end of 2016, the proportion of cash in total means of payment was at 11.5% If considered over a long period, this rate has decreased from 23.7% in 2001 to 14.02% in 2010 and down to 11.5% at present Therefore, the Government has set a target that by the end of 2020, the proportion of cash in total means of payment will be less than 10% In addition, people's awareness of the conveniences that can be paid when not using cash is still limited This is a paradox because card issuance needs to go hand in hand with the development of a widespread payment infrastructure, not a race to increase card market share and realize cash withdrawal purposes Currently, Ho Chi Minh City Development Commercial Bank is considered as one of the pioneer banks in the development of digital banking - Happy Digital Bank and aims to grow non-cash payments The bank has developed and cooperated with many Fintech partners to launch useful digital payment tools for customers However, due to certain limitations remaining in the economic market in general, there are still many limitations in building non-cash payment solutions at this Bank Stemming from that fact, the topic "DEVELOPING DIGITAL PAYMENT IN HO CHI MINH CITY DEVELOPMENT JOINT STOCK COMMERCIAL BANK" was chosen as a research topic in my graduation thesis to assess the current situation and development potential of digital payment methods at HDBank, and at the same time help the bank have solutions to develop this new payment system Literature reviews In recent years, Information technology, communication, science technology, new technologies such as Internet, mobile phone, websites are developed in tremendous speed With rapid development over the years, the Internet has become a popular medium for communication, services and commerce (Narges Delafrooz et al., 2010) The Internet and e-commerce have changed the traditional buying method of consumers Consumers will no longer be limited in time and place, they can buy products and services anywhere and anytime (Hasslinger et al., 2007) Along with the development of information technology and digital has changed the business environment in the world, so business transactions also changed from cash transactions to electronic money transactions (Mohamad, Haroon and Najiran, 2009) Transactions between business partners continue to grow on the basis of ecommerce, electronic payment solutions appear to replace cash payment systems (Dennis, 2004) In the e-commerce environment, payment for the exchange of money in electronic form is called electronic payment, electronic payment is an integral part and the most important part of e-commerce, in general Electronic payment is used to pay for goods and services purchased online through the use of the Internet (Roy and Sinha, 2014) Martina and Sahayaselvi (2017) from India stated that the Information Technology (IT) has revolutionized the various aspects of our lives, particularly it has provided an easy way to go for digital payments and it will be a major form of payment replacing cash nowadays It is no coincidence that digital payment has become popular and developed as it is today This form of payment is considered a big turning point for manufacturers, customers and intermediary businesses According to Garadahew Warku (2010), all electronic payment methods have some characteristics such as: independence, mobility, anonymity, security, ease of use, transaction costs, convenience, control and traceability Electronic payment systems are beneficial for online sellers, because electronic payments allow them to transact their sales online anytime and anywhere instead of being confined to a single store; Reduce operational handling costs and at the same time save printing paper for receipts and invoices; Allowing customers and consumers to access the global market V Va Diep (2017), “Overview of electro ic pa me ts i Viet am” The a thor aims to introduce an overview of electronic payment, the concepts and benefits of electronic payment, besides the author presents electronic payment systems, payment infrastructure electronic and electronic payment methods in Vietnam The above advantages of electronic payment will be the advantages for electronic payment to survive and develop in the digital economy in the future In short, although the least developed in e-commerce, e-payment in Vietnam today has also had certain and outstanding changes Those changes have contributed significantly to the development of electronic payment systems in banks in particular and the development of e-commerce in general L Th Tra (2015), “Research o some forms of payment in e-commerce” This doctoral thesis aims to study some forms of payment in e-commerce, helping businesses have oriented documents when they want to build an online payment system to serve their business activities enterprise's online business Applying the research results to build, install and test the payment system via e-wallet including the following functions: Money transfer, payment, and top-up The topic studies