Trang 1 THUONG MAI UNIVERSITYFACULTY OF FINANCIAL AND BANKINGDISCUSSIONINTERNATIONAL PAYMENTAND EXPORT-IMPORT FINANCINGTOPICInternational payment service for corporate customers at Joint
THUONG MAI UNIVERSITY FACULTY OF FINANCIAL AND BANKING DISCUSSION INTERNATIONAL PAYMENT AND EXPORT-IMPORT FINANCING TOPIC International payment service for corporate customers at Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) Giảng viên hướng dẫn : Cô Phạm Thu Trang Lớp học phần : 231-BKSC2421-01 Nhóm : 06 Hà Nội, 2023 GROUP Topic: International payment service for corporate customers at Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) CONTENT I INTRODUCTION II THEORETICAL BASIS 2.1 Definition of International Payment 2.2 Characteristics of International payment 2.3 Roles of International payment 2.4 The legal framework of International payment 2.5 Documents for International Payment 2.6 Instruments of International payment 2.7 Terms of International payment 2.8 Methods of International Payment 2.8.1 Payment in advance 2.8.2 Open account 10 2.8.3 Collection 10 2.8.4 Documentary credits 12 III International payment service for corporate customers at Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) 12 3.1 Introduction of The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) 12 3.1.1 The history of BIDV 13 3.1.2 The structure of BIDV 15 3.1.3 Overview of BIDV’s financial situation from 2020-2022 17 3.1.3.1 BIDV’s financial situation in 2020 18 3.1.3.2 BIDV’s financial situation in 2021 19 2.1.3.3 BIDV’s financial situation in 2022 20 3.2 International payment service for corporate customers at The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) 21 3.2.1 Available methods of international payment for corporate customers at BIDV 21 3.2.1.1 Cross-border payment 21 3.2.1.1.1 Information 21 3.2.1.1.2 Features 22 3.2.1.1.3 Benefits 22 3.2.1.1.4 Fees for cross-border payment 22 3.2.1.2 Import payment 22 3.2.1.2.1 Information 22 3.2.1.2.2 Features 23 3.2.1.2.3 Benefits 23 3.2.1.2.4 Fees for import payment 24 3.2.1.3 Export payment 29 3.2.1.3.1 Information 29 3.2.1.3.2 Features 29 3.2.1.3.3 Benefits 30 3.2.1.3.4 Fees for export payment 30 3.3 The evaluation of the performance of international payment service for corporate customers at The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) 34 3.3.1 Comparison analysis 35 3.3.2 SWOT analysis of BIDV’s international payment service for corporate customers 41 3.3.2.1 Strengths 41 3.3.2.2 Weaks 42 3.3.2.3 Opportunities 43 3.3.2.4 Threats 43 IV CONCLUSION 44 MEETING MINUTES 45 OUTLINE GROUP 46 Members’ assesment table 47 I INTRODUCTION In today's era, economic and financial links between countries are becoming increasingly closer, especially in the field of international payment services Access to and use of international payment services is not only an essential factor in economic development but also plays a vital role in connecting markets and creating favorable conditions for international trade Banks play an undeniable role in this context, especially reputable and large-scale banks In Vietnam, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) is one of the leading banks In recent years, the banking industry, in general, has not only witnessed the continuous development of BIDV in the financial sector but also felt BIDV's strong commitment to providing payment services Internationally influential and safe In order to learn about international payment products and services in detail and objectively BIDV provides, as well as evaluate the effectiveness and competitiveness of these services in the international market, group 06 has selected the topic "International payment service at Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)" II THEORETICAL BASIS 2.1 Definition of International Payment International payment means the performance of payment obligations due to economic and non-economic activities between counterparties in different countries 2.2 Characteristics of International payment International payments are not only governed by national laws but also by international laws, conventions, customs, and practices International payments are influenced by the variation in exchange rates and foreign exchange reserves International payment transactions are mainly done through commercial banking systems International payment is a type of banking service 2.3 Roles of International payment For the economy: International payments contribute to expanding and promoting foreign economic relations, strengthening the economic position of each country in the international market, creating a bridge between countries in relationships For import-export businesses: International payment serves needs payment for import-export goods and services of businesses For commercial banks: International payments create service revenue, promoting other development banking activities 2.4 The legal framework of International payment International conventions: An international convention or treaty is an agreement between different countries that is legally binding to the contracting States Existing international conventions cover different areas, including trade, science, crime, disarmament, transport, and human rights Example: United Nations Convention on Contracts for the International Sale of Goods - Wien Convention 1980; Convention Providing a Uniform Law for Bills of Exchange and Promissory Notes (Geneva, 1930) ULB 1930 National laws: National law is a binding rule or body of rules prescribed by the government of a sovereign state that holds force throughout the regions and territories within the government's dominion Examples: Civil law; Commercial law; Foreign Exchange Law International customs and practices: International customs and practices in international payments refer to the established norms, rules, and procedures governing financial transactions between parties located in different countries These customs and practices ensure smooth and secure cross-border trade and financial transactions Example: The Uniform Customs and Practice for the Documentary Credits; Uniform Rules for Collection 2.5 Documents for International Payment Documents for international payment come in two types: "financial documents" and "commercial documents” Commercial documents: “Commercial documents” are written records of commercial transactions describing various aspects of those transactions They may include orders, invoices, shipping documents, transport papers, and certificates of origin Commercial documents are divided into two main types: - Transport documents: for example, Multimodal Bill of Lading Ocean, Bill of Lading - B/L, Airway Bill, and Railway Bill - Commercial invoice: is the bill issued by the seller to the buyer A commercial invoice is to be produced by the seller in accordance with the contract For example, Insurance certificate, Packing list, and Certificate of Origin (C/O) Financial documents: "Financial documents" means bills of exchange, promissory notes, cheques, or other similar instruments used for obtaining the payment of money 2.6 Instruments of International payment Bill of exchange (B/E) Bill of exchange, according to the Law on Negotiable instruments, means a valuable paper created by a drawer, requesting the drawee to pay unconditionally a specific sum upon demand or upon a fixed time in the future to the beneficiary Process of using a bill of exchange: Cheque Cheque, according to CPSS Glossary - March 2003, is a written order from one party (the drawer) to another (the drawee, normally a bank) requiring the drawee to pay a specified sum on demand to the drawer or to a third party specified by the drawer Process of using cheque: Promissory note Promissory note is described as an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on-demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer Process of using promissory note: 2.7 Terms of International payment International payments involve various terms and conditions that are negotiated between parties involved in a transaction These terms help define the currency, timing, location, and method of payment Term of currency: This classification is carried out based on the convertibility of currencies According to this method, there are three ways to classify currency - Classification of Currencies based on their strengths and weaknesses + Weak Currency: A currency with a lower exchange rate value when compared to other currencies It may be subject to depreciation and not widely accepted or traded + Strong Currency: A currency that has a higher exchange rate value relative to others It is generally stable and widely accepted in international trade - Classification of Currencies Based on Scope of Use: + World Currency: World currencies are not tied to any particular country and are often used in international trade and finance Historically, gold has served as a world currency because of its universal value and acceptance + International Currency: International currencies are used in international transactions but are associated with specific countries or organizations Examples: Special Drawing Rights (SDR), Euro (EUR), … + National Currency: National currencies are issued and regulated by individual countries and are primarily used within the borders of that country Examples: The US Dollar (USD), Vietnamese Dong (VND), … - Classification of Currencies Based on the Form of Existence: + Cash: Cash refers to physical forms of money, such as banknotes and coins, that are tangible and can be used for transactions in the traditional sense + Credit Money: Credit money represents funds that exist as bookkeeping entries or digital records within the banking system It includes deposits in bank accounts, which can be used for electronic transactions + Electronic Money: Electronic money, or e-money, is a digital form of currency that exists purely in electronic format, such as cryptocurrencies like Bitcoin, digital wallets, and other forms of digital payment Term of time of payment: Time of payment refers to when payment should take place International trade presents a spectrum of risks, which causes uncertainty over the timing of payments between the exporter (seller) and importer (buyer) There are three types of time of payment: Advance payment: There are two types of advance payments that are "Cash with order (CWO)" and "Remittance in advance" Payment in advance is used in minimal circumstances Concurrent payment: + At sight: Payment is made against a documentary bill that is issued by a sight L/C + Document against Payment: Payment is made upon delivery of documents + COD (cash on delivery): Payment is made upon delivery of goods, delivery order, or warehouse warranty Deferred payment: Deferred payment allows the buyer to receive the goods, then after a certain period, make payment It is a form of selling goods on credit to the buyer There are four types of deferred payment: Usance Basis, Documents Against Acceptance (D/A), Escrow Account, and Open Account Term of place of payment: In international payments, an equally important issue is choosing the payment location The payment location can be at the exporter’s country, or importer’s country, or in a third country In sales contracts, payment agreements must clearly stipulate the place of payment It depends on the agreement between the two parties Typically, if you choose the payment currency of any country, the payment location is also in that country Term of method of payment: Document continues below Discover more from: International Trade CN17 Trường Đại học… 13 documents Go to course 20 25 10 13 Discuss THE Influence OF… International Trade None Nguyên-lý-kế-toán học phần mng… International Trade None Các vấn đề ôn tập Kinh tế Đầu tư quốc… International Trade None 93 22113 CEMG2811 Nguyễn-Thị-Quỳnh… International Trade None Bí Kíp Trader UG 2022 - Nâng Cao… International Trade None Đề cương Qtccu How payment is made depends on the role of the banks involved vvv and affects the security offered to both buyer and seller International Trade None 2.8 Methods of International Payment 2.8.1 Payment in advance In a "payment in advance" (also referred to as a "cash in advance") transaction, the seller gets paid before the "delivery of goods" (e.g., shipment of goods, arrival of goods, etc.) Or it means that payment in advance requires the buyer to pay prior to the delivery of the goods Process of using Payment in advance: 2.8.2 Open account In an open account transaction, the seller ships (or delivers) goods and sends the shipping documents, including the invoice, directly (not using a banking system) to the buyer without receiving payment, and the buyer will pay at a future due date The seller extends credit to the buyer by allowing them to pay in arrears Process of using open account: 2.8.3 Collection A seller sells the goods to a buyer and asks his banker to collect money on his behalf from the buyers Therefore, the bank acts as an agent of the seller in collecting money from the buyer Clean collection is the collection of financial documents (drafts) when they are not accompanied by commercial documents Documentary collection is the collection of financial documents (drafts) accompanied by commercial documents (invoices, transport, and insurance documents, etc.) There are two types of documentary collections Document against payment D/P: Document against acceptance D/A: 2.8.4 Documentary credits A documentary credit (or letter of credit) is a definite undertaking of the issuing bank to pay a complying presentation (presentation of documents) An issuing bank would pay a beneficiary (normally the seller), if the documents presented complies with the terms and conditions of the credit Process of using documentary credits method: