Developing card services at Viet A Commercial Joint Stock Bank

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMIC HO CHI MINH CITY.

PHAN THI NGOC HAN

CARD SERVICE DEVELOPMENT AT COMMERCIAL BANK

VIETNAM JOINT STOCK COMPANY

Major: Finance - Banking Code: 60340201

MASTER THESIS OF ECONOMY

SCIENTIFIC GUIDE: Assoc.Prof.Dr. ROYAL VIRTUE

HO CHI MINH CITY – 2015

TABLE OF CONTENTS

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Table of Contents i

List of acronyms iv

List of tables and figures

CHAPTER 1: OVERVIEW OF RESEARCH TOPIC 1

1.1 Urgency of the research topic 1

1.2 Research purpose 2

1.3 Academic overview 2

1.4 Subjects and scope of research 4

1.5 Research Methods 4

1.6 Practical significance of the topic 4

1.7 References 5

1.8 Dissertation layout 5

CHAPTER 2: BASIC ISSUES ABOUT CARDS AND CARD SERVICE DEVELOPMENT AT COMMERCIAL BANK 6.

2.1 The formation and development of bank cards 6

2.1.1 Card concept: 6

2.1.2 Origin of the 6 . card

2.1.3 Card role: 7

2.1.3.1 For 7 . users

2.1.3.2 For Bank 8

2.1.3.3 For businesses 9

2.1.4 Subjects participating in the use of card services : 9

2.1.4.1 International card organization 9

2.1.4.2 Card issuing bank 10

2.1.4.3 Cardholder 11

2.1.4.4 Card payment and (Banking) and correspondent banks 11

2.1.4.5 12 . card acceptor

2.1.4.6 Person responsible for payment 12

2.1.4.7 Card Center 13

2.2 13 . card service

2.2.1 Service concept 13

2.2.2 Service characteristics 13

2.2.3 Card service concept: 16

2.3 Card classification 17

2.4 Benefits and risks of using 18 . card service

2.4.1 Benefits of using 18 . card service

2.4.1.1 For cardholders: 18

2.4.1.2 For Bank 19

2.4.1.3 For units that accept 20 . cards

2.4.1.4 For the economy: 20

2.4.2 Some risks in the process of using card services 21

2.5 Business process of card issuance and payment 23

2.5.1 Card issuance process 23

2.5.2 Card payment process: 25

2.6 Development of card services at commercial banks 27

2.6.1 Perspectives on card service development: 27

2.6.2 Criteria for assessing the development of card services in the Bank 29

2.6.2.1 In terms of quantity 29

2.6.2.2 In terms of quality 31

2.6.3 Factors affecting the development of card services of commercial banks 32

2.6.3.1 Group of objective factors 32

2.6.3.2 Group of subjective factors 34

2.6.4 Experience in developing card services at Joint Stock Commercial Bank for Foreign Trade of Vietnam 35

CHAPTER 3: SITUATION OF DEVELOPMENT OF CARD SERVICES AT VIET A JOINT STOCK COMMERCIAL BANK 38

3.1 Overview of Viet A Commercial Joint Stock Bank 38

3.1.1 History of establishment and development of VietABank 38

3.1.2 Business performance 2011-2015 38

3.2 Current status of card service development at VietABank 41

3.2.1 Card products of VietABank 41

3.2.1.1 International credit card 41

3.2.1.2 Domestic debit card 41

3.2.2 VietABank card services 42

3.2.3 Solutions VAB has implemented. 42

3.2.4 The current situation of card service development at VietABank compared to the development target 43

3.2.4.1 Evaluation of card service development scale at VietABank 43

3.2.4.2 Evaluation of card service quality development 56

3.3 General assessment of the development of card services of VietABank 58

3.3.1 Results achieved 58

3.3.2 Existing problems 60

3.3.3 Cause 61

3.3.3.1 Objective reasons 61

3.3.3.2 Subjective causes 63

CHAPTER 4: RESEARCH METHODS AND RESEARCH RESULTS 65

4.1 Research Methods 66

4.2 Customer evaluation of VietABank 66 card service

4.2.1 General characteristics of current customers of VietABank 66

4.2.2 Characteristics of customers' card transactions 66

4.2.3 The degree of influence of some factors on the development of card services at VAB 69

4.2.4 Customer evaluation of VietABank card service through a number of criteria 70

4.2.4.1 Staff 70

4.2.4.2 Reputation, brand and technology of the Bank 70

4.2.4.3 Fees, procedures and procedures for card issuance 71

4.2.4.4 Promotions, customer care policies 71

4.2.4.5 Cards, ATMs and card merchants 71

4.2.4.6 Card problem 72

CHAPTER 5: SOLUTIONS FOR DEVELOPING CARD SERVICES AT VIET A COMMERCIAL BANK....... 5.1 Basis for building solutions 73

5.1.1 Potential for developing bank card services in Vietnam 73

5.1.2 Development orientation of card services of VietABank 73

5.1.2.1 For card issuance 73

5.1.2.2 For card payment service 74

5.1.2.3 Organization and people 74

5.1.2.4 About technology, technique 75

5.2 Card service development solutions organized by VietABank 75

5.2.1 Solutions for 75 . scale development

5.2.2 Expanding market share, withdrawal network and merchants 77

5.2.3 Solutions for developing card service quality 79

5.2.4 Strengthening risk management for card activities 79

5.3 Some recommendations to the Government, State Bank, State management agencies. 80

5.3.1 Promulgating a system of legal documents to protect the interests of participants 83

5.3.2 Investment in infrastructure construction 84

5.3.3 Promotion of card payment activities in Vietnam 84

5.3.4 Creating a stable socio-economic environment 84

5.3.5 Completing legal documents on card 85

5.3.6 There should be policies to encourage card business expansion 85

5.4 For 86 . card association

Conclusion 87

LIST OF ACRONYMS

1. Agribank: Bank for Agriculture and Rural Development of Vietnam

2. ATM: Automated Teller Machine

3. BIDV: Bank for Investment and Development of Vietnam

4. CSCNT: Card-accepting establishments

5. Merchants: Card acceptors

6. NH: bank

7. Joint Stock Commercial: Joint Stock Trade

8. VAB/ VietABank: Viet A Commercial Joint Stock Bank

9. VCB/Vietcombank: Joint Stock Commercial Bank for Foreign Trade of Vietnam

LIST OF DIAGRAMS, TABLES, PICTURES

Diagram 2.1: 18 . card classification scheme

Figure 2.2: The process of issuing 27 . cards

Figure 2.3: Card payment process 29

Table 3.1 Some indicators reflecting business performance VAB 42

Table 3.2: General criteria for cards 2011-2015 47

Table 3.3: Number of cards issued and means of card payment 48

Table 3.4: Card business results 2011-2015 49

Table 3.5: Card account balance at the end of year 50

Table 3.6: Card data on the market at the end of December 2015 51

Table 3.7: Proportion of VAB cards in the market from 2011-2015 52

Table 3.8: Number of ATMs in the market 2015 53

Table 3.9: VAB's share of ATMs in the market from 2011-2015 54

Table 3.10: POS market share in the market in 2015 55

Table 3.11: Proportion of POS machines of VAB in the market from 2011-2015 56

Figure 3.1: Charter capital growth chart 2011-2015 42

Figure 3.2: Asset growth chart of VietABank 2011-2015 48

Figure 3.3: Chart of Business Performance 2011-2015 49

Figure 3.4: Chart of Balance Growth on Card Accounts 2011-2015 51

Figure 3.5: Chart of card market share at the end of 2015 51

Figure 3.6: Proportion of VAB cards in the market from 2011-2015 52

Figure 3.7: ATM market share in 2015 53

Figure 3.8: VAB's ratio of ATMs to the market. 54

Figure 3.9: Number of Pos machines on the market in 2015 55

Figure 3.10: VAB's share of POS machines in the market from 2011-2015 56

CHAPTER 1: OVERVIEW OF RESEARCH TOPIC

1.1 Urgency of the research topic

Today, the banking industry is considered a lifeline economic sector, of special importance, contributing to promoting the country's economic growth, in order to well perform the key tasks assigned by the Party and State. The urgent issue for the banking industry is to build a strong enough system in all areas: capacity for planning, policy implementation, capacity for administration, management, business, and public level. Modern technology and techniques adapted to the market mechanism. A commodity economy operating under a market mechanism requires rapid capital mobility. Therefore, along with the renovation of organizational mechanism, the banking industry has focused on improving the non-cash payment mode, in which Cards cannot be ignored. Cards have really become a popular means of cashless payment in the world,

Currently, in Ho Chi Minh City and other provinces, there are many banks participating in the card service market to compete for more market share when other products and services are saturated. Not out of that trend, VietABank is one of the banks with small scale, inexperienced and still having to race and promote its strengths in this service to attract more and more customers. However, as a diverse and complex business, many problems related to cards and card services at VietABank still exist, so it is important to research to have good solutions for the development of the product. card is urgent and very important. Not only ensure the growth in the number of cards issued, but also improve the quality of card services,

With the convenience that the card service brings, customers will stick with and use other services of the Bank, so VietABank can have the opportunity to compete with other small and medium-sized banks in the area, find position itself firmly in the current difficult economic conditions.

Stemming from the above reasons, the author chose the topic: "Developing card services at Viet A Commercial Joint Stock Bank" as the master's thesis.

1.2 Research purpose

- Researching theoretical issues about card services at commercial banks.

- Analysis and assessment of the current situation of card service development at Viet A Commercial Joint Stock Bank.

- Proposing some solutions to develop card services at Viet A Commercial Joint Stock Bank in the near future.

1.3 Academic overview:

The thesis is based on the theory of service quality and customer satisfaction;

Researching scientific works, articles, articles ... of domestic and foreign authors with content directly related to commercial banks' operations and card service development at banks This is to draw experiences in the research process, including:

- To Khanh Toan “Developing retail banking services at Vietnam Joint Stock Commercial Bank for Industry and Trade – doctoral thesis in economics 2014. Research topic on theoretical and practical basis for developing banking services retail, learn about the experience of developing this service in some countries around the world, and draw lessons from the experience for commercial banks in Vietnam. Proposed solutions to promote the development of retail banking services at Joint Stock Commercial Bank for Industry and Trade of Vietnam. However, the topic has a wide scope of research including all banking services

In general, card and card services are only a small part, so they have not been paid much attention.

- Van Tao " The reality of non-cash payment, causes and solutions " - published in Banking Magazine (No. 19/2009). The article studies the current situation of cash payment in Vietnam, points out the inconveniences of non-cash payment methods, finds out the reasons for the habit of paying in cash, and gives non-cash payment expansion solution, the results achieved, limitations of this solution and some related recommendations. The article has not yet delved into the issues of cards and card services.

- Le Thi Kim Thu “ Identifying and preventing risks of using bank cards ” - posted on the website of the Banking Association – 2013. The article mentions the risks of the Bank, including risks. Regarding card operations, problems that Vietnamese banks are facing in card issuance and payment activities, the article also offers solutions and recommendations to prevent and minimize losses. The article does not comprehensively study Cards and card services, but only focuses on issues related to card risks.

On the basis of an overview of the research situation, the researches have looked at many angles on non-cash payment activities in general and card payment activities in particular. They are not yet a comprehensive study of card service development in commercial banks. Therefore, the author chose to research this topic with the desire to clarify more about the development of card services, specifically at Viet A Commercial Joint Stock Bank in order to supplement professional knowledge and find solutions. solutions to help the development of card services at Viet A joint stock commercial bank achieve higher efficiency. Thereby contributing to promoting and gradually improving the management of card business in the commercial banking system, as well as the economy, creating a premise for

speeding up the payment process through banks, helping to reduce the proportion of cash in circulation, contributing to curbing inflation and social negatives.

1.4 Subjects and scope of research

- Research object: Developing card services at Viet A Commercial Joint Stock Bank.

- Scope of research on space: The topic focuses on analyzing theoretical and practical issues, customers' evaluation of card services of VietABank.

- Research scope in time: from 2011-2015

1.5 Research Methods

Qualitative, systematic, comparative, statistical, analytical, synthesis and interpretation methods to clarify the problem posed in the research process.

The data source is collected from reports of Viet A Bank Card Center, relevant journals and websites, compiled and processed by the author himself.

1.6 Practical significance of the topic

The content of the topic helps to systematize theoretical and practical issues related to cards and card services. Research on development content, influencing factors, as well as customer evaluations on card services at Viet A Joint Stock Commercial Bank, see the shortcomings and limitations in VietABank's card service development strategy, thereby offering solutions to limit the risks that may arise, hopefully the content of the topic will serve as a reference to come up with strategies to develop card services at VietABank in the near future, attracting customers. customers use card services and other services of the Bank, consolidate and expand VietABank's card market share in order to increase VietABank's competitiveness in difficult economic conditions..

1.7 References

1.8 Dissertation layout

In addition to the introduction and conclusion, the thesis consists of 3 chapters:

Chapter 1 : Basic issues of card and card service development at commercial banks.

Chapter 2 : Status of card service development at Viet A Joint Stock Commercial Bank.

Chapter 3 : Solutions to develop card services at Viet A Joint Stock Commercial Bank.

2 CHAPTER 2‌

CARD BASIC ISSUES AND CARD SERVICE DEVELOPMENT AT COMMERCIAL BANK

2.1 The formation and development of bank cards:

2.1.1 Card concept:

“ A payment instrument issued by the card issuer to customers to use under the contract signed between the card issuer and the cardholder ” (According to Article 2, Decision No. 371/1999/QD-NHNN dated 19 October 1999 on promulgating regulations on issuance, use and payment of bank cards).

2.1.2 The origin of the card

 The formation and development of bank cards in the world

The bank card was randomly born in 1940 with the first name of the DINNERS CLUB card due to the idea of an American businessman, Frank Mc Namara. In 1950 the first plastic card was issued.

Cards quickly became widely used in continents other than the US, in 1960 the first plastic card appeared in Japan, signaling the development of cards in Asia. The first plastic card issued by Barcaly Bank in the UK in 1966 also ushered in an exciting period for card activities in Europe.

 The formation and development of bank cards in Vietnam

In Vietnam, the first card was accepted in 1990 when Vietcombank signed a contract to be a VISA card payment agent with the French bank BFCE and this was the first step for this service to develop in Vietnam.

Today, bank cards are present all over the world with diverse forms and types, fully meeting the individual needs of customers.

consumption. Along with the development of two international card organizations, VISA and MASTER, a series of other international card organizations appeared, such as: JCB, American Express, Airplus, Maestro, Eurocard,... This strong development has confirmed the inevitable development trend of the card. Banks and financial companies are always looking for ways to make the card easier to use and provide the most convenient services for consumers. Currently, card users can use the card in most countries around the world, they no longer have to worry about converting to domestic currency when going abroad.

2.1.3 The role of the card:

2.1.3.1 For users:

 Cash withdrawal :

The first and most basic ability of an ATM card is to help users withdraw cash from their accounts easily and quickly. When cardholders need to withdraw money, they just need to bring their ATM card to any nearest ATM. Customers only need to press their ATM card into the machine, enter the code and request the amount they need to withdraw, all operations take place within 30 seconds to 1 minute.

 Deposit:

This is a service that some banks apply, allowing their customers to send money via ATM cards without having to go directly to the bank. This is a utility to improve the use value of ATM cards and at the same time create advantages for banks' ATM cards in the current card market..

Payment for services:

Users can pay family service costs such as electricity, water, telephone, internet fees, insurance premiums, and even support charity funds by transferring money via their own ATM card. me.

 Bank Transfer:

In addition to depositing, withdrawing money and paying for family service costs, ATM cards also have the function of transferring money at the request of customers to become fast, safe and convenient.

Safe and profitable:

ATM cards also act as a protector of customers' pockets, because only the cardholder knows the code to withdraw money. Even in case the cardholder loses his/her card, others cannot withdraw money from the account without knowing the code. A very beneficial thing for ATM card users is the interest rate on demand deposits.

2.1.3.2 For the Bank:

For central banks:

The fact that commercial banks can raise capital from opening payment accounts for ATM cards has increased the required reserve level of commercial banks at the Central Bank.

Moreover, the fact that people open accounts at banks to use ATM cards will limit the use of cash in circulation. Because the payment in cash will slow down the rotation of the currency, slowing down the development of the economy. While paying with an ATM card, with just a few steps of data entry, money has been transferred from one place to another. Moreover, the payment by transfer via ATM card will increase the ability to create capital for the bank. In addition, the non-cash payment will help the central bank reduce the burden of printing, transporting, storing and preserving cash as well as avoiding counterfeiting. Limiting the use of cash in circulation and switching to using ATM cards will help the State control more closely in tax collection of businesses as well as individuals. at the same time easily detect negative social problems such as money laundering or corruption. Moreover, the use of non-cash payment methods will help the central bank to manage the amount of money in circulation and thereby promptly make monetary policies and make timely decisions.

appropriate measures to promote the development of the economy and build a strong financial system.

 For commercial banks

The card contributes to reducing cash pressure, increasing the ability to mobilize capital to serve the requirements of expanding credit activities, and increasing profits thanks to the card usage fee. Increase the Bank's control when most of the income and expenses are paid through the Bank.

Card issuers also earn profits from card issuance and other related transactions such as annual fees, salary payments, account management, bill payment services, etc.

The card paying bank collects a commission when acting as an intermediary

payment.

2.1.3.3 For enterprises:

ATM card not only brings many conveniences to individual users, but it is also a solution to the difficult problem of improving business performance by reducing the cost of paying salaries of the business. Therefore, more and more businesses are paying employees via ATM cards because of the convenience for both payers and payers.

Enterprises only need to register to open an account for their employees at the bank and transfer the company's payroll in each pay period to the bank, the bank will automatically calculate and transfer the corresponding salary to the bank's account. each employee. Help save time and costs, Manage wages well for workers

2.1.4 Subjects participating in the use of card services:

2.1.4.1 International card organization:

As an organization that unites members who are banks, credit institutions, and card issuers, setting rules that all members must apply.

uniform use under a global system. Any bank currently operating in the field of international card payment must be a member of an International Card Organization. Each International Card Organization has its name on its product. Unlike its member banks, the International Card Organization does not have a direct relationship with cardholders or card acceptors, but only provides a global telecommunications network for payment and authorization processes. member banks quickly.

2.1.4.2 Card Issuing Bank

Is a bank licensed by the State Bank to issue cards. If the bank issues international cards, it must be an official member of international card organizations. In order for the card issue to bring high economic efficiency, the issuing bank must be a reputable bank in the country as well as internationally. NHPH is responsible for:

 Reviewing card issuance for cardholders, instructing cardholders on how to use cards and regulations during card usage.

 Direct debit to cardholder's account for debit cards when customers make withdrawals at ATMs, withdrawal agents or pay for purchases at CSCNTs.

If the issuing bank performs credit card operations, it is also responsible for:

- Immediately pay the amount on the invoice transferred by the correspondent bank when this bank strictly follows the procedures prescribed by the issuing bank. In addition, licensing for over-the-counter payment transactions through the data center is also required.

face.

- Refund the deposit if the cardholder does not use all of the money card

- Periodically make a statement clearly stating the specific amounts used and requested

- Provide items used for card advertising purposes to dealers

withdrawal and CSCNT of the bank.