Development of credit card services the case of vietnam,graduation thesis

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING ACADEMY  GRADUATION THESIS Title: DEVELOPMENT OF CREDIT CARD SERVICES _THE CASE OF VIETNAM_ Supervisor : MA Nguyen Phuong Lan Student : Van Thi Thanh Hien Class : ATC.A – K12 Faculty : Foreign Language Hanoi, May 2013 Graduation thesis Banking Academy of Vietnam STUDENT DECLARATION I, Van Thi Thanh Hien, declare that the graduation thesis entitled “Development of credit card services_ the case of Vietnam” is an original and authentic piece of work on my own The thesis has not been submitted anywhere for any award Where other sources of information have been used, they have been acknowledged Signature Date Van Thi Thanh Hien ATCA- Course 12 I Graduation thesis Banking Academy of Vietnam ACKNOWLEDGEMENT It is impossible for me to accomplish this thesis in the absence of the guidance and the help of several individuals who contributed their invaluable assistance in the preparation and completion of this study First, I would like to express the deepest gratitude to my supervisor, MA Nguyen Phuong Lan of Foreign Language Faculty –Banking Academy She offered me wholehearted support and careful guidance throughout the studying process In fact, her helpful comments and suggestions on the draft research were of paramount importance for this study Second, I am sincerely thankful to the Manager and officers of Xuan Dieu transaction office of Military Bank who greatly assisted me during the internship time as well as provided me with precious experience Also, I wish to convey my grateful thanks to all lecturers of the Faculty of Foreign Language and Banking Department of Banking Academy for their remarkable efforts in our professional growth Last but not least, I would like to express my love and appreciation to my beloved family and friends for their understanding and continuous support through the duration of my study Van Thi Thanh Hien Van Thi Thanh Hien ATCA- Course 12 II Graduation thesis Banking Academy of Vietnam ABSTRACT Threats posed by counterfeit cash combined with global integration have given non-cash payment instruments a push Credit card is one of these non-cash payment methods which have been attracting much attention over the past few years Although this type of services has flourished in developed countries such as U.S, Australia, Britain and China, it is considered an infant market in such a newly-emerged economy like Vietnam The main theme of this study is to examine the current situation of credit card services in Vietnam by carefully analyzing three operations _ credit card issuance, credit card payment and risk management among domestic commercial banks in the period of 2010-2012 and then to propose suggestions and recommendations to the sustainable development of credit card services in such a country in future Materials from both external and internal sources have been used to meet the research objectives More importantly, SWOT analysis model has been employed to show author‟s assessment of credit card market in Vietnam The findings of this study reveal that Vietnam‟s credit card market has witnessed remarkable growth in terms of number of credit cards, their additional facilities and expansion of ATMs and POS network However, there still remain limitations hampering the development of this market such as ignorance of services‟ quality, lack of coordination among banks or between banks and CAUs, strong preference for cash transactions and low efficiency in the risk management policies and marketing strategies It is also stated in this thesis that the Vietnamese credit card market has been considered a full potential one with tourism flourish, golden population structure and Government‟s encouraging policies for the development credit card services Nevertheless, there are major challenges such as increasingly fierce competitions, Van Thi Thanh Hien ATCA- Course 12 III Graduation thesis Banking Academy of Vietnam restriction of target customers, illogical and incomplete legal documents and inefficient security system Hence, it is of importance for home commercial banks to take full advantage of potentials and take effective measures to overcome existing shortcomings as well as cope with challenges It is concluded in this study that domestic commercial banks should focus on marketing policies and risk management In support of these measures, modernizing banking technology and increasing proficiency of staff are needed Also, the active involvement in the development of credit card services in Vietnam from Government, SBV and cardholders is of equal importance Hopefully, these results will be of interest for Vietnam‟s banking system to further develop credit card services Van Thi Thanh Hien ATCA- Course 12 IV Graduation thesis Banking Academy of Vietnam LIST OF TABLES AND FIGURES Tables/ Figures Table Title Legal framework of credit card business in Vietnam Page 18 Table List of types of credit cards issued by the Vietnamese commercial 19 banks on 31st December 2012 Table Growth of bank cards in Vietnam from 2010 to 2012 21 Table Growth of ATM system in Vietnam in the period of 2010-2012 24 Table Growth of POS system in Vietnam in the period of 2010-2012 25 Table Cash-based payment ratio in Vietnam from 1997 to 2015 33 Table Top 10 International visitors in Vietnam in 2011 and 2012 34 Figure Growth of credit card market in Vietnam from 2010 to 2012 22 Figure International credit card market share in Vietnam in 2012 23 Figure Growth of return on payment by international credit card in 26 Vietnam from 2010 to 2012 Van Thi Thanh Hien ATCA- Course 12 V Graduation thesis Banking Academy of Vietnam LIST OF ABBREVIATIONS Abbreviation ABBank ACB Agribank AMEX ANZ ATM BIDV CAUs EMV Eximbank GP Bank HD Bank HSBC MB MDB MHB Navibank OCB PG Bank POS RQ Sacombank SBV SCB SeABank SHB SWOT Techcombank TPB VIB VietBank Vietcombank Vietinbank VNBCA VP Bank Meaning An Binh Commercial Bank Asia Commercial Bank Vietnam Bank for Agriculture and Rural development American Express Australia and New Zealand Banking Group Limited Automated Teller Machine Bank for Investment and Development of Vietnam Card-accepting units Standard of payment cards set up by Europay, Master and Visa Vietnam Export Import Commercial Joint Stock Bank Global Petro Commercial Joint Stock Bank Housing and Development Bank Hong Kong and Shanghai Banking Corporation Military Bank Mekong Development Bank Mekong Housing Bank Nam Viet Commercial Joint Stock Bank Orient Commercial Joint Stock Bank Petrolimex Group Commercial Joint Stock Bank Point of Sale Research Question Sai Gon Thuong Tin Commercial Joint Stock Bank State Bank of Vietnam Saigon Commercial Bank Southeast Asia Bank Saigon-Hanoi Bank Strengths, Weaknesses, Opportunities and Threats Vietnam Technological and Commercial Joint Stock Bank TienPhong Bank Vietnam International Bank Vietnam Thuong Tin Commercial Joint Stock Bank Bank for Foreign Trade of Vietnam Vietnam Join Stock Commercial Bank for Industry and Trade Vietnam Bank Card Association Vietnam Prosperity Bank Van Thi Thanh Hien ATCA- Course 12 VI Graduation thesis Banking Academy of Vietnam TABLE OF CONTENT DECLARATION…………………………………………………………… I ACKNOWLEDGEMENT…………………………………………………… II ABSTRACT………………………………………………………………… III LIST OF TABLES AND FIGURES………………………………………… V LIST OF ABBREVIATIONS……………………………………………… VI TABLE OF CONTENT……………………………………………………… VII CHAPTER 1: INTRODUCTION…………………………………………… 1.1 Rationale…………………………………………………………………… 1.2 Aim and Scope of the Study……………………………………………… 1.3 Research methodology…………………………………………………… 1.4 Organization of the Study………………………………………………… CHAPTER 2: THEORETICAL FRAMEWORK…………………………… 2.1 Overview of credit card…………………………………………………… 2.1.1 History and development of credit card………………………………… 2.1.2 Definition and Characteristics of credit card………………………… 2.1.3 Credit card classification……………………………………………… 2.1.4 The advantages and disadvantages of credit card…………………… 10 2.2 Norms reflecting the development of credit card services……………… 12 2.2.1 Operations related to credit card services…………………………… 12 2.2.1.1 Credit card issuance……………………………………………… 12 2.2.1.2 Credit card payment……………………………………………… 13 2.2.1.3 Credit card risk management…………………………………… 14 2.2.2 Factors affecting the development of credit card services…………… 16 2.2.2.1 Social factors……………………………………………………… 16 2.2.2.2 Economic factors…………………………………………………… 17 2.2.2.3 Internal factors in each bank……………………………………… 17 CHAPTER 3: CREDIT CARD SERVICES – THE CASE OF VIETNAM 18 Van Thi Thanh Hien ATCA- Course 12 VII Graduation thesis Banking Academy of Vietnam 3.1 Overview of current credit card market in Vietnam……………………… 18 3.1.1 Current legal framework for credit card services in Vietnam………… 18 3.1.2 Real situation of credit services in Vietnam………………………… 19 3.2.2.1 Credit card issuance……………………………………………… 19 3.2.2.2 Credit card payment……………………………………………… 24 3.2.2.3 Credit card risk management……………………………………… 26 3.2 Findings……………………………………………………………… 27 3.2.1 Strengths……………………………………………………………… 27 3.2.2 Weaknesses…………………………………………………………… 28 3.3.3 Opportunities………………………………………………………… 31 3.2.4 Threats 34 3.3 Summary………………………………………………………………… 38 CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS……………… 38 4.1Solutions………………………………………………………………… 38 4.1.1 Core solutions………………………………………………………… 38 4.1.1.1 Developing marketing policy (4Ps model)………………………… 38 4.1.1.2 Managing risks……………………………………………………… 40 4.1.1.2.1 Risks in card issuance………………………………………… 41 4.1.1.2.2 Risks in card payment………………………………………… 41 4.1.2 Supporting solutions………………………………………………… 42 4.1.2.1 Modernizing banking technology…………………………………… 42 4.1.2.2 Increasing the proficiency of staff………………………………… 43 4.2 Recommendations………………………………………………………… 44 4.2.1 Recommendations towards Government…………………………… 44 4.2.2 Recommendations towards State Bank of Viet Nam………………… 45 4.2.3 Recommendations towards Cardholders…………………………… 46 4.3 Summary………………………………………………………………… 46 CONCLUSION REFERENCES Van Thi Thanh Hien ATCA- Course 12 VIII Graduation thesis Banking Academy of Vietnam CHAPTER 1: INTRODUCTION 1.1 Rationale of thesis Sometimes it may be a big surprise for us to find out how far humanity has come, especially in terms of technology Up until now, technology has participated in every aspect of life and has brought a new appearance for the global economy and the whole society Banking is no exception, with one of the most persuasive evidence lying in bank card technology Under the trend of using non-cash payment methods, credit card can be considered a measure of the civilization of a society Credit card is known as an original product of banking services as well as a leading alternative means for cash among transactions It thus breaks out a revolution in settlement of banking system through the application of the most up-to-date information technology With flexibility and advantages, ever since its inception in around 50s, the credit card has managed to conquer even the most demanding customers and has increasingly asserted its position in the banking payment activities of the bank 90s marked a fundamental transformation in Vietnam‟s whole economy in general and banking and finance sectors in particular That a wide range of new services have been put on trial, including credit card services has opened up business opportunities and has created fresh momentum for the banking industry It is apparent that the credit card is one of the most effective instruments to accelerate industrialization and modernization of the banking system and speed up the integration of Vietnamese economy into the region and the world Although credit card business in Vietnam is no longer a completely new line, it is not the credit card that can wholly replace the cash In other words, the development of the credit card market in a developing country as Vietnam is currently facing a number of significant challenges This is a pressing problem that requires Vietnamese banks to quickly find out the effective measures Van Thi Thanh Hien ATCA- Course 12 Page Graduation thesis Banking Academy of Vietnam Home commercial banks are facing an increasingly fierce competition with foreign banks and co-operative banks in the credit card segment since the open door policy was launched In other words, the already stiff battle within a country will be even more cut-throat as new dynamic players enter HSBC and ANZ are typical examples Carefully researching market and being active in business, they have drawn out wise plans and have launched appealing programs with the aim of attracting more and more potential customers It was revealed by Representative of HSBC that HSBC is currently a leading bank in terms of credit card payment based on rankings of VISA from 2008 to 2012 Also, they rank third with regard to number of issued international cards in Vietnam at present Thus, in future, it is of vital necessity for home commercial banks to come up with strategic plans so as to successfully compete with such well-known foreign banks for the dominant position in the Vietnamese credit card market  Competition among other types of card ATM cards have been the most popular cards among Vietnamese with more than 80% market share (in 2012) One in ten payment cards was debit cards It means that credit card made up the least percentage of market shares in Vietnam‟s bank card market Additionally, the awareness level for credit cards is extremely low whereas most of Vietnamese are familiar with ATM cards Hence, how to win the market share for credit cards against ATM cards will be a huge challenge for domestic commercial banks  Inconsistent and incomplete legal framework Decision 2453/QD-TTg dated 27December 2012 signed by Prime Minister Nguyen Tan Dung called “Scheme to step up non-cash payment in Vietnam- Period 20112015” has marked a positive signal for development of credit card market Nevertheless, under the Direction No1/CT-NHNN dated 13Febuarary 2012, SBV requires banks to minimize lending activities which, in turn, reduce credit growth via credit card issuance and usage Van Thi Thanh Hien ATCA- Course 12 Page 35 Graduation thesis Banking Academy of Vietnam Hence, home commercial banks face the dilemma It must tackle the question how to develop credit card market and tighten lending activities at the same time Additionally, there are no detailed legal documents regulating the sanctions of disclosing or stealing clients‟ information for fraudulent purposes or individual benefits and violations in privacy and security of informatics technology In fact, other essential legal documents which were issued have not come to life and taken effect  Limited group of target customers Vietnam‟s credit card market has just targeted at those with high and stable income, or those with demand for using of high-end utilities whereas other markets such as American choose different groups of population as their potential customers The number of credit cards for people below poverty line and for students has been on the rise each year The limited group of target customers in Vietnam will be a barrier to growing in popularity of credit card among population However, expanding the group of target customers means that banks have to face high degree of credit risk Hence, it must be a tough task for banks to gain the popularity of credit card on one hand and reduce credit risk on the other hand  Security Credit card frauds, scams, card cloning and online cheats are considered major threats for development of credit card market in Vietnam The problem is that the number of cases for such offences has witnessed an increase in Vietnam in recent years whereas a downtrend has been recorded in those all over the world Obviously, lack of investment in banking technology is the main reason for higher risks in credit card market in a developing country like Vietnam because the more high-level technology should be, the higher expenditure will be Moreover, the process of applying data security standard of credit cards of World Bank Card Association (PCIDSS-Payment Card Industry Data Security Standard) to the Vietnamese banking system has been slow in comparison with other countries in the same region such as Thai Land and Indonesia Thus, it is a prime requirement for home commercial banks Van Thi Thanh Hien ATCA- Course 12 Page 36 Graduation thesis Banking Academy of Vietnam to pay more attention in security in particular and then to make more investment in banking technology in general 3.3 Summary In summary, by analyzing three operations of credit card services (issuance, payment and risk management) and using the SWOT analysis model, strengths, weaknesses, opportunities and threats of the Vietnamese credit card market have been drawn out Although a surge in the number of issued credit cards, ATMs and POS has been recorded, Vietnam‟s credit card services are still considered “infancy” in terms of the quality of issuance, payment and risk management Boom in tourism industry, golden population structure and launch for encouraging policies from Government are opening up precious opportunities for developing credit card market in Vietnam in the future However, some threats such as increasingly fierce competition, inconsistent and incomplete legal documents, limited group of target customers and security problem require banks to consider representing a move in the right direction in the near future Van Thi Thanh Hien ATCA- Course 12 Page 37 Graduation thesis Banking Academy of Vietnam CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS 4.1 Solutions Basing on analyzing current situation, opportunities and threats, the author wants to suggest two groups of solutions as well as recommendations pertaining to the development of credit card services in Vietnam: 4.1.1 Core solutions 4.1.1.1 Developing marketing policy (4Ps model) Because the mixed marketing strategy consists of every factor by which the bank can make impacts on the demand for its product, the 4Ps is carefully designed to dance the same tune with the overall competitive strategy  Product In order to improve the quality of product, it is of necessity for credit card services to meet the need of diversifying products and enhancing their quality Taking strategic partners to issue co –branded card is an option to realize this strategy Several banks have been successful in cooperative models like Big C and Techcombank (allowing cardholders to pay for goods at Big C by Techcombank cards), VIB and Language Link (paying tuition fees into Language Link‟s account by VIB cards) Hence, co-branded cards that focus on solving daily life needs are a wise specific strategy because providing convenience for cardholders is the key to win their preference Equally important, non-stop upgrading the quality of credit card by adding new utilities makes the credit card‟s functions not only for settlement but also for other transactions relating to other products such as lending, mobilization Besides, it is necessary to strengthen after-issuance services such as consulting to open an account, assisting in using all services For the time being, there is a need for a 24/7 calling center which is responsible for handling questions and suggestions from customers  Pricing Van Thi Thanh Hien ATCA- Course 12 Page 38 Graduation thesis Banking Academy of Vietnam Of the mixed marketing elements, pricing is the most troublesome for marketers because it is vital for each commercial bank to set reasonable price that both achieves revenue target and market share without devaluing its product in the eyes of customers In other words, applying high-tech operation system which allows banks to provide perfect services for customers means that service fee will higher However, high fee will decrease competitiveness of supplying services Therefore, banks need to know how to gain the balance between two contrasting faces of one issue Beforehand, what the banks should is to decrease service fee and maximize the number of cardholders at the same time Non-stop developing technology is also important to attract long-term customers Moreover, the bank should consider negotiating with merchants to apply “cash rebate” scheme for mutual benefit This scheme then allows cardholders to enjoy a special discount rate at a specified POS  Place For the purpose of optimizing its distribution channel in meeting customers „needs, the bank should not only choose suitable ATM and POS installation site but also create the goodwill of card acceptance merchants Firstly, only when being available whenever and wherever on demand, ATMs and POS fully function As a result, it is necessary to install ATMs and open up POS to every merchant area like small restaurants and downtown shopping malls It is true that the more convenient the service is, the more loyal its customers will be With the aim of better delivering the first measure, the bank should create the goodwill of CAUs by marketing the importance of card service to shops or recreation centers, spelling out the rewards and penalties in the authorized contract, installing high-quality POS at the agreed sites and providing follow-up technical support Besides granting favorable discount rate, designing contests among POS is another alternative to build up strong relationship between issuer and its merchants For example, annually VPBank grant prizes to its most talented merchants basing on several criteria such as revenue from payment by credit card and level of cardholders‟ satisfaction Van Thi Thanh Hien ATCA- Course 12 Page 39 Graduation thesis Banking Academy of Vietnam  Promotion  Advertising: For advertising strategy, each commercial bank should adopt customer-centered approach First of all, in conjunction with non-personal channel, why does not the bank try personal channel, i.e worth of mouth To deliver this strategy, celebrities like singers, composers and actors are the group of choice The bank will sell first to this group with special incentives After buying, satisfying with and believing in the service quality, this group will then spread the words to various would-be customers in their own network This method helps banks spend no expenditure but successfully send convincing message to its potential customers In addition, the bank is suggested to appoint its sales representatives to contact enterprises whose staff are interested in the service to arrange for a presentation on this bank‟s credit card services By doing this, each bank is more active in approaching its customers Instead of waiting for customers going to bank, the bank makes it available to the customers  Sales promotion: In addition to premiums, it is worth using methods to remind customers that every single customer is valuable to the bank development and they are equally treated Sending this message at the right time by the right way is a measure to create goodwill For instance, the bank sends postcards or small gifts to all its cardholders on their birthday as a means of cementing cardholders in the long-term relationship  Public relation: In parallel with existing groups, it is of importance to promote products among would-be customers, i.e students, farmers Students with high level of education, keeping up with trends of globalization like online shopping will be the very target group for such high-class financial product like credit card Likewise, good-risk farmers are a potential group of choice because agriculture is the sustainable strength of our country and issuing credit card for farmers will increase short-term capital 4.1.1.2 Managing risks: Van Thi Thanh Hien ATCA- Course 12 Page 40 Graduation thesis Banking Academy of Vietnam As stated earlier, risks are originated from not only banks themselves but also parties involving in credit card services including customers, CAUs, issuers Hence, it is impossible for banks to exactly predict when risk occurs In order to minimize these risks, there should be specific measures: 4.1.1.2.1 Risks in card issuance Banks have to face different risks during the whole process from choosing customers, printing to sending cards and managing account during usage process To correct these mistakes from banks, it is of necessity to improve degree of security and accuracy throughout card issuance To minimize risks resulting from customers, here are several approaches that the banks should consider:  Austerity in carrying out appraisal of customers does not mean setting high standard to customers since the quality of customer‟s credit is a very sensitive factor which directly affects the number of customers using credit card If requirement of customer‟s credit quality is too strict and demanding, the number of customers meeting these requirements will go down and then result in a decrease in the return on credit card Reversely, that the credit quality of a customer is too low leads to high degree of risk Hence, it is of paramount importance for banks to distinguish between good risk and bad-risk customers, judge credit capability of banks Moreover, simplifying procedures of issuance is an option that banks should consider  Building database among banks within a common system and widening connection with banks outside system will help enhance the exchange of information, especially information about bad-risk customers  Raising consciousness of vigilance, boosting information security for bank staff will prevent information loss of cardholder‟s account Furthermore, treating harshly breach in the internal bank at different levels will minimize risks resulting from human during operation process 4.1.2.1 Risks in card payment Van Thi Thanh Hien ATCA- Course 12 Page 41 Graduation thesis Banking Academy of Vietnam There are some following measures that should be taken to reduce risks in card acceptance and usage:  Risks from CAUs In order to minimize risks resulting from counterfeit CAUs, it is a must for banks to publicize information about their CAUs via mass media or their own bank website to create favorable conditions for customers to find and check What is more, a warning about the case of counterfeit CAUs should be issued This will help customers be more vigilant against fraud via card payment In terms of risks caused by fraudulence in CAUs, banks should investigate and conduct right after finding out the suspicious cases These CAUs also need putting into the watch list In the case of new CAUs, banks ought to state terms of prohibiting fraud as well as specific detailed ways of treating as a clear basis for later case right after signing a contract If such risks come from collusive fraud between customers and merchants, what banks need to is to close this bank account, put these CAUs into blacklist and demand compensation fee for value of illegal transactions  Risks coming from credit card fraud It is extremely difficult for banks to control these risks such as disclosed PIN number, counterfeit cards and stolen data Thus, there is a fundamental need of consolidating propaganda, education to raise the awareness of cardholders and involved parties about information security and risk management It is advisable for every bank to issue EMV chip cards and other high-end credit card products like MasterCard Paypass replacing all old ones In spite of high initial fee, these hi-tech products will be helpful in cutting loss in long-term 4.1.2 Supporting solutions In support of perfecting these above core solutions, supplying approaches including modernizing banking technology and developing proficiency of staff need to be taken 4.1.2.1 Modernizing banking technology Van Thi Thanh Hien ATCA- Course 12 Page 42 Graduation thesis Banking Academy of Vietnam Equipping with modern facilities for credit card payment plays an important role Technology level is one of decisive criteria for quality of card settlement services and success in competition with fierce players Therefore, it is of vitality for banks to invest in technology and equipment for payment at POS However, with increasingly large POS network, not only banks ensure an effective information processing and managing system which guarantees a smooth flow of information and money turnover, but they also need to invest more in machines, facilities, operating and managing software Such investment is not an easy task because it requires large capital and longterm payback Hence, there is an essential need for banks to come up with a plan of drawing investment funds or mobilizing from other long-term sources in order to meet this target Once technology is paid attention to develop, managing system can both ensure to supply qualified services to cardholders and merchants and effectively minimize risks and loss resulting from frauds 4.2.1.2 Increasing the proficiency of staff The quality of banking staff is an important factor representing the power of the bank and its service quality This is also a solid base for each bank to confirm its position in the Vietnamese bank system, especially in the time of severe competitiveness among banks in terms of credit card segment Any customer prefers making transactions with a bank whose staff are energetic, enthusiastic and qualified because they can feel comfortable and then easily place trust on that selected bank Therefore, banks should grasp this sentiment to draw up specific policies with the aim of establishing a close link between banks and customers For the further improvement of banks‟ image in the eyes of customers, a team of moral and qualified staff is needed Consequently, there are several following aspects that require banks to take into consideration:  Constructing a scientific, accurate and suitable recruitment process to select deserved staff  Encouraging staff to keep an inquiring mind and updating new information Van Thi Thanh Hien ATCA- Course 12 Page 43 Graduation thesis Banking Academy of Vietnam  Holding monthly professional contests about operations among staff  Strengthening and improving staff‟s morality  Opening regular classes, short courses on banking and soft skills and even inviting the specialists in the field to increase proficiency of staff  Offering satisfying incentives to excellent or highly qualified staff 4.2 Recommendations 4.2.1 Recommendations to the Government For the Government, the author would like to give some general suggestions as follows:  Stabilizing economic environment The stability and sustainable growth of the macro economy is positively correlated with the financial markets, just as the economy grows stably and inflation is under control, then the operations of bank card payment have good conditions to develop  Improving the legal framework for the operation of card payment Specific legal framework for the operation of card payment in Vietnam is incomplete; there should be an overall separate system of written documents to adjust the retail operations Global integration is happening quickly, which requires lawmakers to make the prompt appropriate modifications to the development of banking services including credit card services These documents must meet the requirements in accordance with the laws and the socio-economic characteristics of Vietnam while not opposed to the international practices This requirement is not easy to implement because of many differences between Vietnam's banking activities and those of foreign banks in international practice, so the process to reconcile and amend the law takes time to study and undergo a trial period  Upgrading the banking technology The process of modernizing banking technology must be done with the support and investment from the Government because that is the general long-term developmental strategy having a considerable impact on the entire economy The Government needs Van Thi Thanh Hien ATCA- Course 12 Page 44 Graduation thesis Banking Academy of Vietnam to closely manage, monitor and appraise the investment programs as well as the contracts of equipment and technology sales abroad to avoid wasting the national monetary resource In addition, there should be regulations stipulated by the State and the Ministries on the standard of information technology infrastructure while providing card payment services so as to make the market synchronize and work effectively 4.2.2 Recommendations to SBV Besides the government, the SBV is a managing organization which exerts a direct influence on the operations of the banking system To ensure for the system to work smoothly and efficiently, the SBV should take the following measures:  Completing laws and regulations of the central banks and credit institutions The completion of laws and regulations of the central banks and of credit institutions will encourage the commercial banks to develop their modern banking services, especially credit card services In fact, a number of laws the central bank has issued have not yet kept pace with the development status of the market and have lacked the flexibility, leading to the asymmetry between the regulations of the law and market behaviors This not only curbs the banking activities but also sometimes creates loopholes for some bad subjects to circumvent; hence the rules still need to be much improved to keep up with the actual development of the banking market For credit card payment, the specific immediate need is to build more complete legal basis for the issuance and payment of credit cards, in which, there are sanctions imposed on the actions of disclosing or stealing clients‟ information for fraudulent purposes or individual benefits causing loss of card data or credit card fraud Accordingly, the appropriate and synchronizing measures should be taken so that the solutions for the development of non-cash payment would come into effect  Improving information systems for the entire banking system Solutions to improve information systems for the entire banking system have been launched with the aim of preventing and controlling risks from activities, especially the payment operations This information systems will provide database of direct customer‟s or online customer‟s information with tools for managing, sharing and Van Thi Thanh Hien ATCA- Course 12 Page 45 Graduation thesis Banking Academy of Vietnam warning of risks, frauds to facilitate the sharing of information between all cardissuing banks in the country Thus, it is a requirement for the system to be modernized and for the system operators to be knowledgeable of the banking sector Besides, the banking information system is built on the foundation of information technology, which is inevitable to technological and operational risks such as trading order errors, information leaks and technical problem Therefore, though essential, it is a big challenge to the SBV due to lack of qualified staff and facilities Hence, building and completing the information system throughout the banks takes time and effort of both the SBV and the entire domestic banking system 4.2.3 Recommendations for cardholders  Signature and Credit card account numbers: It is advisable for cardholders to sign their signature on the back of credit card right after receiving it, rewrite account numbers and then put it in a safe place Signing in the credit card makes it difficult for others to use while memorizing the credit card numbers will make things easier in the case of informing banks of stolen-lost cards  Being alert A large number of credit cards are often lost or stolen in public places such as supermarkets, shopping malls and airports because thieves always find it easier to steal credit cards in such crowed places Thus, cardholder should watch out suspects and hold the credit card carefully  Checking monthly statements Cardholders should keep receipts, check and compare monthly statements to realize whether or not there are mistakes from information system of banks 4.3 Summary Overall, Chapter composes of solutions to the Vietnamese commercial banks and recommendations to Government, SBV and cardholders Home commercial banks should concentrate on fostering marketing policies and managing risks In support of these measures, they ought to modernize banking technology and increase proficiency Van Thi Thanh Hien ATCA- Course 12 Page 46 Graduation thesis Banking Academy of Vietnam of staff Also, there should be wholehearted contributions from SBV, the Government and attentions from cardholders Van Thi Thanh Hien ATCA- Course 12 Page 47 Graduation thesis Banking Academy of Vietnam CONCLUSION It is an indispensable trend among worldwide banks that they all pay attention to retail banking So the Vietnamese commercial banks One of these services which have been gaining much concern is credit card services In other words, global integration has had positive impacts on development of credit card market in Vietnam over the past few years Through revising theoretical framework about credit cards, analyzing current situation of the Vietnamese credit card market from 2010 to 2012, the author came to further assessment under the SWOT analysis model before presenting some solutions and recommendations On the basis of various study method, theoretical knowledge and datum about credit card services in Vietnam, the graduation thesis has managed to complete three main tasks as follow: Firstly, the thesis has just collected and systematized theoretical framework about credit card services including history of credit card, its definitions and characteristics and types, advantages and disadvantages of credit card usage and factors affecting the development of credit card market Secondly, the current situation of credit card services in Vietnam has been carefully examined Based on this, strengths, weaknesses, opportunities and threats are drawn out Finally, the thesis has put forward some solutions and recommendations to the Government, the SBV and cardholders with the view to further development of credit card services in Vietnam It stands a chance that the thesis contains a lot of faults and insufficiencies due to lack of conditions and short research time Thus, it is my deep pleasure to receive support and advice from all lecturers and my school-fellows I hope that my thesis will make a useful contribution to development of the Vietnamese credit card market in the future Van Thi Thanh Hien ATCA- Course 12 Graduation thesis Banking Academy of Vietnam REFERENCES Frederic S.Mishkin , The Economics of Money , Banking and Financial Markets , Pearson Publication Company , 1965 Pahwa, H.P.S, Bank Finance to business and Industry : How to borrow from the banks, India Vinod Law Publication, 1998 Laws of credit institutions Number 02/1997/QH10 December 1997 Official websites and annual reports of the Vietnamese commercial banks in 2012 Annual report of SBV in 2010, 2011 and 2012 http://www.sbv.gov.vn/ http://vnbaorg.vn/ http:// www.sbv.gov.vn http://www.cardexpert.org/ http://www.investopedia.com/university/credit-cards/credit-cards4.asp 10 http://www.sggp.org.vn/phapluat/2012/5/288913 11 http://www.thanhtoan.com/thanh-toan-qua-the-tin-dung/161-thanh-toan-quathe-xu-the-tuong-lai.html 12 http://www.baohaiquan.vn/pages/su-dung-the-ngan-hang-tien-nhung-phailoi.aspx 13 http://www.img-law.com/media/31154/decision%202453-qd-ttg%20(e).pdf 14 http://www.uef.edu.vn/resources/newsletter_uef/thang11_2012/4_phat_trien_di ch_vu_the.pdf 15 http://www.mof.go.jp/english/international_policy/others/sseae2004/SSEAE20 04-8.pdf 16 http://www.hvcsnd.edu.vn/vn/Acedemy/Khoa-hoc-Cong-nghe/64/2101/Chomdu-lieu-de-lam-the-thanh-toan-gia.aspx 17 http://www.dnse.com.vn/FileTrungTamPhanTich/20101230152431VNFinancia lCards&Payments1Dec10.pdf Van Thi Thanh Hien ATCA- Course 12