Some solution to develop the card payment activity in viet nam joint stock comercial bank for industry and trade vietinbank for the period of 2012 2017

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS CHU THANH TAM SOME SOLUTIONS TO DEVELOP THE CARD PAYMENT ACTIVITY IN VIET NAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE_VIETINBANK FOR THE PERIOD OF 2012 - 2017 Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor 1: Dr Nguyen Thi Phi Nga Supervisor 2: Dr Pham Quy Long Hanoi, 2012 TABLE OF CONTENTS COMMITMENT i ABSTRACT ii TÓM TẮT iv TABLE OF CONTENTS vi LIST OF TABLE ix LIST OF ABBRIVIATIONS xi INTRODUCTION CHAPTER 1: THE BASIC ISSUES ON THE CARD PAYMENT ACTIVITY 1.1 OVERVIEW OF THE BANK CARD AND REAL SITUATION OF THE CARD PAYMENT 1.1.1 Definition of the bank card and card payment 1.1.2 Classification of bank card and form of card payment 1.1.3 The of formation and development history of the payment card in Vietnam 1.2 PROCESS OF THE CARD PAYMENT 12 1.2.1 Overall process of card payment 12 1.2.2 The participation entities of the card payment 13 1.2.3 Charges and charges sharing rate in the card payment activity 14 1.3 THE ROLES AND THE MEANINGS OF CARD PAYMENT ACTIVITY 15 1.3.1 For the society- national economy 15 1.3.2 For the bank joining in the payment 18 1.3.3 Impact on the card owner and the unit accepting the card payment 22 vi CHAPTER 2: THE FACTUAL SITUATION OF CARD PAYMENT IN VIETINBANK 26 2.1 GENERAL INTRODUCTION ON VIETINBANK 26 2.1.1 The general introduction on VietinBank 26 2.1.2 The general introduction on VietinBank Card business Center 27 2.1.3 The process of formation and development of payment operation by card at VietinBank 30 2.2 THE POSITION OF VIETINBANK CARD SERIVES 32 2.2.1 The prominent speed of growth, leading in the quantity of market share 32 2.2.2 The quality and profit have not yet been proportional to the potential 37 2.3 THE FACTUAL SITUATION OF IMPLEMENTATION AND DEVELOPMENT OF PAYMENT SERVICE BY CARD IN VIETINBANK 41 2.3.1 The factual situation of implementation and development of card business and payment 41 2.3.2 The evaluation of real situation of conducting and developing the VietinBank’s card payment 54 2.4 SWOT ANALYSIS ON VIETINBANK CARD PAYMENT BUSINESS 59 2.4.1 External environment analysis- challenges and opportunities of VietinBank 60 2.4.2 Internal environment analysis- strong and weak point 68 2.4.3 SWOT matrix analysis 75 CHAPTER 3: SOME SOLUTIONS TO DEVELOP CARD PAYMENT ACTIVITY IN VIETINBANK 80 3.1 Focusing on the market segment, groups of lines and types of card which bring the sales of payment and profit 80 vii 3.1.1 Exploiting the group of lines bringing the sales of payment and high profit 80 3.1.2 Increase the transaction according to the card forms and the transaction forms 81 Cover and scoop the whole open and potential market 83 3.3 Improve the card payment business effectiveness through marketing mix 7Ps 85 3.3.1 P1 - Product: 85 3.3.2 The price 92 3.3 Promotion and media 95 3.3 Place - Distribution channels 97 3.5 Human resource 99 3.6 The process 100 3.7 The physical evidence 102 3.4 SOME RECOMMENDATION 104 3.4.1 The recommendation to the government on the policy and legal lobby 104 3.4.2 The recommendation to some relevant merchants, boards, sections 105 REFERENCES 106 Appendix Apenndix Appendix viii SOME SOLUTIONS TO DEVELOP THE CARD PAYMENT ACTIVITY IN VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE FOR THE PERIOD OF 2012 - 2017 Chu Thanh Tam MBA Candidate, 2008 – 2010 Vietnam National University, Hanoi School of Business Supervisor: Dr Nguyen Thi Phi Nga and Dr Pham Quy Long INTRODUCTION Reasons for the subject’s selection Vietnam Joint Stock Commercial Bank for Industry and Trade_ VietinBank has been identifying that the retail bank’s service development is an important part in its development strategy, and especially, of which developing the payment service by card is considered as the core and basic products in the booming context of Vietnam Card market With the aim of becoming the number one financial group in Vietnam, one of the large targets of VietinBank is developing the card payment as the leader Thus, it time to review “Some solutions to develop the card payment activity in Vietnam Joint Stock Commercial Bank for Industry and Trade_VietinBank for the period of 2012-2017” The objective of the research The research objective is to systemize theoretical framework related to the business services of the bank card payment Then analysing the real situation and the card payment business of VietinBank, since then recommending the practical and applied solutions to increase the profits from the card payment activity of VietinBank matching with the potential, to shorten the gap with the first competitor and toward to occupy the market and become the leading bank of Vietnam and have the position in the local area Scope of the study Subject researchs and analyze in many subjects, many different fields of the experienced and deeply understanding persons in the financial sector in general and the retail financial sector in particular, since then building the synchronous and practical strategy with the reality of this bank Due to the limited time and working conditions, the study scope of the subject is limited with researching some solutions to develop the card payment activity in VietinBank The study entities are mainly characters who are Merchants – Shops or supper markets use card payment method according to cash payment method, Customer – card owner and VietinBank staffs – people undertake VietinBank card payment serivce business Research method: Some methods of analysis, evaluation, comparison and collection are used to study and build the thesis, of which the analysis method (micro, macro environments analysis, value chain, SWOT matrix analysis) will be mainly used The used theoretical bases include the theoretical bases on card payment activity, factors impacting on the card payment turnover, the specific strategy of the banking service, etc combining with real survey in the variety Merchants, also referring the successful models of the foreign countries New contribution of the subject The subject will contribute the solutions matching with the reality and the present situation of VietinBank, these solutions are specific in contents, creativeness, and feasible to apply for VietinBank in term of becoming the leading bank of card payment service in Vietnam CHAPTER 1: THE BASIC ISSUES ON THE CARD PAYMENT ACTIVITY 1.1 Overview of the bank card and real situation of the card payment 1.1.1 Definition of the bank card and card payment Card payment is the payment method in which the card owner can use the card to pay for the goods and services purchase money or withdraw automatically cash through the card readers or the automated taller machines, or in other words, the card payment is payment method without using the cash but the card 1.1.2 Classification of bank card and form of card payment 1.1.2.1 According to the payment characteristic of the card Credit card: is the card allowing the card owners to implement payment, withdrawing within the issued credit line according to the agreement with the card issuance bank Debit card: is the card allowing the card owners to implement payment, withdrawing within the amount of money in the payment deposit account of the card owners opened in a bank Besides the above two cards, there is Cash card: this is the cash drawing card in the automated taller machine or the bank 1.1.2.2 According to payment scope Domestic card: is the card which is limited in the scope of a nation International card: is the card which is accepted all over the world, uses the strong foreign exchange for payment 1.1.2.3 According to issuance entity Bank Card: is the card issued by the bank in order to help the clients use amount of money financed by the Bank This card is mainly used in Vietnam Non-bank Card: is the tourism and entertainment cards issued by the large business groups or the big petrol companies, the large shops, etc such as Dinner’s Club, Amex, etc 1.1.2.4 According to production technology Embossing card: Based on the embossing technology; the first card was produced by this technology At the present, this card is not been used no longer because its technology is too simple, easy for counterfeit Magnetic stripe: Based on the letter technique with two magnetic tapes storing information in the card’s back This card was used popular in the last 20 years, but there are some weaknesses: because the information in the card can not be coded by itself, the card only stores the fixed information, the data storage space is litter; it can not apply the coding technique, information security, etc Smart Card: this is the newest generation of the payment card; the structure of the card is the same as a computer 1.1.3 The of formation and development history of the payment card in Vietnam 1.1.3.1 History of formation and appearance of the payment card in Vietnam In 1990, VietcomBank signed the contract of Visa card disbursement agency with French bank, this activity started the adoption of the payment card into Vietnam In 1996, the Foreign Bank officially became the member of Visa International Organization Then, A Chau Bank, VietinBank Vietnam also became the official members of the Visa Card Organization At this year, Vietnam Foreign Bank (VCB) issued pilot the first bank card, as well as the association of Vietnam card payment banks was also established with the four founders including VietcomBank, A Chau Commercial Joint Stock Bank, Joint Stock Commercial Bank for Import and Export (Eximbank) and First Vinabank The legal corridor for the card activity at that time was only the Decision No 74 issued by Governor of the State Bank on 10/4/1993 regulating the “temporary regulations on issuing and using the payment card” The card market in 2006, 2007 was eventful because Vietnam joined in the large playground- WTO, and the credit card service and ATM card were the efficient “weapons” for the bank to penetrate the market It can be said that VietinBank joined in this playground later than VietcomBank near half of the decade; the knowledge and the experience about the card of VietcomBank are the clear advantages and the competitive advantages of this leading bank 1.1.3.2 The development of payment card in Vietnam and some achievements In over the last 15 years, the card service has been developed with the high speed, from when being considered as a property or a trademark of the successful person, at the present, the bank card becomes the popular payment tool In Vietnam, there are 32 banks issuing the card, with about 130 different card trademarks, of which 54% are the local card trademarks The card service has had the high growth rate in the recent years, 150-300%/year By the end of 2007, a number of the card issued by the banks are near 8,3 million of cards, in comparison with 3,5 million of cards in 2006 At the present, the payment density by card accounts for 6% in the sum of the exchanges of non-cash payment tools Among the cards issued by the domestic issuance organizations, the local debit card (popular named ATM card) accounts for 93,87%, then the international debit card accounts for 3,65%, the international credit card accounts for 2,22% and the local credit card accounts for 0,31% By the end of 2007, there were 4.300 ATM machines in all the country; over 23.000 places accepted the payment by POS card At the present, some main card unions in Vietnam include Smartlink Company; East Asia Card Union, International Financial Switching Joint Stock Company Banknetvn In 2007, in the tendency of increasing the competitiveness, many banks issued the card forms with the high security, which was the CHIP card with the EMV standard and supplying many attached benefits for the customers By the end of 2010, the growth rate of the card market was very great; there were 15.000 ATM machines in all country, over 40.000 places accepting the payment by POS card The two large unions, Banklet and Smartlink cooperated with each other and gathered the card payment for all the member banks 1.1.3.3 Some main obstacles in the progress of the card payment development activity Vietnam payment card has many limits and insufficiencies preventing the development progress of the payment card:  The habit of using the cash in consumption of Vietnamese people is very popular  Vietnam lacks an instruction and management mechanism, does not have the clue organization to mobilize and collect whereas the banks are not consensus; even they consider the ATM development as the competitive weapon  The security issue of card payment is not been assured, leading to the disorder and unbelief of the card users The above situation is partly caused by the weak payment network management, low card production technology 1.2 PROCESS OF THE CARD PAYMENT 1.2.1 Overall process of card payment Figure 1.1 : General payment-via-card process (Sources: Card centre - VietinBank ) 1.2.2 The participation entities of the card payment The card owner: is the person whose name is written in the card and is entitled to use the card to pay the amounts of goods and service purchase Merchants: are the goods and services business sectors which sign with the payment bank on accepting the card payment such as the restaurants, the hotels, the shops, etc Issuance bank: is the bank which issues the card for the owner Payment bank: is the bank which installs the card payment machines International card organization and switching card organization: are the organizations which connect the payment bank and the issuance bank For example: Smartlink and Banknet, Visa Card and Master, JCB, American Express, etc The product of card service of VietinBank confirms the competition position in the market of debit card in Vietnam As the result, VietinBank becomes the leading bank in terms of issued debit cards The total number of international credit cards issued by VietinBank gained quite big amount number, ranking the second in the card market with 30% the market share Regarding on the network: Currently, the number of machines of the ATM system of VietinBank increases to 2,000 machines The current quantity of POS also increases up to 12,000machines and VietinBank becomes the second bank in the market in terms of POS market share as of 2010 Increasing the utility, different value for the card product : VietinBank leads in the market in the development of utility of Card service 2.2 THE POSITION OF VIETINBANK CARD SERIVES 2.2.1 The prominent speed of growth, leading in the quantity of market share In term of the market share of quantity, VietinBank currently ranks the first in the market in the number of issued debit cards and coverage of the payment machines (The issued credit card still ranks the second, behind the VietcomBank), VietinBank passed other banks with the admirable speed; from the fourth and fifth position in 2009, this bank ranked the second in 2010 and at the current time, it gained the first I can be seen that VietinBank left many competitors behind and shortened the distance with the first competitor 2.2.2 The quality and profit have not yet been proportional to the potential VietcomBank is still the biggest competitor of VietinBank, leading the market with 34% market shares Except VietcomBank, the market share of international credit cards basing on the sales of used cards of banks has no huge difference Regarding on the absolute sales, the sales of payment of VietinBank just accounted for about 15, 46% comparing to the sales of VietcomBank (this number had the increasing trend comparing to year 2010: 13, 11%); The increase of sales of VietinBank in Quarter comparing the same period in 2010 had the feasibility: all are > 200%; The quarter I, 2011 marked the huge growth of the sales of JCB cards at 10 POS of VietinBank (increasing 534 times as much as comparing to the same period and nearly equivalent to 60% of the whole year 2010) 2.1 THE FACTUAL SITUATION OF IMPLEMENTATION AND DEVELOPMENT OF PAYMENT SERVICE BY CARD IN VIETINBANK 2.3.1 The factual situation of implementation and development of card business and payment 2.3.1.1 The steps of card business and payment of VietinBank Step 1: Getting access to the unit to persuade it to become the unit which accepts VietinBank’s card This is considered as the first step and also the most difficult step in the process of conducting the card business To get the success in this step, the seller has to implement the small steps as follows:  Identifying the subjects which it is necessary  Get access and prepare to presenting  Receiving the objection: Repeating the objection by answering, The leading sentence + Expressing the sympathy with the client, Education: Representing the ideas to help the client understand the issue  Coming to sign the contract: Step 2: Singing the contract - Fulfill in all the relative documents Step 3: Training and instructing the usage Step 4: The development and care - The works related to the service after selling It has no ending point; it is a prolonging continuous process The detailed contents of the step include: Receiving the print paper, signals which identify the card payment, Reporting the summary of periodical transaction Training the knowledge for the old cashiers and training the new cashiers Solving the obstacles related to the payment 11 2.3.1.2 The real situation in the process of implementation and development of card payment business a The real situation 1: Much depending on the network of the branches, as a result, this leads to the difficulty in controlling The biggest limitation of this channel is that the care cost and the specialization requirement of the circulating staff of the branch is high; as the result, the quality of the care can not meet well b The real situation Has not yet promoted the performance of the current channel of implementation and development c The real situation 3: Marketing- Caring after selling has not yet orientated to the proper client 2.3.2 The evaluation of real situation of conducting and developing the VietinBank’s card payment 2.3.2.1 Analysis of some basic criteria of finance: Considering come basic criteria of finance and in comparison with the competitor No.1, it can be seen that the efficiency of card payment business of VietinBank is not equal to the potential Time for capital repaying of installing and caring one unit of receiving the card is years comparing to the year circle of the machine The rate of profit is 1, 22; it means that if VND is spent, after years, it is possible to receive one VND spent and within next years, the interest is 0, 22 VND In fact, the rate of profit of Vietcombank is 2, and time of capital repaying is year and months 2.3.2.2 Some hindrances make difficult for activity of card payment Subjective reasons Difficulties from the Branches: difficulties relating to individuals, location, Leader’s concern and card -professional techniques In addition to that, difficulties also are 12 people’s education, living standard, habits, and culture are still undeveloped and are not suitable for card payment service Objective reasons: consumption habit in cash of people This habit had penetrated into Vietnamese people’s thinking, consciousness, even staffs, leader of the bank in Braches where POS machine is installed for good payment Only habit changes habit, how is it possible to change consumption habit from payment in cash to card payment Perhaps, this is a problem of time and time will deal with this problem 2.3.3 Basis given to supposed solutions aiming at card payment activity improvement of VietinBank Content in chapter II clearly mentions how the “health” of VietinBank card payment activity is and it simultaneously gives the prediction about the reason of that “health” situation In this chapter, writer will analyze the external environment and objective factors affecting to card business activity of Vietinbank aiming at finding the opportunities and challenges and internal environment affecting to card business of VietinBank aiming at finding strong and weak points of card payment activity Then, four grafts of SWOT matrix from analyzing the external and internal environment will be used to give some solutions for card payment service development for VietinBank 2.3.3.1 External environment analysis- challenges and opportunities of VietinBank 2.3.3.1.1 External macro environment Politics: Legal documents about card payment are evidence to show the support of the State that is made a maximum favorable condition by the State and it is an opportunity for VietinBank Recently, Prime Minister of the Government had signed Decision No 291/2006/QDTTg (on 29/12/2006) to approve the Scheme of none–cash Payment in the period of 2006-2010 and in orientation to 2020 in Vietnam The scheme is an important legal basis for payment activities meeting the demand of economic development 13 On 27/9/2010, Vietnam State Bank released the Dispatch No 7305/NHNN-TT about opening the POS connection in Hanoi Accordingly, banks and Switching companies interconnect locations that accept the first phase POS Currently, the system had been multiplied nationwide by the banks Lately, in a conference held by Ministry of Labor, invalid and social affairs, enforced decision given to business units on paying through card for staff and officers Simultaneously, in analysis of delegates and member of the National Assembly also indicated that that none-cash payment is the origin to prevent the money laundering Society: permanent habit of people is that payment in cash and the thought of doing things that bring tangible benefits are both challenge and blank market opportunity of card payment service of VietinBank Although many supermarkets have been equipped POS, the number of people pay in card is still limited in comparison with paying in cash MERCHANTS not actually focus on customer service and payment civilization In terms of business units, Merchant always want to be paid in cash and only install POS when their customers require paying in card Merchant that service is never used, card transaction charge is a big hindrance leading to their refusing of using card because units’ benefit will be reduced in comparison with pay- in- cash Therefore; to avoid reducing benefit, many units had collected the additional charges of the card owner This affects to owner’s card consumption, then, they will not want to use it further Economics: Vietnam is a developing economy and young population who love civilized technology together with typical consumption market of the world are a big opportunity for VietinBank and other banks The result of the general housing and population investigation in 2009 showed that Vietnam is the third largest population of the Asean and the thirteen worldwide Additionally, Vietnamese population is belonging to the golden population structure in the period of 2009-2039 with the scale of labor age accounting for 65% of the general population in the period of 2015-2025 The youth under this structure are both objectives who will attract the new things, change the cash use culture and who will 14 possess bank card, discover and access technology easily As a result; our country is being benefited a great number of labor who can possess payment card Furthermore; this force is highly having tendency to consuming Technology: technological development is a basic chance for VietinBank in some aspects, but its incompleteness also brings difficulties Until now, on the basis of financial Switching and interconnection technology, card owner from different banks can pay from different payment machines of numerous banks without limitation of paying in the correct machine of the bank releasing their card VietinBank is currently importing payment machine from oversea market, machine buying mechanism is lack of being flexible and active That payment is greatly affected by network provider’s telecommunication link At the moment, telecommunication network quality in Vietnam is in mediate As a result, that payment in numerous payment hours by card payment machine using mobile SIM or telephone line is not actually transparent 2.3.3.1.2: external micro- environment analysis Micro-environment: using model Five-Force to search for micro environment of payment activity at VietinBank Client negotiation power – Low: it can be said to be relatively low because there are too many card service product providers bringing about different choices to clients Banks have to compete each other to service clients, or even competition happens in the internal Branches of a Bank beside VietcomBank, Payment quality of VietinBank machine’s transfer link has a better payment quality than that of other banks, VietinBank gradually becomes a prestigious trademark to consumer and has competition strength to client Additionally; banks will invest payment machine at the value of 10 million when Merchants become a unit that accept their card Therefore; Banks will not pay attention to the small -size Merchants 15 Negotiation power to Provider- rarely low: VietinBank’s negotiation power to Provider is not high Specifically; provider will include: Provider of payment machinethe most important provider, connection transfer, and parallel connection At the present, Vietnam does not have the above popular machine providers and producers It is completely imported Because this is a particular machine, the number of provider is counted on the fingers Hence; competitive creation and negotiation power of providers are bigger than that of VietinBank However; almost no provider conversion charge is also a problem creating more difficulty in negotiation to provider Substitution product- very high: products and services substituted for card payment service is cash, then none-cash payment such as account transfer, cheque… That use cash for payment helps Merchants not take any charges for the third party, they are totally benefited that amount of payment Anymore; the habit of cash payment and payment quality are sometimes not so high because of the limitation of transfer link technology Beside that account transfer is also a substitution choice for card payment; this is a mean of service for the remote payment without a contact between sender and receiver Industry participation hindrances: average The number of bank participating in the field of card is very big with 42 banks, but only 10 banks take part in card payment because investment potential and scale about infrastructure and capital must reach to some extend In fact, this industry participation hindrance is to require a bank with a potential capital and technical infrastructure Hence, this hindrance is a big factor Recently, the State bank has been restricting to establish banks and open transaction offices and giving a requirement of incorporation and rescue small banks This is a hindrance for bank organization integration and an indirect hindrance for card payment industry incorporation Interior competition: Competition in Card payment market in Vietnam is harsher and stronger Besides domestic bank is paying attention to developing this product, it is recognizable that appearance and market extension of various retail products of foreign banks which are 16 in the top of retail sellers such as HSBC, ANZ, Citi or Standard Charter Domestic banks are ready to devaluate or find all the ways to defeat their competitor including bad action as cutting transfer link, destroying machine, and cutting machine network From the above Five Force PEST analysis and VietinBank is heading to the opportunities and challenges clearly Writer will express these opportunities and challenge in the matrix SWOT in the next part That is the opportunity about golden moment to develop and about challenge to compete harshly 2.3.3.2 Internal environment analysis- strong and weak point In relation to financial power, network and share, VietinBank is currently the second largest bank of the internal banks According to the above analysis, release market share is nearly in the top Strikingly development pace in year when it reaches to the leading position from the 4,5, big market share and numerous strategic and traditional customer relationship establishment However; business orientation of VietinBank is too large, strategic goals is not established and business activities is lack of concentration Sales activities have not been developed effectively For technology: VietinBank recently pay attention to development investment to improve service quality, investing technology, techniques and equipments Monopolize new market stages: nonstop road fee collection service, ATM card integrated with time ticket, officer ticket, student card, library ticket and none cash hospital fee collection system However; it is not developed strongly and potentially distinguished service/products are not made use of in the new market stage Customer account system is still complicated in numerous system bases and because it has not yet been managed in a centralized way, customer service is limited Organization: attractive policy of salary, bonus, and benefit has pushed an internal motive effectively and competitively However; administration procedures are too wordy, connection among rooms and sections is relatively weak and ineffective Business reputation and prestige, and culture: VietinBank is prestigious as a State bank dynamic and adaptive to new age 17 VietinBank has not yet accepted card payment: Amex, Dinner Clubs, CUP: this is a great hindrance when access to units, especially big and potential units such as: 4-5 star hotels where Amex card owner is relatively high The important capability and potential VietinBank is first of all a state business, hence; VietinBank is greatly benefited from Government, Ministries and Industries Vietnam’s business environment is environment based on “relationship” and prestige “state” is still a decisive factor to the success of many trade affairs and VietinBank possesses a great amount of assets named after the above factors However, bank is very dynamic under the market and economic rules without basing on these advantages and learning how to manage in a modern way of capitalism to apply to our management machine bringing about the highest business efficiency Value chain analysis to find out which department to create the value chain:  Cost advantage: By reducing and saving the costs -> increase the added value VietinBank will have the cost advantage if it can know how to control the business units better than the competitors by re-structuring the third partner use value chain to exploit and care the Merchants In details, it will change the structure; create the card payment service as a new process, new distribution channels, or selling through the new method At the present, selling and caring the card permission units by the personnel of the VietinBank’s branches are not effective; the following example will present the cost advantage in term of using the third party to care the Merchants  Differentiation: The differentiation which VietinBank can apply from the value chain analysis is keeping the price not following the below competitors to care the small and medium units well, the market segment which is not concerned by the No competitors and competed by many banks However, it is determined that the bank will not join in the price rate to make the good care quality 18 2.3.3.3 SWOT matrix analysis SWOT ANALYSIS The strength The weakness - The trademark - The orientation of business -The technology -Taking advantage of strong points of - The power of finance other products/services -Diversified products and services -The competitiveness -Integrated product and service - The performance of selling channel -The network -The awareness and habit of the - The market share Branch -Labor policy - The customer care activity after -The program for the holder of selling card - The information system, analysis -The system of centralized card report payment - The low receives of service - The co-ordination between departments, boards - The assignment of work -The customer’s account system Opportunities The risks The development potential of the The situation of unstable inflation market The The competition in the price, care guidelines, polices of government the quality The unhealthy competition VietinBank’s development strategy The pre-condition of card payment 19 CHAPTER SOME SOLUTIONS TO DEVELOP CARD PAYMENT ACTIVITY IN VIETINBANK 3.1 SOME SOLUTIONS TO DEVELOP CARD PAYMENT ACTIVITY IN VIETINBANK 3.1.1 Focusing on the market segment, groups of lines and types of card which bring the sales of payment and profit 3.1.1.1 Exploiting the group of lines bringing the sales of payment and high profit Through analyzing the sales of card payment according to the lines of business and the regional allocation, there are some lines of business accounting for the better sales than others Therefore, in exploiting and opening the card accepting units, focusing on the groups which bring the good sales of card payment will be the method to increase the performance of machine installation and it is possible to receive the service charges from this time Lines of business which brings the sales and good profit are: Hotel, restaurants in exemption of tax, refrigerator supermarket, stores of gold, silver and jewelry and golf area It can be seen that there are some potential lines of business, the strength for three regions throughout areas with huge sales: Hotel, restaurant, gold, silver, jewelry, tourism, supermarket and fashion Some lines of business are the individual potential of each area 3.1.1.2 Increase the transaction according to the card forms and the transaction forms Increase the card payment transaction of the debit card owner Increase the card payment transaction of the On-us card owner Increase rate of cash drawing in POS: Return the large service fees (4%/ 20 3.1.2 Cover and scoop the whole open and potential market The Vietnam commercial banks are aware of the importance of the retail bank, therefore, the development strategy of the Vietnam commercial bank towards to become the retail bank, of which concentrates to investment on the card service development- one of the most important distribution channels turning the bank into the new position, new appearance as well as bringing the potential of charges return in the future And VietinBank can completely it due to its financial potential and nationwide network in all country at the moment However, this is only a part of the covering work; VietinBank should sign the exclusive contract of assembling with the merchants to reduce the participation of the competitors 3.1.3 Improve the card payment business effectiveness through marketing mix 7Ps 3.1.3.1 Product The Vietnam card market is being compared as the “delicious cake” and will be divided smaller and smaller In some next years, the competitive trend on limit and charges will be gradually replaced by the competition on service, utility, especially the services, the utilities via i-banking, sms banking, phone banking and the additional enclosed value VietinBank should make advantage use of the different service product which is the MOTO payment service, online payment, payment on the integrated card products; and continuously increase the useful features for its service products enclosed with other financial service products The card payment service for the virtual and un-touch card: The card payment is not only that the card owner directly strikes card in the payment machine but also paying without submitting the card 1.3.2 The price With the image of big trademark and building up it in the proper way, the VietinBank bank will not purchase the campaign of reducing the price to attract the customers The 21 price strategy here is that VietinBank will apply the flexible price level to take initiative in applying However, it is absolute not to allow the price to be lower than the floor price Building the mechanism allows the banks to take initiative and flexibility in the price according the principle: Using flexibly the floor and ceiling price to ensure the efficiency and target of business Instead of reducing the price for Merchants , VietinBank will build up the preferential programs for the following subjects:  Apply the penetration policy- Use the low price (or =0): the strategy of competitive price is the way to aim at the group of this VIP customer group (5-star hotels, famous restaurants, resorts or golf area )  For VIP Merchants belongs to the potential group, VietinBank will use the penetration policy by taking its cost to care the persons who have the right of decision It is very necessary to take incentives for other service of finance so that they feel not losing much when using the trademark of VietinBank and then they will tell owners of the units that they takes a lot of benefits when using the service of VietinBank 3.1 3.3 Promotion and media It is very necessary to change the media: The first important step is to build up the system of data base on Merchants and this base is used to implement forms of information such calling for periodic care and reporting via telephone, fax, email, message for the key point of Merchants on the information of the program Together with the copied report of payment transaction for the unit, there are the contents of promotion program and updating their results of implementation in order to get the motivation to try It is necessary to build up the long term program of media; however, the summary is short-term 3.1 3.4 Place - Distribution channels Considering the usage of the agency- The third partner: This is the individual, organization which plays the role as one channel of developing the service of card 22 payment, implementation of exploitation operation, meeting and introducing the products of card for the potential clients VietcomBank and the above branches selected the partners effectively because they selected on the base of understanding the card market in Vietnam and they have the business network covering the market, strong ability of finance, good prestige in the market and they does not trade the product of the same type of other competitors; their force of staff is well trained in the specialization In addition, it is impossible to rent the cashier of the unit to be the partner caring for that Merchants This way can be applied for huge Merchants which operate according to the chain 3.1 3.5 Human resource Adding the human resources getting enough necessary knowledge and experience which the work requires: The human resource needs to get the knowledge related to well using the machine of card payment, experience to address the popular mistakes, the way to care the client, especially the prissy or VIP clients Furthermore, the passion for the work is also the criteria of great importance The portrait of a professional salesman : Attitude – Habit – Knowledde - Skill 3.1 3.6 The process Building up the policy of long-term card payment: Part 1: Exploiting and opening the CNT unit Part 2: Installing the machine and training Part 3: After sale service Part 4: The product of integrated payment: For the client: For each 10, 00 VND of consumption for card payment, the client will be received the equivalent loyalty In term of cashiers: The more the client uses the card, the more bonuses the cashiers receive In term of the owner of the Merchant: Other added value realte to advertising, consultance… 23 3.1 3.7 The physical evidence Physical evidence is the material part of service Strictly speaking, there are no physical attributes to a service, so a customer tends to rely on material cues In the case of VietinBank, physical evidence tends to be some of the following:  The compulsory requirement is that when exploiting and caring the Merchant, the staff of VietinBank must wear the uniform and signs, logo adequately  Upgrading the construction of website which has the update list of Merchants and it is easy to search according to the lines and geographic position  Building the set of signals to identify the unit of accepting the card 3.2 SOME RECOMMENDATION 3.2.1 The recommendations to the government on the policy and legal lobby  Issue the policies of encouraging the operation of payment by card  Building up the spending way of not using the cash and creating the legal lobby  Improving the document allowing the areas of the State to pay by card 3.2.2 The recommendation to some relevant units, boards, sections  The State Bank  The sector of telecommunication  The sector of electricity and fresh water provision  For the Ministry of Labor, Invalid War and Social Affair  For the Department of Planning and Investment 24 ... time to review ? ?Some solutions to develop the card payment activity in Vietnam Joint Stock Commercial Bank for Industry and Trade_ VietinBank for the period of 2012- 2017? ?? The objective of the research... viii SOME SOLUTIONS TO DEVELOP THE CARD PAYMENT ACTIVITY IN VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE FOR THE PERIOD OF 2012 - 2017 Chu Thanh Tam MBA Candidate, 2008 – 2010 Vietnam... factors affecting to card business activity of Vietinbank aiming at finding the opportunities and challenges and internal environment affecting to card business of VietinBank aiming at finding