Payment cards in viet nam the case of acb,graduation thesis

Chapter 1: INTRODUCTION

Rationale

The sustainable development of banks heavily relies on the integration of Information Technology in their operations As science and technology rapidly advance, banks must implement effective solutions that not only drive their growth but also enhance customer service, as emphasized by Nguyen Van Giau, the former governor of the State Bank of Vietnam.

In recent years, the rise of science and technology has made payment cards increasingly essential in modern society These cards possess two key features: they benefit from network externalities, gaining value as more merchants accept them, and they are offered by thousands of banks and firms worldwide to millions of cardholders and merchants Payment cards have evolved beyond simple cash withdrawal tools into multifunctional instruments that provide easy access to various banking services Their primary functions include making payments for goods, withdrawing cash, transferring funds, paying bills, and facilitating online purchases To meet customer demand, banks and service providers are increasingly focused on enhancing the utilities associated with card services.

Along with the implementation of traditional services, banking operations have a tendency towards the powerful development of modern products and services, in an

Le Thi Thanh Huyen highlights the challenges faced by banks in providing optimal services amidst fierce competition from well-established foreign institutions with significant financial resources and expertise To thrive in the domestic financial market and gradually expand into regional and international arenas, banks must implement effective strategies and solutions to boost their competitiveness and strengthen their market position.

Asia Commercial Bank (ACB) is adapting to the essential trend of enhancing its card payment system by focusing on diverse, professional, and convenient products tailored to customer needs To achieve its objectives and compete effectively with other banks, ACB is expanding its network, diversifying payment card offerings, and improving service quality and staff interactions The bank aims to position itself among the top retail banks in Vietnam while also seeking growth in other regional markets Additionally, ACB is working to strengthen its competitiveness, prestige, and reputation within the international financial market.

To enhance customer satisfaction, it is essential to evaluate the quality and current status of bank card payments at ACB Consequently, I have chosen to focus my graduation thesis on “PAYMENT CARDS IN VIETNAM – THE CASE OF ACB” to explore effective solutions for improving service quality.

Research Objectives

This study aims to address key theoretical aspects of payment cards, specifically evaluating the performance of payment card services at ACB It also seeks to analyze the bank's business operations related to payment cards and offers recommendations to enhance the promotion of these services.

Le Thi Thanh Huyen – ATCC/K13 Page 3

Scope and Subject of the study

Subject of the study: theoretical and practical issues related to developing card payment services at ACB

Scope of the study: Due to the time and conditions are limited, this study mainly focuses on researching the development of card payment services at ACB in the period

2009 – 2013 as well as recommending certain solutions.

Research Methods

The thesis has been applied some research methods, including Systematization,

Synthesis, Comprehensive analysis, Comparison, Statistics and Interpretation, determined to shed light on the issues raised in this research.

Research Questions

To achieve the above objectives, three research questions are addressed in this study as follows:

Question 1: What are characteristics, classifications, functions and benefits of payment cards?

Question 2: What is the current background of payment card services at ACB?

Question 3: What are possible solutions to improve payment card services at ACB?

Research Structure

In addition to lists of abbreviations, tables, figures, references, the main content of the thesis includes 5 chapters as follows:

Chapter 2: Theoretical framework of payment cards

Chapter 3: Current background of payment cards at ACB

Chapter 4: Suggested solutions and recommendations to enhance payment card services at ACB

Chapter 2: THEORETICAL FRAMEWORK OF PAYMENT CARDS

Definition

A payment card is a non-cash payment method issued by banks or credit institutions, allowing customers to withdraw cash from ATMs or merchants and make payments for goods and services.

Classification

Based on different criteria, cards are classified into different types: a In terms of technical characteristics

- Magnetic Stripe card: is produced based on a magnetic tape technique with a tape containing information on the back of the card This species is widely used for over

- Smart card: This is the latest generation of payment cards which are based on microprocessor attached to an electronic chip b In terms of issuers

- Cards issued by banks: A type of card enables customers to use their account flexibly at the bank, or use a line of credit granted by banks

Non-banking institutions issue Travel and Entertainment cards, commonly provided by major business groups like Dinner Club and American Express, as well as by petroleum companies and large retail stores These cards facilitate payments for travel and entertainment expenses, offering users a convenient alternative to traditional banking options.

Credit cards are the most widely used type of card, providing both consumers and businesses with short-term lines of credit and various repayment options This line of credit enables cardholders to manage unexpected expenses or make large purchases with ease.

Le Thi Thanh Huyen emphasizes the importance of credit history in managing everyday expenses and making essential purchases Establishing a solid credit history is crucial for applying for mortgages, auto loans, and other long-term financial commitments Additionally, a good credit history can be beneficial in various scenarios, including job applications and securing insurance.

A debit card is directly connected to the cardholder's deposit account, allowing for immediate deductions from the account when purchases are made This ensures that transaction expenses are instantly credited to the stores Additionally, debit cards provide consumers with direct access to their brokerage accounts, enabling quick cash withdrawals from ATMs globally and facilitating payments at numerous retail locations.

Prepaid cards are rapidly becoming one of the most popular payment methods today Users load a predetermined amount of money onto the card before making purchases, and the transaction amount is deducted from the card's balance This payment method offers convenience and control over spending, making it an attractive option for many consumers.

A domestic card is designed for use within a specific country, allowing transactions and cash withdrawals exclusively in the local currency Its functionality and payment capabilities are restricted to the geographical boundaries of that nation.

An international card is a versatile payment option that can be used both domestically and globally These cards are backed by major financial institutions such as MasterCard and Visa, as well as operating companies like American Express, JCB, and Diners Club, ensuring widespread acceptance and support across various countries.

Characteristics

Since their introduction, card structures have evolved significantly to provide greater utility for users Modern advancements in microelectronics have enabled the integration of electronic chips into various card types, improving both security and card durability.

Le Thi Thanh Huyen – ATCC /K13 Page 6

Most international credit cards are made of plastic, with a size of 84mm x 54mm x 0.76mm and 2 sides:

 The front of cards includes:

- Name, logo and badge of card issuers

- The validity date of the card

- The feature to prevent tampering

 The back of cards includes:

- Name of the card holder

- The resume of the bank

- The date of the last trading

- Maximum level of withdrawal and balance

Functions and Benefits

Card payments play a vital role in minimizing cash flow circulation by facilitating direct transactions for goods and services This payment method significantly reduces the need for extensive paperwork, leading to substantial savings in costs associated with printing, storage, and transportation.

Le Thi Thanh Huyen highlights that the adoption of fast, safe, and effective payment methods significantly boosts economic development This advancement enables the government to manage both micro and macroeconomic aspects more efficiently Furthermore, the implementation of modern technology in card issuance and payment systems presents valuable opportunities for Vietnam to integrate into the global economy.

Bank card payments play a vital role in executing the government's stimulus package, fostering an environment that attracts tourists and investors This payment method enhances commercial practices and promotes a culture of digital payments, while also increasing public awareness of the importance of Information Technology in daily life Furthermore, card payments provide a significant opportunity for national integration into the global community and contribute to improved social safety within the monetary sector.

Cards offer convenience for various transactions, allowing users to pay for goods and services, withdraw cash, and access banking services at locations that accept card payments, including ATMs and both national and international merchants With credit cards, cardholders can enjoy the flexibility of spending first and paying later, while also facilitating online purchases from the comfort of their homes.

Payment cards utilize advanced technology and unique personal identification codes for each cardholder, ensuring maximum security This system facilitates direct money transfers into customers' accounts, significantly reducing the risks of loss or theft.

Credit cards offer customers the flexibility to manage their spending within a set credit limit, allowing for easier adjustments in their financial activities This flexibility benefits consumers by facilitating both their purchasing decisions and production needs.

 To merchants (The places where payment cards are accepted)

Accepting card payments enhances sales for merchants by increasing the volume of goods sold while reducing costs and boosting profits This modern payment method not only creates a more civilized shopping experience but also fosters customer comfort, ultimately attracting more visitors to the store Additionally, sales revenue is directly deposited into the bank account, ensuring safer and more convenient financial management.

Issuing banks play a crucial role in card payment services, allowing them to diversify their offerings and attract new customers who become familiar with both card services and additional banking products By issuing cards, banks can also generate significant capital, enhancing their short-term funds through interest and card issuance fees Furthermore, providing comprehensive services boosts the bank's prestige and reputation in the competitive financial market.

- Acquiring banks: Banks can attract more customers to use products they provide, so this would raise their revenue and profit through taking the discount from payment activities

This chapter explores the theoretical aspects of bank cards, covering their definition, classification, characteristics, and advantages This foundational knowledge aids banks in enhancing their payment card services Building on this theoretical framework, Chapter 3 will present the recent performance of payment card operations at ACB, followed by an analysis of its successes, limitations, and the underlying reasons for these challenges.

It can be drawn from chapter 2 that:

First, using cards in payment and consumption offers golden opportunities for participating parties as well as for the economy

The bank card business represents a modern service that draws significant investment from banks For commercial banks, it serves as a foundation for retail credit operations and enables the diversification of banking services.

Chapter 3: CURRENT BACKGROUND OF PAYMENT CARDS AT ACB

Overview of ACB

3.1.1 Foundation and Development of ACB a Establishment

Asia Commercial Joint-Stock Bank (ACB) was founded on April 24, 1993, under Business License No 0032/NH-GP by the State Bank of Vietnam and received its Establishment Permit from the People’s Committee of Ho Chi Minh City on May 13, 1993 ACB officially commenced operations on June 4, 1993, marking the beginning of its development journey.

1993 – 1995: ACB was in the embryonic stage of development The founders of

ACB, leveraging its financial strength and entrepreneurial expertise, fosters unity within the organization through a shared principle of safely and effectively managing enterprise development In response to its competitive position, ACB targeted individual and business customers in the private sector, adopting a cautious approach to credit while introducing innovative products and services, such as consumer loans, Western Union express money transfers, and credit cards, that were previously unavailable in the market.

1996 – 2000: ACB became the first Vietnamese Joint – stock commercial bank to issue international credit cards of MasterCard and Visa In 1999, ACB launched its

The IT modernization program aimed to establish a wide area network, facilitating online operations and transaction automation In 2000, ACB restructured its organization as part of a corporate development strategy for the early 2000s (2000-2004), focusing on both business and support activities This restructuring included the creation of departments directly overseen by the CEO, with the headquarters' business activities being relocated to the newly established Main Branch in Ho Chi Minh City The reengineering initiative was designed to enhance operational efficiency and streamline processes.

Le Thi Thanh Huyen emphasizes the importance of maintaining consistent command, control, and communication while offering products tailored to various customer segments Additionally, she highlights the necessity of effective business development and risk management strategies.

2001 – 2005: ACB established a quality management system in accordance with

ISO 9001:2000 and its associated quality management system were recognized for their effectiveness in managing deposits, loans, trade services, and HR at the Head Office In 2005, Standard Chartered Bank (SCB) entered into a strategic partnership with ACB, providing comprehensive technical assistance and becoming a key shareholder This collaboration enabled ACB to initiate the second phase of its IT modernization program, which included upgrading servers, replacing existing bankcard transaction processing software with a new system compatible with the core banking platform, and installing ATMs.

2006 – 2010: ACB stocks were listed on Hanoi Securities Trading Center In

In 2007, ACB significantly expanded its branch network by adding 31 new branches and sub-branches, while also establishing ACB Leasing Company The bank enhanced its collaborations with various partners, including Open Solution (OSI) and Thien Nam for core banking upgrades, Microsoft Group for IT integration in operations and management, and Standard Chartered Bank for bond issuance Additionally, ACB successfully issued 10 million shares with a par value of VND 100 billion, generating proceeds exceeding VND 1,800 billion.

ACB has successfully restructured its human resources and distribution channels, implementing a sales-oriented branch model with the establishment of 51 new branches and sub-branches The bank has also updated its credit scoring system for individuals and credit rating system for businesses, alongside launching a help desk system Notably, ACB became the first bank in Vietnam to receive six prestigious awards for "Best Bank in Vietnam" in 2009 from renowned international financial magazines.

Since 2011, the bank has focused on transforming its corporate governance to align with Vietnamese regulations and international best practices, as outlined in the Strategic Directions for 2011-2015 and Vision to 2020 Key initiatives include clearly defining and separating the roles and responsibilities of the board, its committees, and management, enhancing the Board of Directors' directing role, empowering the Supervisory Board, improving the Internal Auditing Department's capabilities, and developing a robust risk management framework.

Table 3.1: Profit before tax and Total assets of ACB in the period 2009- 2013

Year Criteria Profit before tax Total assets

Source: Financial reports of the year 2009, 2010, 2011, 2012 , 2013 of ACB

By the end of 2012, ACB's total profit before tax plummeted to approximately 963 billion, marking a significant 76% decline from the previous year This downturn was primarily attributed to unauthorized trading activities by senior leaders and substantial losses in foreign currency and gold transactions However, with the central bank's intervention, ACB has since recovered and continues to maintain its operations effectively.

ACB has a rather well – organized structure with a system of Divisions, Departments and Offices implementing fully business activities of the bank

The organizational structure of the bank includes:

 The Council, Management and Executive Board: Board of Directors, Supervisory Board, General Meeting of Shareholders, Board's Office, General Director

 7 Divisions: Consumer Banking Division, Commercial Banking Division, Treasury Division, Business Development Division, Operation Division, Human Resource Division and Information Technology Division

 6 Departments: Property Management, Supervisory, ISO Quality Assurance, Project Management, International Relations and Credit Policy

 The branches and transaction offices

Diagram 3.1: Organizational structure of ACB

Current background of card payment at ACB in the period 2009 – 2013

General Meeting of Shareholders Supervisory Board

Board of Directors Board Committees

Office of Board of Directors

ISO Quality Assurance Departme nt

Operation Departments, Card Centres, Branches and Transaction Offices

Subsidiaries: ACB Securities Company (ACBS), ACB Asset Management

Company (ACBA), ACB Leasing Company (ACBL), ACB Capital Company

With experience of over 10 years providing card payment services, ACB has served more than 4,000 business places throughout cities/provinces around Vietnam

Card payment services cater to a diverse range of businesses, including hotels, restaurants, air-ticket agencies, supermarkets, hospitals, art galleries, and jewelry shops, primarily in major cities and tourist destinations.

At present, ACB issues 3 types of cards, namely, credit cards, prepaid cards and debit cards

Diagram 3.2: Types of cards ACB issues

Source: website of ACB (acb.com.vn)

ACB Visa MasterCard ACB Visa Platinum ACB World Mastercard

Visa Extra Prepaid ACB Citimart Visa Prepaid

The diagram illustrates that ACB prioritizes the issuance of international cards while also collaborating with card switching organizations such as Smartlink and Banknetvn to provide domestic debit cards.

Regarding credit cards, ACB only issues international credit cards: ACB Visa/MasterCard, ACB Visa Platinum, and ACB World MasterCard

The ACB Visa/MasterCard serves as a convenient alternative to cash, offering the same benefits as traditional Visa and MasterCard options Additionally, it includes a "Buy Now, Pay Later" feature, allowing users to repay their purchases over an extended period.

When trading globally, Visa and MasterCard offer safety for customers, ensuring that losing a card does not equate to losing money, provided that cardholders promptly inform ACB There are two types of international credit cards available for consumers.

– Personal Card: ACB – MasterCard and ACB – Visa, divided into two types:

+ Credit card having deposit as secured: This card is issued to customers who pledge their saving books

An unsecured credit card is exclusively available to prestigious customers with high and stable incomes, or those backed by their bank or employer.

– Company Card: ACB - Visa Business

Companies enter into a contractual agreement to join the card program, designating staff members who will receive cards with varying credit limits backed by a letter of guarantee The cumulative credit limits of these cards will align with the overall credit limit specified in the company's contractual agreement.

The Chip ACB Visa Platinum card, a premium international credit card issued by ACB, features a "Buy first, pay later" repayment period of up to 45 days This card offers exclusive benefits for international transactions, making it a unique choice for customers Additionally, for the first time in Vietnam, Visa Platinum cardholders can enjoy priority banking services at Standard Chartered Bank (SCB) in Singapore and Malaysia.

The ACB Card World MasterCard is a cutting-edge international credit card that utilizes EMV chip technology and is branded by MasterCard Launched by the Vietnam Joint Stock Commercial Bank - Bank Asia (ACB), this card not only offers standard credit card features but also provides cardholders with exclusive global benefits and services associated with MasterCard and ACB.

The Visa Prepaid Card and MasterCard Dynamic issued by ACB offer flexible and secure payment options accepted globally Notably, for the first time in Vietnam, customers benefit from insurance coverage for worldwide ATM withdrawals.

 ACB Visa Prepaid Card/ MasterCard Dynamic

Visa Prepaid Card and MasterCard Dynamic issued by ACB can be used for flexible and safe payment which is accepted throughout the world

 ACB – Visa Electron and ACB – MasterCard Electronic

Asia Commercial Bank has become the first institution in Vietnam to issue payment card products in collaboration with leading global Card Organizations, Visa and MasterCard, specifically the ACB-Visa Electron and ACB-MasterCard Electronic cards.

 ACB – Citimart Visa Prepaid Card

The ACB – Citimart Card, a prepaid card from Asia Commercial Bank, has evolved from the ACB-Citimart Visa Electron, boasting enhanced features and exceptional benefits This versatile card serves as both a membership and prepaid card, enabling secure and convenient payments globally.

ACB currently offers three types of debit cards: Visa Extra Debit, Visa Debit, and MasterCard Debit, all with a credit limit of zero Customers can only spend the amount they have deposited in their accounts Additionally, cardholders can take advantage of promotional programs from ACB and MasterCard, along with non-term interest applied to Current Accounts in VND.

Domestic debit cards issued by ACB now are ACB2GO and 365 Styles

365 Styles is a domestic debit card connecting to VND current account branded

Banknetvn issued by ACB The card is used at ATMs and other accepting units with Banknetvn, Smartlink and VNBC logo nationwide

ACB2GO card is a domestic debit card connecting to VND current account branded Banknetvn, Smartlink issued by ACB ACB2GO is functioned the same as

365 Styles Domestic Debit Card The cardholders can choose to use either 365 Styles (fee applicable) and enjoy ATM cash withdrawing insurance or ACB2GO (free) and without the insurance

3.2.2.1 The number of issued cards

During operation, recognizing the important role of developing card products, ACB has constantly strived to expand the issuance of cards to customers This is shown in the following table:

Table 3.2: The development of bank cards’ total number in the period 2009 - 2013

Total number of cards (Accumulated)

Source: Card Business Report – ACB Card Centre

Table 3.2 and Chart 3.1 indicate a consistent increase in the number of cards issued by ACB over the analyzed period, showcasing stable growth rates of 62.69%, 41.52%, 54.19%, and 52.1% By the end of the period, the total number of issued cards surged to an impressive 1,391,038.

In 2013, Sacombank issued approximately 2,158,742 cards, but the number of new cards issued during that period was relatively low This discrepancy may be attributed to intense competition from other banks and a lack of motivation among the bank's officials to actively seek out potential customers.

Chart 3.1: The number of cards issued and card growth rate in the period 2009 –

Developing issuing scale for each type of cards:

(1) Credit Cards : Regarding credit cards, ACB issued only international credit card

Chart 3.2: The number of credit cards issued in the period 2009 – 2013

Total number of cards (Accumulated) Growth rate (%)

Between 2009 and 2013, ACB experienced a remarkable increase in international credit card issuance, growing approximately 3.7 times over five years The peak growth occurred in 2011, with a nearly 55% rise attributed to the introduction of EMV chip technology and the launch of the EMV chip Visa Platinum card, which gained considerable popularity However, this trend declined in 2012 due to high average interest rates of 24% per year and escalating fees associated with credit card issuance and usage As a result, many customers opted for consumer loans, which offered lower interest rates and costs.

Evaluations about the operation of developing card payment services at ACB

(1) Having the right strategy for developing card payment services

ACB is a leader in leveraging technology to enhance payment card services, being the first bank in Vietnam to partner with major international card organizations, MasterCard and Visa, to introduce ACB Visa and ACB MasterCard On October 26, 2010, ACB implemented EMV-standard chip technology for its international cards, demonstrating its commitment to innovation In the highly competitive card market, ACB's pioneering efforts and adoption of advanced technologies provide significant advantages in the development of payment card services.

From the outset, ACB strategically prioritized the issuance of international credit cards over domestic ones, a decision that has proven advantageous as the market for domestic credit cards became saturated While many banks shifted their focus to domestic credit cards, ACB has successfully maintained a significant presence in the market with a considerable number of international credit cards in circulation.

(2) Associated with many partners to create incentives for customers

ACB enhances collaboration with various suppliers to provide greater incentives for cardholders Customers using ACB cards at partnered merchants can benefit from discounts and 0% interest installment plans on high-value household items Notably, ACB has teamed up with Vietnam Airlines to introduce the "Taking off easily with domestic cards" program, allowing customers to receive special offers when booking and paying with domestic cards through ACB's website or electronic transaction channels.

Le Thi Thanh Huyen – ATCC /K13 Page 32 discount for ticket price Particularly, customers who make this payment for the first time or purchase tickets earliest will receive 500 000VND into account

Recently, the number of ACB’s partners has climbed to more than 200 in all sectors, such as restaurants, hotels, resorts, golf courses, commercial centers, supermarkets, etc

(3) Services’ quality receives good reviews from customers

According to a survey of 500 real customers using debit cards in Hanoi, they agree that ACB is one of the trustworthy banks they choose:

Chart 3.11: Banks having prestige card services and customers’ reliability

Source: A synthesis of Card Business Reports for selected banks

With 57.8% of customers rating ACB as a reliable and prestigious bank, it is evident that ACB's card services are well-regarded by its clientele When compared to state-owned commercial banks such as Vietcombank and BIDV, which benefit from significant capital and technological support, ACB's current standing in the card business is commendable and deserving of recognition.

ACB Vietcombank Vietinbank BIDV Others

Business risks are unavoidable, yet ACB has implemented effective strategies to prevent and mitigate these challenges The bank actively seeks solutions to address existing risks, recover financial losses, and rectify vulnerabilities in card management Additionally, ACB collaborates closely with relevant authorities to prevent and address criminal activities associated with cards, such as counterfeit cards and theft.

ACB has made significant strides in its card business, excelling in card quality and customer service, while rapidly establishing a banking union However, despite these accomplishments, ACB encounters challenges that require adaptable solutions to address effectively.

First, insufficient investment in technology

Despite significant investments in technology, domestic banks still lag behind foreign counterparts, resulting in persistent issues within mechanical systems that waste time and money for banks, merchants, and customers An example of this is the leakage power incident in ATMs in 2010, which not only incurred financial losses but also harmed the reputation of the banks involved.

Second, the rate of “death cards” is still high

The intense competition in the banking sector has sparked a race among banks to issue cards as a branding strategy However, many banks, including ACB, focus primarily on increasing the quantity of cards issued, neglecting how these cards are utilized by customers afterward As a result, a significant percentage of cards, particularly ATM cards, have become underused or "junk," with estimates suggesting that 30% to 50% may fall into this category.

Third, in terms of marketing activities to attract customers

Promotional efforts to engage both customers and merchants for card products have been insufficient, resulting in a challenge for banks to enhance their appeal despite widespread awareness through various communication channels.

Chart 3.11: Channels help customers get access to ACB’s payment cards

Source: Business Report – ACB’s Card Centre

Forth, price competitiveness of bank services

The price competitiveness of bank services, particularly at ACB, is notably low, with the bank imposing the highest excess limit fee at 0.075% per day Transaction fees for cardholders range from 1% to 1.45%, which is significantly higher than Eximbank's 0% to 1.1% and Vietcombank's 0% to 1% Additionally, ACB charges annual fees that vary by card type, with domestic cards costing 100,000 VND and international credit cards ranging from 200,000 to 300,000 VND, exceeding fees of many competitors A recent survey indicated that these transaction fee disparities contribute to customers' reluctance to choose ACB's card products, highlighting a critical challenge for the bank in attracting new customers.

Internet Newspapers Friends and relatives Leaflets

First, cash consumption habit of people

In Vietnam, the low adoption of payment cards is primarily due to the widespread habit of cash consumption, particularly among the elderly and rural populations who face cultural and technological barriers to accessing banking services This reliance on cash hinders the growth of non-cash payment methods, as many individuals prefer in-person transactions at branches due to a lack of trust in technology Consequently, the development of high-tech services, including payment cards, has not met expectations, presenting a significant challenge for banks to enhance their advertising and marketing efforts for card usage.

Second, the legal environment has not completed yet

Vietnam's Criminal Code currently lacks specific penalties for irregularities related to international credit card payments, highlighting the need for enhanced crime prevention through international cooperation However, significant disparities exist between Vietnam's high-tech laws and those of other countries, which impede effective collaboration in addressing these issues.

Third, difficulties in the development of POS, ATM and Merchant network

The technical infrastructure for settlements in Vietnam is not well synchronized, with ATM and POS systems primarily concentrated in urban and industrial areas ACB faces significant challenges in expanding its merchant network, as the majority of Vietnamese consumers prefer cash transactions Consequently, the adoption of non-cash payment methods, particularly card payments, remains limited, hindering the expected growth of POS networks.

Costs of procurement, technology investment, installation and maintenance of ATMs are also obstacles for banks

Forth, the fierce competition among banks

By 2013, Vietnam's card market featured nearly 40 banks, each implementing unique policies and attractive incentives to boost their market share This has led to increasingly fierce competition among these banks.

The competitive landscape compels ACB to enhance and sustain its market share, especially with the rising presence of foreign banks that bring significant potential To address this challenge, ACB must focus on diversifying its product offerings, providing customers with a wider range of choices and flexible incentives.

Fifth, costs of enhancing technology and infrastructure for payment, diversifying products, training staff, improving the quality of service lead to increase the cost of card business

Chapter 4: SOLUTIONS AND RECOMMENDATIONS TO ENHANCE PAYMENT

Some solutions to enhance card payment services at ACB

4.1.1.1 Diversifying cards’ features of ACB

As living standards continue to rise, there is an increasing demand for diverse card offerings under the ACB brand To cater to various market segments, banks are introducing innovative products with tailored functionalities Notable examples include Vietinbank's E-partner Pinkcard designed for women and Vietcombank's MTV card, which reflects the personality and dynamism of the younger generation.

Developing information technology is essential for banks today, as it underpins business growth and the expansion of online trading services In the context of global integration and intense competition, ACB must invest in modern technology to enhance its card payment services Strengthening collaborations with domestic and international banks and economic institutions will enable ACB to leverage financial and technical support effectively Additionally, modernizing banking technology and innovating security measures are crucial to ensuring data safety.

Le Thi Thanh Huyen emphasizes the importance of enhancing the core banking program to improve the transmission line's capacity and speed, ensuring a robust host system for swift and accurate transaction processing This upgrade will reduce congestion at ATMs and POS systems, leading to improved transaction times and safer, more effective payment services for users Additionally, ACB must prioritize raising the technological proficiency of its entire workforce through ongoing training initiatives, ensuring that all personnel, from leadership to junior staff, achieve professional qualifications necessary for adapting to new technologies and supporting network expansion and service development.

The integration of modern IT solutions will enhance ACB's card services quality, operational safety, management efficiency, and market competitiveness, solidifying its position as a leading retailer in Vietnam and demonstrating its readiness for regional and global economic integration.

4.1.1.3 Cooperate with international card organizations

ACB's primary strength lies in its international payment cards, predominantly MasterCard and Visa However, to improve its market presence and competitiveness, it is crucial for ACB to diversify its card offerings by incorporating other international card organizations such as JCB, AMEX, and Diners Club Expanding the range of card options and payment capabilities is an urgent necessity for ACB to stay competitive in the global market Therefore, negotiating and establishing partnerships with these prestigious card organizations is essential for ACB's growth.

4.1.2 Perfecting and enhancing card services

It is irrefutable that network is a bridge bringing customers to the banks, and with a widespread network, a stable infrastructure, banks can hold a large market share

Thus, ACB should pay more attention to building up a suitable working network via merchants accepting cards

ACB needs tailored strategies to expand its merchant network, recognizing that each region has unique characteristics, business activities, and shopping habits For instance, in tourist areas with high consumer demand, a more extensive merchant network is essential compared to suburban regions.

4.1.2.2 Training and developing human resources to expertise in card operations

The staff at ACB are predominantly young, enthusiastic, and highly valued, making it crucial for the organization to focus on both maintaining and developing skilled employees while also training a new workforce This approach is essential for ACB to ensure customer satisfaction with their card services To achieve this goal, ACB should prioritize two key strategies.

ACB should implement regular training courses focused on card operations and customer communication skills for its staff Collaborating with other banks to facilitate practical training sessions will enhance employees' ability to apply their knowledge and stay updated on the latest developments in card issuance and payment Additionally, sending staff abroad for further education or inviting industry experts for specialized training can significantly expand their expertise and experience in the field of card services.

 Enhancing the quality of human resources

Human resources play a crucial role in banking operations, where effective recruitment, training, and employee treatment policies are essential for maximizing workforce potential Additionally, banks must provide competitive compensation and benefits to attract and retain top talent.

Le Thi Thanh Huyen from ATCC/K13 emphasizes that implementing effective incentive policies and rewards for employees at ACB can enhance the relationship between staff and the bank while boosting employee motivation As a result, improving personnel quality becomes a strategic priority to fulfill the long-term development goals of the bank.

Customer satisfaction is vital for a bank's survival, especially in today's competitive landscape Satisfied customers are likely to return and refer others, driving sales, market share, and profitability while enhancing the bank's reputation Ultimately, ensuring customer satisfaction is key to retaining clients and boosting revenue.

Besides solutions for improving products, technology and personnel as well as expanding network, another measure suggested for card services is giving a boost to marketing activities

To enhance card marketing strategies, it is essential to train staff responsible for marketing cards These employees should possess a comprehensive understanding of card operations and societal trends, enabling them to create accurate statistics, forecasts, and analyses of customer demand This expertise will empower them to develop innovative and impactful marketing activities that effectively promote card products.

Second, promotional and advertising activities could be strengthen by:

Advertising is a crucial method for attracting customers, and through mass media, ACB can effectively communicate information about its products, services, and banking operations To maximize the impact of its advertisements, ACB should tailor its advertising strategies to align with customer psychology.

2 Promotions and after-sales services:

Regularly demonstrating care for customers is essential for building trust and loyalty at ACB By consistently engaging with clients over time, the bank fosters strong relationships that encourage customers to become faithful partners.

3 Building up close relationship with customers

To effectively develop and retain customers, ACB should prioritize building strong relationships with existing clients, converting new customers into loyal patrons, and increasing the adoption of their card products and services.

4 Providing information directly to customers

Recommendations to expand card payment at ACB

Government attention is vital for the growth of all economic sectors, as it can provide essential support through taxation, legislation, and socio-economic policies To foster the advancement of modern payment methods, the government must implement effective management strategies that enable banks to thrive.

To establish a solid legal foundation for card business activities and safeguard cardholder rights, it is essential to implement comprehensive legal documents Additionally, a structured framework of penalties should be introduced to address crimes associated with card transactions, including the production and use of counterfeit cards and the theft of card codes.

To enhance the card business landscape in Vietnam, it is essential for ministries and departments to collaborate with the banking sector to promote the acceptance of bank cards for commercial transactions This initiative aims to lower social costs and provide significant benefits to consumers Furthermore, implementing regulations that mandate salary payments for State enterprise staff through card accounts will bolster this effort.

 Paying attention to the construction of infrastructure, equipment and machinery for card issuance and payment activities, creating favorable conditions for banks to attract customers to use cards

4.2.2 Recommendations to the State Bank

The State Bank of Vietnam (SBV) plays a pivotal role as the leader among Vietnamese commercial banks To enhance the payment card services at ACB, the SBV should implement several strategic solutions.

Commercial banks should establish clear strategies for card operations to leverage shared benefits and enhance service development effectively.

 Creating favorable conditions to establish financial switching, simultaneously connecting card payment systems among banks across the country

Implementing policies that promote non-cash payment methods is crucial, including tightening cash management and introducing fees for cash transactions to encourage a shift towards alternative payment options Additionally, it is important to provide incentives for non-cash payment methods These initiatives should align with government policies to ensure a cohesive approach to promoting digital payments.

Payment card services in commercial banks are experiencing significant growth, driven by increasing competition from established foreign banks, which poses both challenges and opportunities for domestic institutions like ACB This competitive landscape motivates ACB to expand its operations, enhance administrative expertise, and improve the quality of payment card services to meet rising customer demands By focusing on service quality as a competitive advantage, ACB aims to establish a strong foundation for development and address the pressing needs of global economic integration.

On the basis of analyzing the actual situation of ACB’s payment card services, chapter 4 suggests certain solutions to merchant expansion, distribution channels,

To enhance its competitiveness in a challenging market, ACB is implementing improvements in IT, human resources, customer care, and marketing policies These strategic measures aim to address existing disadvantages and leverage opportunities for the development of card services.

The evolution of retail banking services is essential for Vietnamese commercial banks to gain market dominance and ensure sustainable development in a globally integrated financial landscape As Vietnam prepares to fully open its financial market, competition will intensify, making the enhancement of payment card services a strategic approach for banks This initiative not only diversifies banking offerings but also boosts operational efficiency and strengthens competitive capabilities in the industry.

The thesis titled "Payment Cards in Vietnam – The Case of ACB" systematically explores key concepts related to card issuance and payment operations, providing essential knowledge for banks engaged in card services It analyzes the performance of ACB's payment card services from 2009 to 2013, highlighting achievements, limitations, and underlying causes Furthermore, it proposes strategic measures and recommendations for both ACB and the government, aiming to enhance service quality in the near future.

Admittedly, the thesis still has certain inevitable restrictions

I look forward to receiving contributions and feedbacks of teachers and other readers to help the content more comprehensive and completed.

Tiêu đề	Payment Cards In Vietnam The Case Of ACB
Tác giả	Le Thi Thanh Huyen
Người hướng dẫn	Pham Thi Hoang Anh (Ph.D)
Trường học	Banking Academy
Chuyên ngành	Foreign Language Faculty
Thể loại	graduation thesis
Năm xuất bản	2014
Thành phố	Hanoi

Định dạng
Số trang	53
Dung lượng	0,98 MB