Payment Card Application in Vietnam:

Through the above payment process, we can see that the documentary credit method is a very strict payment method in terms of procedures. Moreover, in this method, the bank opening the L/C is not only an intermediary in payment but also the person who is obliged to pay the exporter within the validity period of the L/C, if the exporter presents a set of documents in accordance with the L/C. Therefore, this is a payment method that ensures the interests of the exporter.

3 Types of Letters of Credit

A letter of credit is a legal document in which the issuing bank commits to pay the exporter if they present a set of payment documents that comply with the terms of the L/C.

Letter of credit is formed on the basis of the sales contract, that is, based on the content and requirements of the contract, the importer makes a request to open an L/C. But after the L/C has been opened, it is completely independent of the sales contract, which means that when making payment, the bank that opens the L/C only bases on the opened L/C.

Types of L/C in international payment include.

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- Revocable L/C : is a type of L/C that the importer can modify or cancel at any time without prior notice to the seller. However, the modification or cancellation must be done before the exporter delivers the goods and presents the documents to the notifying bank.

- Irrevocable confirmed L/C : is a type of letter of credit that, once opened and acknowledged by the exporter, the bank that opens the L/C cannot modify, supplement or cancel it within its validity period, unless otherwise agreed by the parties to the L/C. This is the most widely used letter of credit in international payments, it is the most basic type of L/C.

- Irrevocable confirmed letter of credit (irrevocable confirmed L/C) : is a type of letter of credit that cannot be cancelled, and at the same time has payment confirmation from another bank at the request of the bank opening the L/C.

- Irrevocable without Recourse Letter of Credit

L/C)

This is a type of L/C in which, after the exporter has been paid, the bank that opens the L/C no longer has the right to claim the money back from the exporter. When using this type of L/C, the exporter (the beneficiary of the L/C) must write on the bill of exchange the sentence "no recourse against the issuer" and the same is true in the L/C.

- Irrevocable Transferable Letter of Credit (Irrevocable Transferable L/C).

This is an irrevocable letter of credit which provides the right of the paying bank to pay all or part of the amount of the L/C to one or more other parties, to the order of the first beneficiary. This type of L/C can only be transferred once. The transfer costs are usually borne by the first beneficiary.

- Deferred payment letter of credit (Deferred payment L/C) : Is an irrevocable L/C, in which the bank opening the L/C, or the bank confirming the L/C commits to the beneficiary to gradually pay the amount of the L/C within the time limits clearly specified in that L/C.

- Revolving letter of credit (Revolving L/C)

It is a type of letter of credit that cannot be cancelled after it has been used or expired, but it will continue to have the same value as before, and it will continue to circulate until the total value of the foreign trade transaction is completed.

- Back to back L/C

Is a type of letter of credit opened based on the original L/C. This type of L/C is often used by exporters to pay their suppliers for export. In this case, the exporter gives the opening bank the original L/C that the importer opened for him as a basis for requesting the bank to open a back-to-back L/C for the supplier. Back-to-back L/C often arises in the case of buying and selling goods through an intermediary, or in transit business.

- Reciprocal letter of credit (Reciprocal L/C).

This is a type of L/C that only becomes effective when the corresponding L/C has been opened. The corresponding L/C is often used in the barter trade method.

- Stand-by letter of credit (Stand-by L/C) . This is a type of L/C in which the bank that opens the L/C commits to the importer to refund them in case the exporter fails to fulfill the delivery obligation as stated in the L/C.

- Deferred payment letter of credit (Deferred payment L/C): Is an irrevocable L/C, in which the bank opening the L/C, or the bank confirming the L/C commits to the beneficiary to gradually pay the amount of the L/C within the time limits clearly specified in that L/C.

3.3.6 Payment by card

3.3.6.1 Concept

Payment card is a modern means of payment, a form of electronic money used to pay for goods, services or withdraw money at branches and card payment agents.

Payment cards are mainly used for consumption purposes, they are not suitable for buying and selling high-value goods. Currently, they are quite popular in payment in the tourism and hotel industry. Tourists use cards to pay without having to use cash, so they are both compact, safe and ensure quick and convenient payment. There are currently some popular types of payment cards in the world:

- Visa cards : issued since 1960, this is the card with the largest development scale today, a card that can accept payment anywhere.

- Master cards : born in 1966 by the ICA (Interbank Card American) association through members around the world, this is also a type of card with a very developed scale. It can be said that currently Master cards is one of the two largest card organizations along with Visa cards providing the most services in the world.

- American Express (AMEX) cards : founded in 1938, this is the world's largest travel and entertainment card organization. Unlike Visa cards and Master cards, AMEX issues its own cards and directly manages cardholders. To compete with Visa cards and Master cards, AMEX launched a new type of credit card, using the OPTIMA card circulation, launched in 1987.

- Diners Club cards : are the first type of travel card in the world. However, this type of card is not as popular as the above 3 types of cards. Currently, the number of people using Diners Club cards is decreasing.

- JCB cards : was born in 1967, by the Japanese credit association, mainly targeting the tourism and entertainment market. Currently, JCB is still behind AMEX but this is a strong competitor of AMEX. Like AMEX, JCB does not accept members but directly issues and manages its customers. Today, JCB is having

The trend of expanding the market not only serves the Japanese but also serves other groups with needs.

3.3.6.2 Some regulations related to credit cards

*Card description:

- Credit cards are made of a special type of card with international standard size of 8cm x 5cm x 1mm issued by banks. Credit cards have two sides.

+ The front always has three embossed elements:

- Card number.

- Card validity date.

- Card user name.

In addition, there are some contents such as:

- Card name: Visa card, Master card, American Express, JCB, Diners club...

- Card icon.

- Name of the card issuing bank

- Cardholder photo (if available)

+ Back has:

Black magnetic tape contains the following contents:

- Card number.

- Card validity date.

- Cardholder's full name.

- Cardholder's address.

- Secret code.

- Bank statement.

- Maximum withdrawal amount and balance.

* White tape with customer's sample signature.

Both the magnetic strip and the signature strip are embedded inside the card.

* Parties involved in the credit card payment process:

+ Issuing bank: The issuing bank is responsible for issuing credit cards from the time of directly receiving the application, opening and managing the account, issuing the card, monitoring payments and managing card risks.

+ Cardholder: Is the person who is authorized to use the card to pay for goods and services at points of sale or withdraw money at banks or ATMs. Each card is granted a credit limit by the bank for a certain period of time.

+ Point of sale (Merchant, Point of sale): Is the point of receiving cards such as stores, supermarkets, shopping malls, restaurants, hotels, travel companies...

+ Payment organization (Acquirer): Is the place that represents the issuing bank to pay money to the points of sale when they present the card payment bill. Usually, these banks are in charge of this, so they are called the payment bank (Acquiring Bank).

+ International credit card association (Visa, Master): This is not a card issuing organization but only an organization that links members who are issuing banks in other countries.

3.3.6.3 Card Classification

* Based on the card payment mechanism:

- Credit Card: is a type of card in which the cardholder is allowed to owe the card-issuing bank a certain amount not exceeding the amount written on the card to pay for goods, services or withdraw cash.

Each card has a separate credit limit according to the agreement between the cardholder and the card-issuing bank. When the cardholder uses the card but has not yet paid the debt, it means that they are using the bank's money, which means that the bank is granting credit to the cardholder. Therefore, credit cards are considered both a means of payment and a modern form of credit. This type of card is increasingly popular, affirming its convenience and usefulness, because: Credit card users enjoy the convenience of spending first and paying later . In the case of consuming services at the hotel, the customer only needs to sign the bill. At the end of the month, the bank or the representative of the card-issuing company will send a summary of the expenses for the whole month to the customer and the customer must repay this amount to the bank within a certain period of time.

Here, the card-issuing company or bank authorizes the hotel to accept card payments. The hotel is also notified of its “credit limit” – the maximum amount the hotel is allowed to accept for a particular card type without having to call the bank for permission. Major banks and card companies often have a 24-hour payment authorization center that helps payment staff conduct procedures to request validity checks or request authorization for payments exceeding the credit limit.

- Debit card: is a type of card used to pay for goods, services or withdraw cash. When the cardholder uses this card, the bank will immediately collect money from the cardholder by reducing the balance of the cardholder's deposit account. Debit cards are usually applied to customers who have opened a payment deposit account at the card-issuing bank and each card is only assigned a certain limit. This type of card is not widely used around the world and is only issued by region or country because of its immediate debiting nature.

- Cash card: is a type of card in which the cardholder must deposit money into the card-issuing bank with an amount equal to the amount written on the card. This type of card is commonly used by tourists.

In addition, based on different bases, people can also divide cards into many types as follows:

* Based on the production technology of the cards:

- Embossed card: This is a type of card that has necessary information embossed on the surface of the card. Currently, this type of card is combined with new techniques such as magnetic tape and smart.

- Magnetic stripe card: The card is based on the technology of the card and cardholder information encoded on the magnetic strip on the back of the card. This card is currently widely used, however, the card can be exploited to cause loss of money because the information recorded on the card is narrow and fixed, applies secure encryption, and can be easily read through the computer system.

- Smart card: is a new generation card, based on computer microprocessor technology, attached to the card an electronic "chip" with a structure like a perfect computer. The card has a very high level of safety and security. However, the cost of the card is very high, so this card is only popular in developed countries.

* Based on the card issuer

- Card issued by the bank: This type of card helps customers flexibly use their bank account, or use the amount of money the bank lends on the account. This is the most widely used type of card today.

- Cards issued by non-bank organizations: these are travel and entertainment cards issued by large business corporations and stores, such as Dinners Club, Amex cards, etc.

* Based on card limit:

- Gold card: is a premium card, suitable for the living standards and financial needs of high-income customers. The card is issued to prestigious people, with healthy financial capacity, and large spending needs. The difference between a gold card and a regular card is the large credit limit.

- Standard card: is a type of credit card, with a lower credit limit, this type of card is popular, common and widely used around the world.

* Based on scope of use:

- Domestic card: is a type of card limited to a country, so the transaction currency must be that country's currency.

- International card: is a type of card that uses hard currencies for payment, accepted globally. The card is supported and managed worldwide by major financial institutions such as Mastercard, Visa... operating in a unified and synchronous manner. International cards are very popular because of their safety and convenience.

3.3.6.4 Application of payment cards in Vietnam:

Payment cards first appeared in the US in 1949, and have become increasingly popular and widely used around the world. For Vietnam, payment cards were first introduced in 1989 through the cooperation between BFCE Bank (France) and Vietcombank as Visa Card's card payment agent, mainly serving foreign visitors to Vietnam to conveniently pay in USD.

After that, the Industrial and Commercial Bank entered into a joint venture with a foreign bank to establish a Visa Card payment center in Ho Chi Minh City and also acted as an agent for other payment cards such as JCB Card, Master Card. Up to now, many Vietnamese banks have become members of international credit card issuing organizations such as: Vietcombank, Eximbank, ACB.....

Although Vietcombank and the Industrial and Commercial Bank have successively expanded payment points at hotels and large shopping centers, the use of payment cards in our country is still not popular. This is due to many different reasons, one of which is:

- Due to Vietnamese customs.

- Because the fees that cardholders have to pay to banks in Vietnam are still quite high, not suitable for the income of most workers.

- Because we do not have enough facilities and machinery to support card payments.

Therefore, currently the subjects using card payments are mainly businesses and high-income people in society. In addition, the most popular service used today is the service of withdrawing money by ATM.

7 Vouchers

3.3.7.1 Concept

Prepaid vouchers, also known as package payment vouchers (vouchers), are a form of payment on behalf of customers in tourism. Payment is made by tourism service staff according to the commitments in the tourism contract with customers.

A prepaid voucher issued by a travel agency requiring the hotel to provide the holder with certain services. The travel agent will reimburse the hotel for these expenses.

3.3.7.2. Contents of the voucher

The prepayment voucher has the following basic contents:

- Voucher issuer (travel agency, tour operator...)

- Release date

- Serial number

- Information about the voucher owner (beneficiary): name, age, ID number

letters...

- Information about the services that the beneficiary is designated to consume (eg.

: what class of seat to take on the plane, what standard room to stay in the hotel, how many days to stay...)

- Information about the voucher's usage time and expiration date: shows the time the customer uses the services specified on the voucher and the date the voucher is valid until.

- Specific information about space and location: each prepaid voucher clearly specifies the location where the beneficiary can use the services listed on the voucher.

3.3.7.3. Types of vouchers

Prepayment vouchers include the following forms:

- Contracts (prepaid or postpaid) between customers and travel agencies.....with or without package nature (excluding fees, meals.....)

- Gift vouchers from one organization or individual to another organization or individual, for tours with specified locations and times....

- Types of winning tickets where the prize is paid in the form of tours

calendar.

3.3.7.4. How to use and pay for vouchers

Tourists, when traveling, will go to a travel agency to buy vouchers for the services they want to use during the trip and present the vouchers to the service providers (hotels, etc.) designated by the voucher to consume the services.

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