THEORETICAL BACKGROUND
Digital society
Digital transformation is a key force driving change in today's world, focusing on leveraging the latest technology to enhance existing processes rather than just the rise of Internet unicorns.
The global economy is undergoing a digital transformation as well, and it‘s happening at the fastest speed
The digital economy encompasses the economic activities driven by billions of daily online interactions among individuals, businesses, devices, data, and processes At its core lies hyperconnectivity, characterized by the increasing interdependence of people, organizations, and machines facilitated by the Internet, mobile technology, and the Internet of Things (IoT).
The digital economy is taking shape and undermining conventional notions about how businesses are structured; how firms interact; and how consumers obtain services, information, and goods
Professor Walter Brenner of the University of St Gallen highlights that the strategic utilization of data is revolutionizing business models, enabling the development of innovative products and services, streamlining processes, enhancing value, and fostering a new management culture.
TechCrunch highlights a fascinating trend in the digital economy, noting that leading companies like Uber, Facebook, Alibaba, and Airbnb have transformed traditional business models Uber, despite being the largest taxi company, owns no vehicles; Facebook, the most popular media owner, produces no content; Alibaba, the most valuable retailer, holds no inventory; and Airbnb, the largest accommodation provider, possesses no real estate This shift signifies a significant change in how businesses operate in the modern landscape.
In banking service, digital technology will change the way from the old to new, from low to fast and correct transactions.
Cash
Cash refers to physical currency, including banknotes and coins, and is classified as a current asset in bookkeeping and finance It encompasses currency and currency equivalents that can be accessed immediately or almost immediately, such as funds in money market accounts Cash serves as a reserve for payments during periods of negative cash flow and acts as a safeguard against financial market downturns.
1.2.1 The history of using cash
After the fall of the Western Roman Empire, Western Europe relied on coins, silver jewelry, and hacksilver as its primary forms of money for centuries In the early Middle Ages, Venetian merchants began using silver bars for large transactions and later introduced paper bills for payments through their bankers Marked silver bars were also utilized in regions where these merchants had established offices, including the Byzantine Empire and parts of the Balkans and Kievan Rus As the global economy evolved and silver supplies increased, particularly following the colonization of South America, larger coins emerged, leading to the creation of a standardized international currency in the 15th century: the Spanish coin of 8 reales, with its gold equivalent being the Venetian ducat.
Different coin types competed in various markets, allowing issuing rulers to gain additional income from seigniorages, which is the profit derived from the difference between a coin's value and its metal content Successful high-nobility coins were often imitated by lower nobility for similar financial benefits, although these imitations typically had lower weights, diminishing the original coins' appeal As feudal states unified into kingdoms, the imitation of silver coins decreased, but gold coins like the gold ducat and gold florin continued to circulate as trade coins based on weight rather than fixed values Colonial powers attempted to capture market share from Spain by issuing trade coins equivalent to Spanish silver coins, though with limited success.
In the early of the 17th century, English East India Company coins were minted in England and shipped to the East
During this period, the Madras mint was actively producing coins for the East India Companies, with the rupee serving as the primary currency in the company's Bombay and Bengal administrative regions.
In the 18th century, paper money emerged primarily for emergency use, gaining popularity in European colonies Significant issuances occurred in regions like Ceylon and the neighboring colonies of Essequibo, Demerara, and Berbice.
The introduction of paper money shifted the responsibility of inflation management to nation-states by enabling them to control the money supply, making the intrinsic metal value of coins less relevant From 1816 onwards, coins primarily became token money, although some large silver and gold coins remained in circulation until 1927 The impact of World War I led to a significant decline in the use of standard coins Despite this, standard gold coins, particularly British sovereigns, continued to be utilized in colonies and developing economies, while silver Maria Theresa thalers, minted in 1780, served as trade coins in East Asia until 1946 and possibly beyond.
Cash now constitutes a minimal portion of the money supply, primarily serving as a currency storage option for those avoiding other systems and facilitating small, convenient payments However, this function is increasingly being supplanted by electronic payment methods Research indicates that as debit card usage rises, the demand for cash diminishes, as merchants require fewer changes for customer transactions.
The circulation of cash has significantly risen in recent years, with the value of the United States dollar increasing by 42% from 2007 to 2012 Similarly, the pound sterling banknotes saw a 29% rise in value between 2008 and 2013 Additionally, the euro's circulation value grew by 34% from August 2008 to August 2013, partly due to its adoption in Slovakia in 2009 and Estonia in 2011, which accounted for 2% of this increase.
The concept of a cashless society, often perceived as futuristic, is gradually becoming a reality due to the influence of governments and major financial institutions Even those who critique traditional financial systems and government-backed currencies are supporting the transition away from cash.
But we‘re not yet there In addition to logistical challenges, we need to address several social issues before giving up on cash entirely
A cashless society significantly reduces crime rates, as cash transactions are often targets for theft, regardless of the amount Moreover, illegal activities such as drug trafficking, corruption, and money laundering frequently rely on cash to avoid transaction records, ensuring sellers receive payment without traceability.
Effective tracking of financial transactions can significantly reduce financial crime, as it becomes increasingly difficult to conceal income and avoid taxes with comprehensive payment records Additionally, the constant availability of fund sources makes money laundering a challenging endeavor.
Eliminating cash management can significantly reduce costs associated with printing, storing, and handling physical currency Businesses can streamline operations by avoiding the need to replenish cash supplies and deposit excess funds, making the management of large sums of money more efficient and secure Transitioning away from cash transactions may lead to a more modern and simplified financial process.
When traveling abroad, you often need to exchange for local currency; however, cashless transactions simplify payments between countries With your mobile device managing the process, you can avoid the hassle of currency conversion.
Disadvantages of a Cash-Free World
Depending on your perspective, going cashless might actually be problematic
Electronic payments can compromise your privacy, as your payment information may be exposed in unforeseen ways, despite your trust in the organizations managing your data In contrast, cash transactions enable anonymous spending and receiving of funds, safeguarding your financial privacy.
Hacking: Hackers are the bank robbers and muggers of the electronic world
In a cashless society, the risks increase if your account is compromised, as you lack alternative spending options Despite federal protections, individuals encounter considerable inconveniences and repercussions following a financial breach.
Types of cashless payment in the world
There are many types of cashless payment applied all over the world And basing on the condition of their technologies, each country has its own kind
RFID technology utilizes radio waves to monitor tags embedded with electronic data These small RFID tags can be affixed to wristbands, lanyards, or badges, allowing them to be scanned with specialized scanners or contemporary smartphones.
RFID technology is increasingly utilized at events, allowing attendees to use RFID tags as digital wallets for seamless payments on food, drinks, and merchandise, which can be topped up with credits prior to or during the event.
An RFID payment system allows attendees to effortlessly pay by presenting their wristbands to vendors, who can use a smartphone or dedicated scanner to process transactions This innovative payment method can complement traditional payment options or serve as the sole means of conducting transactions at events.
Mobile payment enables consumers to use their smartphones as digital wallets for purchasing goods and services Recently rebranded as Google Pay, Google Wallet, along with Apple Pay, has gained traction in markets such as the United States, Europe, and Australia.
China has experienced remarkable advancements in e-payments, particularly with the widespread adoption of QR-based mobile payment systems like WeChat Pay and Alipay In contrast, WhatsApp payments have recently been introduced in India, marking a significant development in the digital payment landscape.
Mobile wallets are becoming increasingly common among event-goers, leading to speculation about their potential as the standard for cashless payments However, their reliance on internet connectivity, which can be limited at remote festivals, suggests that they may not fully replace traditional payment methods in such settings.
Contactless credit cards from Visa and Mastercard are becoming increasingly popular among consumers, enabling instant transactions by simply scanning the card instead of the traditional swiping method.
Contactless cards and RFID wristbands offer quick and convenient payment options, but they have notable differences Like mobile phones, a significant limitation of these cashless payment methods at events is their reliance on online processing for credit card transactions, which can cause disruptions or delays during times of unstable connectivity.
The cheque is a traditional cashless payment method that is widely recognized It involves issuing a cheque for a specific amount to another party, who then deposits it into their bank The bank processes the payment through a clearing house, facilitating the transfer of funds.
Cheque transactions provide a reliable record of payment, serving as proof for both parties involved However, issues such as signature mismatches or insufficient funds can lead to cheque dishonor To mitigate these risks, consider utilizing alternative cashless payment methods.
A demand draft (DD) is a secure method of cashless transactions, ensuring safe payments as it is signed by the banker, which eliminates the risk of default However, both demand drafts and cheques require a visit to the bank for deposit, and the clearance process can take additional time.
1.3.6 Online Transfer- NEFT or RTGS
The third simplest method for cashless transactions is online money transfer through NEFT or RTGS, which requires an internet banking facility This method is significantly faster than traditional cheque or demand draft transactions, allowing users to transfer funds from anywhere with internet access.
E-wallet is the next cashless payment option E-wallet can be used to purchase products starting from grocery to airline tickets In order to use E- wallets customer and merchant, both require a smartphone with active internet connection The most popular example of E-wallet is PayPal Apart from PayPal, you can also use Payoneer, Transferwise, Skrill, and PayZa
To start using your E-wallet, link your credit or debit card to your E-wallet ID This convenient cashless method allows for easy fund transfers and online shopping.
UPI, or Unified Payments Interface, is a mobile payment system that facilitates various financial transactions directly from your smartphone It enables users to send and receive money seamlessly using a virtual payment address, eliminating the need to input bank details Merchants can register with banks to accept UPI payments, similar to how they would with a PoS machine, requiring them to maintain a current account with a bank for processing these transactions.
The examples of few UPI Apps are SBI Pay, ICICI Pocket, Axis Pay UPI App, Union Bank UPI App, PNB UPI, PhonePe, TranZapp etc
Cashless payment in Viet Nam
In Vietnam, where the technology platform is not high From observation in Agribank and other banks, I realize that some types that can be applied:
1.4.1 Customers have to appear to bank sites
A cheque is a printed document that facilitates payments directly from your bank account, serving as an alternative to cash In Vietnam, it is commonly utilized for withdrawing funds from the bank to meet cash payment needs.
An authorized payment, also known as a payment order, is a document used by individuals and businesses that contains essential details such as the payer's and receiver's information, the transaction amount, and the authorized signature along with the payer's stamp This document instructs the bank to transfer funds to the receiver's account based on the provided information.
Letter of credit: oversea payments or to other countries for goods and services
1.4.2 Customers do not need to appear in bank sites
Mobile banking and internet banking allow users to conveniently manage their finances through a mobile app, enabling seamless payments and secure identification verification to confirm account ownership.
- Master, visa and JCB card: are the products of banks which suppy the limitation of amound of money for you to make transations when buying goods and servies
QR code payment is a contactless method that allows users to make transactions by scanning a QR code with a mobile app This innovative approach serves as an alternative to traditional electronic fund transfers that rely on payment terminals By utilizing QR code payments, businesses can bypass the conventional infrastructure associated with electronic payments, such as payment cards, networks, terminals, and merchant accounts.
Consumers can easily make payments by scanning a merchant's QR code with their phones, entering the payment amount, and submitting the transaction This method offers enhanced security compared to traditional card-not-present payment options.
ATM card: is often used to withdraw money from ATM for individual payment purposes
E- Wallets: Grap Pay, Payyoo, Shopee… customer payment through the connection of Visa, Master Card and the Wallets
Internet Banking: using computer and internet with online accounts
Because using new technology to bank requires the innovation from the top and the whole system, I choose the scope of my thesis as the system of Agribank
Technology Platform, Inteligent Mobile device with wifi and 3G, users can make payments by themselves, is the way of my thesis
In this thesis, I concentrate on E-mobile banking, QR Pay and Credit Card in Agribank
1.5 Cashless payment from the view of Vietnam Government:
The Vietnamese government is prioritizing cashless payment systems, as evidenced by the Prime Minister's issuance of Decision No 2545/QD-TTg on December 30, 2016, which approved the Scheme for the Development of Cashless Payment in Vietnam for the 2016-2020 period.
The content of this decision has the following notes:
1.5.1 Overall objectives a/ To make a marked progress in non-cash payment in the national economy, thereby, changing the habit of using payment instruments in society, reducing cash payment-related social costs and the ratios of cash in circulation to the gross domestic product (GDP) and of cash to total payment instruments; b/ To ensure security, safety and operational effectiveness of payment and settlement systems, and cashless services and payment instruments; to create effective mechanisms to protect users of cashless payment services; c/ To promote the use of e-payment and reduce the use of cash in payment transactions between individuals, enterprises and governmental agencies; d/ To improve the effectiveness of the management and supervision by state management agencies, and make payment activities in the economy and personal incomes transparent, thus contributing to the prevention and combat of corruption, negative practices and economic crimes
1.5.2 Specific targets a/ By the end of 2020, the ratio of cash to total payment instruments will be below 10%; b/ To strongly develop card payment using card readers at points of sale (POS); to gradually increase the number and value of card payment transactions using card readers By 2020, the whole market will have over 300,000 card readers installed at POS to process around 200 million transactions per year; c/ To promote e-payment in e-commerce, strive to achieve the targets set out in the master plan on development of e-commerce during 2016-20 (100% of modern supermarkets, shopping malls and distribution centers will have card readers which enable consumers to make non-cash payments when purchasing goods; 70% of electricity, water, telecommunications and communications service providers will accept non-cash payment of charges; 50% of individuals and households in major cities will use non-cash payment instruments in their shopping and consuming activities); d/ To concentrate efforts on developing a number of new and modern payment instruments and forms in rural, remote and deep-lying areas, thus contributing to promoting financial inclusion; to drastically increase the number of people having access to payment services, and increase the percentage of people aged 15 years or older having bank accounts to at least 70% by the end of 2020
1.5.3 Solutions: a Improving the legal framework, mechanisms and policies b Upgrading and expanding the interbank e-payment systems to meet the needs of the economy and the process of international economic integration c Building and developing retail payment systems and services d Promoting e-payments in the governmental sectors and public administrative services e Renovating the securities clearing and finalization system f Innovating the payment and finalization systems on the interbank monetary and foreign-currency market h Enhancing management and supervision of international payments and money transfers g Supervising and applying standards to payment systems according to international criteria and standards k Stepping up information, communication, training, guidance and customer protection in non-cash payment l Enhancing coordination to promote non-cash payment
The government's initiative to enhance cashless payment systems is exemplified by Decision 2545, which provides a framework for Agribank and other commercial banks This decision aims to promote not only profitability and efficiency but also the overall development of society.
STATUS OF CASHLESS PAYMENT IN VIETNAM
Introduction of Agribank Vietnam
Since its inception in 1988, Agribank has been a pivotal force in Vietnam's rural credit market, significantly contributing to the growth and success of the nation's vital agricultural sector.
The Vietnam Bank for Agriculture and Rural Development (Agribank) stands as the only fully state-owned commercial bank in the country With a robust development trajectory, Agribank consistently ranks as Vietnam's largest bank by total assets, extensive operating network, and substantial customer base The bank commands a significant market share, accounting for 16% of the total funding sources and outstanding loans within Vietnam's banking system.
As of December 31, 2017, Agribank's total assets amounted to approximately VND 1,200 trillion, with mobilized capital nearing VND 1,100 trillion The bank's outstanding loans to the economy reached nearly VND 900 trillion, with 73.6% allocated to agriculture and rural development Additionally, Agribank reported a record pre-tax profit of VND 5,018 billion, reflecting a 19.9% increase compared to 2016.
Agribank has been pivotal in Vietnam's economic development, particularly within the agricultural sector and rural regions, where 70% of the workforce is engaged in agriculture and 80% of the population resides The agricultural sector contributes approximately 22% to the nation's GDP and constitutes 30% of its export turnover Over nearly 30 years, Agribank has maintained its focus on investing in these areas, solidifying its role as a leading financial institution providing credit and financial services to Vietnam's agricultural and rural sectors Notably, Agribank's loans for agricultural and rural development represent 73.6% of its total outstanding loans and account for 50% of the banking sector's total loans in these areas.
Agribank plays a crucial role in Vietnam's economic development by maintaining a stable liability structure, with 80% of its funds sourced from public mobilization This financial stability supports various national programs and agricultural development initiatives, including lending for the food industry, aquaculture, coffee, husbandry, rubber, pepper, and cashew cultivation Additionally, Agribank contributes to the national targeted program for New Rural Development, implements support programs to mitigate agricultural production losses, and offers loans for social housing The bank also pioneers lending models that enhance agricultural value chains, from production to consumption, and promotes the adoption of high-tech applications in agriculture.
Agribank's international partnerships have significantly enhanced Vietnam's agricultural and rural sectors, leading to improved economic structure, job creation, infrastructure development, and increased income for customers, thereby stabilizing socio-economic conditions in rural areas Renowned for its expertise in rural credit, Agribank is the preferred partner for international donors such as the World Bank, Asian Development Bank, and European Investment Bank, facilitating the successful implementation of various credit projects across the country.
Agribank actively participates in various international associations, including the World Savings and Retail Banking Institute (WSBI), the Asia-Pacific Rural and Agricultural Credit Association (APRACA), and the International Agricultural Credit Confederation (CICA), demonstrating its commitment to global collaboration in the agricultural finance sector.
Agribank has prioritized the integration of high-tech solutions in its banking operations, becoming the first bank in Vietnam to successfully implement a core banking project funded by the World Bank, which modernized its customer accounting and payment system (IPCAS) With a strong technological foundation, Agribank has made significant advancements in governance and management, along with the development of innovative banking products and services.
Agribank aims to strengthen its pivotal role in Vietnam's agricultural and rural monetary and credit markets in the coming years The bank will offer a diverse range of products and services tailored to the unique characteristics of different regions, all while upholding its status as the largest commercial bank and financial institution in Vietnam Agribank is dedicated to supporting the country's industrialization, modernization, and overall development efforts.
2.1.2 Business strategy in the 2016-2020 period with a vision to 2030
In 2017, Agribank marked a pivotal year in its 2016-2020 business strategy, aiming for a vision that extends to 2030 The bank's objectives include solidifying its status as Vietnam's leading state-owned commercial bank, leveraging modern technology and advanced management practices while ensuring robust financial health Agribank is committed to achieving safe, efficient, and sustainable growth, while continuing to play a crucial role in providing financial and credit services, as well as development assistance for agriculture and rural regions.
Agribank is committed to maintaining a secure operational framework while achieving its objectives and fulfilling the political responsibilities set by the Party and the State The bank aims to positively influence monetary policy, alleviate challenges in the business environment, and enhance the investment climate, with a particular focus on fostering economic growth in agriculture and rural development.
Agribank, the largest commercial bank in Vietnam, boasts an extensive network of 2,233 branches and transaction offices across the country, all connected online In 2010, the bank expanded its reach internationally by opening its first branch in the Kingdom of Cambodia.
Agribank plays a pivotal role in the rural and agricultural financial market by expanding its network to districts and communes, ensuring easy and secure access to bank loans for customers nationwide With a diverse customer base of 60,000 businesses, 4 million production households, and 10 million individual clients, Agribank leverages its extensive network to enhance competitiveness amid the challenges of market integration.
To cater to the import-export payment needs of both local and international customers, Agribank has strategically expanded its correspondent relationships with banks worldwide Currently, Agribank boasts partnerships with 837 correspondent banks across 88 countries and territories Notable agreements include collaborations with Agricultural Promotion Bank (APB), Phongsavanh Bank in Laos, Acleda Bank in Cambodia, and major Chinese banks such as Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB), and Industrial and Commercial Bank of China (ICBC), facilitating beneficial cross-border payment solutions for customers and all involved parties.
Apart from 2.233 branches and transaction offices, as a leading commercial bank in Viet Nam, Agribank has 6 subsidiaries: Financial Leasing Company
Agribank operates through several key subsidiaries, including Agribank Services One Member Limited Liability Company (ALC 1), Agribank Gold Joint Stock Corporation (AJC), Agribank Securities Joint Stock Company, Agribank Insurance Joint Stock Corporation (ABIC), and Agribank Debt Management and Assets Exploitation Limited Company (AMC).
Agribankers always have the special cultural values with passion for work and dedication to the development of the Agribank for 30 years until now The characters are as below:
Honesty: is interpreted as per someone‘s thought, something has existed and happened, or integrity, truthfulness (an honest person or a person with honesty)
Products of cashless payment
Agribank offers Visa/Master debit cards that enable individual cardholders to access their payment account balance and overdraft limit for various transactions These cards can be used to purchase goods and services, withdraw cash at ATMs, and make online payments worldwide Agribank provides two types of debit cards: Debit Classic and Debit Gold.
With this card, customers enjoy numerous benefits, including cash withdrawals and advances at ATMs and EDC/POS terminals worldwide, allowing transactions in VND in Vietnam and various currencies abroad They can conveniently pay for goods and services online or at physical locations, as well as perform account balance inquiries, change PIN codes, transfer funds, and make deposits Additional features include obtaining account statements, paying bills, purchasing prepaid cards at ATMs, and utilizing Mobile Banking for balance changes, fund transfers, mobile recharges, and payments for mobile phone contracts through Vnmart e-pocket.
Customers with a stable monthly income can request an overdraft limit of up to VND 30 million for a maximum term of 12 months Additionally, they receive a complimentary card that offers worldwide accidental insurance coverage of up to VND 15 million per card, provided they meet Agribank's conditions Customers also benefit from a demand interest rate of 0.2% per year on their payment accounts, while their account and personal information remain confidential.
There are some conditions for issuance for individuals that want to own a card
Agribank issues card for main card holders and also for supplementing card holders:
Customers are Vietnamese citizens or foreign residents living in Vietnam with duly civil capacity and civil responsibility as stipulated by the law They have a payment account opened by Agribank
Customers agree to comply with regulations of Agribank international cards issuance, management, utilisation and payment
Customers seeking an overdraft with Agribank must sign a contract and demonstrate stable income to ensure debt repayment within the overdraft period Additionally, they are required to utilize payment accounts at the Agribank branch where the overdraft application is submitted for receiving salaries and social allowances.
Main card holders may be issued up to two (02) supplement cards
Customers who possess the necessary legal capacity, as defined by applicable laws, or those aged between 15 and 17 years old, may use the card with the consent of their legal representatives.
Customers agree to comply with regulations of Agribank international cards issuance, management, utilization and payment
Supplement card holders are guaranteed by main card holders for all liabilities arising with regard to the card use
For issuance of the card, the bank needs some personal information documents from customers:
Customers fullfil the Application form for banking service use and copy their
To apply for an overdraft, you need to provide an ID card or passport along with a recent 3x4 cm photo taken within the last six months Additionally, you must sign the card use contract and submit a salary or social allowances certificate from the relevant organizations.
Card transactions are subject to a maximum limit, which varies between ATM withdrawals and EDC/POS payments, ensuring the safety of the cardholder Customers can process payments within the specified allowable amount Below is a table detailing the daily transaction limits.
At ATMs At EDC/POS
Payment for goods and services/day/car d
2.2.1.2 Visa/Master International credit cards
Agribank's Visa and MasterCard credit cards provide individual clients with global payment acceptance, offering features like overdraft facilities, advance purchasing of goods and services, and post-payment options, ensuring convenience for clients anytime and anywhere.
There are 3 types of Visa/Master credit card:
- Gold (Visa/MasterCard Credit Gold)
With this kind of card, the usages are variable and can satisfy customer needs
Customers can conveniently withdraw cash at ATMs and EDC/POS terminals worldwide, using VND in Vietnam and foreign currencies elsewhere They can also pay for goods and services via EDC or online, book accommodations, flights, and travel tours, inquire about account balances, change PIN codes, and enjoy complimentary worldwide accidental insurance coverage of VND 15 million for Standard/Gold cards and up to USD 5,000 for Platinum cards, provided Agribank conditions are met Additionally, customers benefit from competitive credit card interest rates and a 45-day interest-free period on payments for goods and services, as long as outstanding loans are settled by their due dates.
To obtain a card for managing client information, individuals must meet specific conditions The card is issued to both the primary cardholder and any supplementary cardholders.
Main card holders at Agribank must be Vietnamese citizens or foreign residents with legal capacity and a valid payment account Foreigners are eligible if their residency or work period in Vietnam extends at least 45 days beyond the card's effective period Applicants must demonstrate stable and legal income, provide a loan guarantee, and comply with Agribank's regulations for international card issuance and management Additionally, they must sign a card usage contract with Agribank Each main card holder can obtain up to two supplementary cards.
Supplement card holders must possess legal capacity as defined by applicable laws, or be aged between 15 and 18 with parental consent for card usage They are required to adhere to Agribank's regulations regarding the issuance, management, and payment of international cards Additionally, all liabilities associated with the use of the supplement card are guaranteed by the primary cardholder.
For the issuance of card, there are some easy procedures for customer at the beginning
To apply for a card issuance at Agribank, customers need to complete an application form and provide a copy of their ID card or passport, along with a recent 3x4cm photo taken within the last six months Additionally, applicants must sign a card usage contract and submit loan guarantee documents or proof of salary and social allowances from authorized organizations All necessary forms are readily available for customers.
Credit lines for different types of cards vary based on individual needs, creditworthiness, and monthly income Customers have the flexibility to utilize less than the maximum limit associated with each card type.
500,000,000 Customer can take the advance cash within the limitation: equivalent to a half (1/2) of granted credit line
Limit for payment of goods and services: equals to the remaining granted credit limit minus advance cash limit already used and not yet repaid in the period
2.2.1.3 International master cards of Agribank for business
Agribank offers the internationally recognized MasterCard to individual customers, enabling them to make global payments seamlessly This credit card provides convenient features such as cash advances and the ability to purchase goods and services both in advance and through post-payment options, enhancing the overall experience for clients.
International Master Card of Agribank has only one credit limit, Gold Credit (MasterCard), with the image above
The situation of cashless payment in Agribank in recent years
The author analyzes Agribank Vietnam's 2016 and 2017 Financial Statements, audited by Ernst & Young Global Limited, to gain insights into the bank's operations This examination highlights Agribank's strategic shift towards enhancing cashless payment services, including card transactions, E-Mobile banking, and QR Pay, in response to evolving market demands.
Derivatives and other financial assets
Liabilities Debts owed by Government and State Bank
Revenue from loan interest 80.266.508 68.167.713 Expense from deposit interest (46.245.007) (39.829.781)
Net income from loan activities 34.021.501 28.337.932
Net income from service activity 3.061.853 2.580.635
Net gain from foreign exchange activity
Net loss from trading securities (1.321) (152.563) (Loss)/Gain from investment securities trading
Net gain from other activities 5.072.477 4.340.048 Net gain from capital contribution 127.569 47.256 and shre purchase
Net operating profit before provision for credit loss
Notes to the Financial Statement Interest Income
Interest from investment in debt securities investment
Interest income from finance lease 168.308 58.295
Other income from credit activities 1.783 3.097
Cost of issuance of valuable papers 1.265.643 1.002.605 Cost of interest on financial lease of fixed assets 17.097 22.264
Income from payment services 3.423.577 2.828.036 Income from the treasury service 165.931 162.528 Income from entrusted services and agents 27.204 2.393
Postage and telecommunications expense 122.027 116.627 Counting and storage cash expense 240.943 234.132
Expenses for agency and agents 7.626 85 consulting services expense 10.019 9.398 insurance services expense 341.135 348.871
Net income from service activities 3.061.853 2.580.635
Comments and analysis from the financial statement:
The abbreviated financial statements above have pointed out the characteristics of Agribank's business
Agribank has experienced steady growth in total assets during 2016 and 2017, with a significant focus on customer lending and securities trading The bank primarily relies on resident deposits for its debt structure, indicating that capital mobilization and loan issuance are its core activities However, fixed assets constitute a minor portion of its total assets due to limited investment in technology and innovation, primarily partnering with entities like VN Pay for technology services The majority of Agribank's revenue, approximately 80%, is derived from loans, while banking services contribute only 10-15% Despite the high revenue from lending, the bank faces considerable profit erosion due to a substantial provision for bad debts, totaling 18.5 trillion dong in 2017 The sale of bad debts to VAMC and their conversion into 5-year bonds due in 2018 pose additional risks, as these debts have not yet been adequately provisioned or cleared, making the current lending business quite precarious for Agribank.
Income from payment services has steadily increased from 2016 to 2017, representing a significant portion of total service revenues This sector is characterized by minimal risk and requires no provisioning, contributing to its sustainability However, despite its growth, payment services still account for a relatively small share of overall revenue.
Agribank's financial performance lags behind competitors like Vietcombank, Viettin Bank, and BIDV, which reported net profits ranging from VND 8-10 trillion in 2017 The bank's return on assets (ROA) is notably low due to its heavy focus on lending and capital mobilization, coupled with insufficient risk management and market trend forecasting Additionally, Agribank has experienced a decline in equity, particularly in major cities such as Hanoi and Ho Chi Minh City, as well as in western provinces.
In conclusion, Agribank should prioritize mobilizing activities in major cities while reallocating capital for lending in rural areas By focusing on banking services in urban centers, Agribank can leverage its extensive customer base and network across 64 provinces to boost service usage This strategy not only generates stable and sustainable income but also aligns with the practices of leading banks in developed countries.
SOLUTION
Recommended solutions to the Government,
Agribank is a 100 %state-owned bank, a tools for Government in operation the economy, especially in rural development, so Agribank has the task of giving opinion and Advisory services to Goverment
3.1.1 To Issue a number of policies to encourage electronic payment
Besides Decision No 2545/QD-TTG dated 30/12/2016, the Government should implement many detail documents for each kind of administrative field
One of the solutions to achieve the above objective is to study and implement some administrative measures in combination with economic incentives to develop electronic payment
To promote electronic payment in tax collection and various transactions, it is essential to establish effective mechanisms and policies This includes facilitating e-commerce, streamlining the collection of fees and administrative processes, and enabling payments for regular services such as electricity, water, and telecommunications Additionally, the deployment of advanced electronic payment technologies should be prioritized, alongside encouraging retailers to adopt these payment methods and assist customers in utilizing electronic payments during their purchases, thereby highlighting the advantages of electronic transactions over cash payments.
The article advocates for the establishment of effective mechanisms and policies regarding payment service charges to promote non-cash transactions among organizations and individuals It emphasizes the need to adjust transfer fees and cash withdrawal charges at credit institutions and foreign bank branches by raising cash transaction fees while lowering non-cash payment fees Additionally, it calls for a reduction in inter-bank payment transaction fees and outlines regulations for the fee structure and distribution by payment system operators to ensure competitive pricing, fair market practices, and to prevent monopolistic behaviors.
To enhance non-cash payment systems, it is essential to develop and implement various mechanisms and policies that strengthen payment oversight, ensure proper invoicing for goods and services, and combat tax evasion Additionally, establishing legal frameworks for electronic vouchers, along with clear guidelines for their usage and preservation, is crucial for fostering a secure and efficient payment environment.
To enhance the management of payment accounts, it is essential to review and update regulations governing their opening and use This includes ensuring that businesses and individuals engaged in commercial activities are required to open payment accounts with authorized payment service providers for transaction purposes Additionally, regulations should be established to facilitate non-cash payments for real estate and valuable assets, such as automobiles, motorbikes, and boats.
3.1.2 Promote e-payment in public administrative services
The initiative aims to enhance e-payments within the government sector and public administrative services by improving data exchange solutions among financial agencies, including the State Treasury, General Department of Taxation, and General Department of Customs This enhancement will facilitate electronic coordination of state budget revenues, particularly in electronic tax collection and payment, thereby supporting efficient tax management The goal is to create a more favorable environment for the government, businesses, and citizens, enabling diverse and flexible electronic payment options for tax collection and payments.
Implementing POS and mPOS systems enhances electronic payment methods for administrative and public service units, facilitating the collection of fees for various services, including health, education, and transportation This initiative aims to promote the use of electronic payment products and services to streamline public-duty expenditures for agencies utilizing state funds.
Enhancing the disbursement of social benefits and pensions through electronic payment systems, establishing payment accounts for beneficiaries, and expanding access to cash points at post offices, alongside the introduction of modern, convenient, and affordable payment methods, is essential for improving financial accessibility.
To enhance payroll efficiency and income distribution, it is essential to promote the use of non-cash payment methods among officials and employees Encouraging direct transfers via ATMs, utilizing POS systems, and adopting modern payment services will facilitate this transition and streamline financial transactions.
Solutions for implementation by Agribank
3.2.1 Develop cashless payment in rural areas
Based on insights from the customer interview in Chapter 2, it is evident that Agribank enjoys a strong base of loyal customers in rural areas Furthermore, the increasing use of mobile phones in these regions is noteworthy, as it grows year by year To capitalize on this trend, I propose the implementation of cashless payment solutions tailored for rural communities.
To improve retail payment systems, it is essential to enhance card payment services, establish an Electronic Clearing System for retail transactions (ACH), optimize banks' internal payment systems, and expand e-payment services for e-commerce Additionally, promoting non-cash payment solutions in rural areas will further contribute to a more efficient and accessible payment landscape.
To enhance card payment services, it is essential to focus on both the quantity and quality of POS networks, ensuring their efficient arrangement This includes the development of shared POS networks and mobile payment solutions (mPOS), as well as increasing the acceptance of card payments in online transactions Additionally, extending these services to medical facilities, hospitals, and schools will further improve accessibility and convenience for users.
Modern payment technologies are evolving to offer cost-effective solutions that prioritize speed, simplicity, and convenience This advancement encourages the development of versatile financial instruments such as multi-purpose, multi-functional, non-physical, and contactless cards These innovative payment methods facilitate various transactions, including toll collection, fuel purchases, bus ticketing, taxi fares, and social insurance payments, enhancing the overall user experience.
Promote the development and accessibility of modern payment methods, such as mobile and digital devices, to facilitate non-cash transactions in rural, remote, and island areas, as well as for individuals without bank accounts Leverage existing networks, including institutional credits, postal services, and intermediary payment providers, to enhance financial inclusion Implement a comprehensive financial promotion plan across Vietnam to support these initiatives.
3.2.2 Recruiting and training the staff to meet the increasing demands of the current market, from the perspective the service providers
Agribank emphasizes the recruitment of relatives, reflecting its 30 years of operation primarily in rural areas where community ties are strong This approach fosters a friendly environment where individuals understand and support one another By prioritizing the hiring of family members, Agribank allows children of current employees to receive preferential treatment during entrance exams and provides opportunities for them to succeed their retired parents, reinforcing the bank's commitment to community and familial connections.
Advantages: Following the tradition of their parents, the elements of the profession were spread from a small-family scale to their descendants of a bigger one
The lack of formal banking education and financial expertise among Agribank's descendants can lead to inefficiencies and mismanagement, resulting in a potential waste of social resources and recent operational faults within the institution.
Agribank should select good staff in the society, building a fair examination system to select talented people, gradually make the change in the image, human perception of Agribank VietNam
Agribank staff occasionally exhibit a lack of enthusiasm and attentiveness toward customers, primarily due to ineffective application of KPI indicators, inadequate training services, and insufficient staff assessments These factors significantly influence the attitude and behavior of staff in their interactions with customers.
Enhancing E-Mobile Banking services through advanced technology involves raising transaction limits and streamlining initial registration processes These improvements aim to provide customers with a quick and convenient banking experience, eliminating cumbersome and time-consuming procedures.
The current daily transaction limit of 25,000,000 VND at Agribank is insufficient to meet user demands; an increase to approximately 1,000,000,000 VND is recommended While initial registration should occur at Agribank's transaction office, subsequent service modifications should be facilitated online or via phone To ensure customer identification, employees can verify personal information through targeted questions.
Eliminating the concept of original branches, Agribank is establishing uniform transaction offices that operate under a cohesive national system This initiative allows customers to access services at any Agribank location, promoting convenience and consistency across the network.
To enhance user experience and minimize system errors, it is essential to separate QR Pay services from E-Mobile Banking Apps by creating two distinct applications This separation will facilitate broader promotion and accessibility for users, ensuring that each service can be effectively marketed and utilized without complications.
Carrying out extensive advertising and propaganda programs throughout the country for people to understand and use
To enhance retail banking, it is essential to streamline the credit card application process, making it more accessible and user-friendly for target customers By simplifying card issuance procedures, we aim to foster customer prosperity and satisfaction.
Opening credit cards at Agribank is challenging due to stringent requirements such as credit appraisal and income verification, as the bank is cautious about potential bad debts associated with mortgage loans To improve the credit card issuance process, Agribank should adopt a more flexible approach by designating local branches to oversee the credit and financial status of customers in their regions, allowing for informed decisions on issuing new cards or halting issuance when necessary.
3.2.4 Comprehensive solutions and customer classification 3.2.4.1 Focus on the Gen Y customers segment
Generation Y, born between 1982 and 2000, represents over 25% of the global population, with significant regional distribution: 18% in Asia, 20% in Africa, 15% in North America, 16% in Oceania, and 18% in Latin America As this generation continues to mature, they are poised to become a dominant market force, driving global economic growth in consumption, financial services, savings, and investment over the next decade.
Transaction fee for using international card
TRANSATION FEE APPLIED FROM 12/5/2018 (Based on Deciosion 1545/QĐ-NHNo-TCKT date 13/9/2017 of Agribank
Standard 100.000 VND/each 100.000 VND/each Gold 150.000 VND/each 200.000 VND/each
Standard 50.000 VND/each 50.000 VND/each Gold 75.000 VND/each 100.000 VND/each
Platinum NA 500.000 VND b Supplement main card
4 Card issuance by Agribank and transact in Agribank’s
ATM/EDC (on-us) a Transact at ATM
Withdraw/ Advance cash 1.000 vnd/transact 2% in total Min
20.000vnd/transact Transfer money within
0.3% in total Min 3.000vnd/transact
No bill payment print free
Withdraw with code 10.000 VND/transact 10.000 VND/ transact
Renew Card Fee free free
Register and cancel service free free
Credit card payment fee free free
Deposit money fee free free
Transfer money to saving account
Payment bill fee free free b Transaction in POS fee
POS in Agribank transaction site
Withdraw/ cash advance in branch differ from open account branch:
0,03% in total amount; min 5.000 VND/GD; max 500.000 VND/GD
- in the opening account bank: free
2% in total amount; Min 20.000 VND/ transact
0,03% in total amount; Min 3.000 VND/GD; Max 3.000.000 VND/GD
Balance inquiry 500 VND/transact 500 VND/transact Print Statement 500 VND/transact 500 VND/transact c Agribank Card transact at other bank (not on-us)
- outside Vietnam boundary 4% in total; min 50.000
4% in total; min 50.000 VND/trans
In Vietnam Boundary: 4% in total; min 50.000
VND/GD outside Vietnam boundary: 6% in total amount; Min 50.000 VND/GD
In Vietnam Boundary: 4% in total; min 50.000
VND/GD outside Vietnam boundary: 6% in total amount; Min 50.000 VND/GD
10.000 VND/ tran Payment bill and service Free Free
The fees for various services include a confirmation request from the cardholder at 80,000 VND each, a complaint fee of 50,000 VND each, and a pin change request at 20,000 VND each Additionally, there is a transfer fee for foreign currency transactions set at 2% of the total amount.
Payback card due to ATM hold
At Agribank’s ATM 30.000 VND/each 30.000 VND/each
In other bank’s ATM 100.000 VND/each 100.000 VND/each Change credit limitation/Overdraft level
N/A 50.000 VND/each Unlock card fee 10.000 VND/each 10.000 VND/each
Delay payment fee N/A 3% in total amount;
Internet/ Moto service fee 30.000 VND/each 30.000 VND/each
Appendix 2: E- Mobile Banking Service Fee
+ Transaction under 1.000.000 VND: 1.000 VND/GD
+ From1.000.000 VND to under 10.000.000 VND: 2.000 VND/GD + Above 10.000.000 VND: 3.000
2 Inter- bank 0,05% of total amount; min 8.000
Table of 10 questions designed for the study of five factors affecting payment services:
1 MD: Purpose of using payment service of customers
2 TN: the income of customers
3 ML: the network of ATM and POS
4 AT: The safety level while using payment service
1 Purpose when you use E-mobile banking, international card and QR Pay a Cash withdraw b Purchase goods ans service at supermarket c Online payment d All e Others
2 From which channel you know Agribank payment service? a Internet, newspaper, magazine b My friend and relative c At Agribank site when I visit
3 How much is your monthly income? a 5-10 million b 10-20 million c over 20 million
4 Please let me know your level of satisfactory about banking services with criteria below:
5 What are the troubles you meet when using Agribank payment services?
Satisfy Not satisfy Completely dissatisfied
Many utilities Competitive fee Wide ATM, POS network
Promotion news updated frequently Agribank staff are polite and enthusiastic to answer customer complaints Agribank transaction sites are very beautiful and comfortable Card issuance and service register quickly
Never Rarely Sometimes Usually ATM ran out of money
Deduct money in account without reason
Queries are not adequately explained by the bank teller
6 According to you, 8.800 VND fee for each transaction with interbank tranfer a Reasonable b Unreasonable c Should not charge fee
7 For international card, please evaluate the level of importance of these criteria:
Not Important Normal Important Interest Rate
Issuance and annual fee Other fees (cash advance, delay clear payment fee) Promotion and incentive included Customer Service Confidential Way to connect with bank Others
8 Please evaluate the quality of services when you make transaction with Agribank
Completely Satisfy Satisfy Normal Fast, Accurate
Service Agri Staff Uniform polite
When evaluating the quality of services at your regularly visited branch or transaction office, please rate it on a scale from 1 to 5, with 5 being the highest score Your options for rating are: a 5, b 4, c 3, d 2, and e 1.
Simple and fast procedure Customer service careful (Contract Center, Promotion and gift
AGR's website interface is easy to use and effective
Many channels of communication between customers and AGR