PROVINCE 3.1 Results of VPSuper card service business
After a year of development, actively applying measures of advertisement on mass media, VPBank has gradually put VPSuper card into the list of useful and essential services to consumers.
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Chart 6 below shows the results of a survey implemented by VPBank to research people’s awareness towards VPSuper card, when the card has been issued for almost a year.
Chart 6: Customer evaluation about awareness of VPSuper card in February 2012
(Source: VPBank Card Center) More than two fifths of those who are surveyed, equivalent to 42%, have never heard of VPSuper card. This is an understandable problem because the time that VPSuper has come to customer is too short. On the other hand, there are 58%
of respondents have known VPSuper cards, of which 12% had VPSuper card. These figures though are still relatively small compared with other card products of the State banks in Nam Dinh province; it also marks the VPBank's efforts to make VPSuper card popular with consumers.
Category 2011 2012 in plan Compared to 2011
Number of card issued 509 1000 196,5%
Issuance fee 25,450 50,000 196,5%
Maintaining fee 27,995 55,000 196,5%
Payment and money transforming fee 51,623 80,000 155%
Total income from VPSuper card 105,068 185,000 176,1%
Table 1: VPSuper card Growth in VPBank branch in Nam Dinh province
(Source: VPBank Card Center)
Since VPSuper was launched early in 2011, many people and businesses still have not known about this a-lot-of utilities product. However, from the table 2 we can see that the number of 509 issued cards in the first year at a narrow market like Nam Dinh province is also a good sign for VPBank. Compared to the number of VPBank domestic debit card issued in Nam Dinh province, 1,919 cards, the VPSuper also takes up more than 25% of the total.
With the issuance fee and maintenance fee set at 50,000 VND per card and 55,000 VND per card, VPSuper card is a debit card product with strong competitiveness on the domestic market of Vietnam in general and Nam Dinh provinces’s card market in particular. Additionally, the total revenue from VPSuper cards issued in the first year reached more than 105 million. To continue the success of VPSuper card issuance in Nam Dinh province in 2011, VPBank has set a new plan for 2012. The bank planned to issue about 1,000 cards, nearly doubles compared with 2011, and with the total benefit reaching over 180 million USD, increasing 76% over the same period. The goal of VPBank branch in Nam Dinh province in 2012 is to make VPSuper product become a mainstream domestic debit card of the bank to bring the best utility of card products to the user, contribute to improve the image and reputation of the bank.
Now VPSuper is applied the most advanced technology on Vietnam card market, along with outstanding utilities, certainly in the near future, the number of VPSuper cards issued and card revenue will be one of the leading benefit sources of VPBank.
3.2 Limitations in VPSuper card service development at VPBank branch in Nam Dinh province
Being a new card product, the development of VPSuper card issuance and payment services also face many difficulties and limitations.
3.2.1 Limited using-card subjects
VPBank cards are issued to focus on young intellectuals such as students, businesses; therefore, VPBank's cards are not familiar with the popular classes. The middle-income people are now overwhelming in the present population, and they
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also have the total consumption much larger than the rest. And this market is a long- term target of the VPBank and other commercial banks.
3.2.2 Small card payment environment
On 28th November 2011, Prime Minister Nguyen Tan Dung signed and issued Decision No. 2106/QD-TTg on the recognition of Nam Dinh city as a type 1 city. This was a good sign for Nam Dinh to enable all economic and social fields of the province have the opportunity to grow. The banking sector in general and VPBank Nam Dinh in particular are well-aware that it’s time to assert position in Nam Dinh market. In addition, activities to promote the issuance and payment of VPSuper are also noticed more than ever.
However, besides offering numerous opportunities for VPBank, the payment card market also sets a lot of challenges. Currently, there are the presences of State banks such as Vietinbank, Agribank, or BIDV in Nam Dinh market; therefore, the competition between banks in the card services is becoming more and fiercer because Nam Dinh is just a small province with limited population. Furthermore, the distribution channels of the banks are now mainly focusing on big cities like Hanoi and HCM, ATM network is not widely expanded, so that it hasn’t met the customer demand, and many people in a small province like Nam Dinh are strange to automatic payment services of banks.
3.2.3 Using cash habit in community
Currently, in Vietnam as well as in Nam Dinh province, people still use cash as a main payment tool. Since the payment card was brought to life, this habit has been changed somehow, though not significantly. Only a few people use the cards as a tool to pay, up to 83% of people use cards just to withdraw money. Because of the inconvenience of card payment when the number of card-accepting units in Nam Dinh is small, so people have not paid much attention to this kind of advanced card.
3.2.4 Risks arising form card issuance and payment
There are many ways to identify and classify different risks, depending on selection criteria. However, it can be generalized and reached under two angles: (i), Risk in card issuance, (ii) risks during using and accepting payment card.
Risk in card issuance
Issuing banks always have to deal with many different risks during the card issuance with a lot of activities including customer choice, card personalization, or
information (fraudulent application), clients’ untruthful information, credit risk, lost card and missing data.
Risks during using and accepting payment card Card payment activities also contain potential risks:
- Fraud card-accepting units (CAU)
- CAU enters into collusion with the cardholder to steal card data for illegal purposes or accept counterfeit cards
- Card users change the amount of money on the bill; steal money in the account when they pay for goods or services via letter, message or Internet.
- CAUs do transaction with a wrong type of registration, change transaction amount
- The cardholder's account are used - Cards are copied to counterfeit