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 ................................................................................................... 1
CHAPTER 1: THE BASIC ISSUES ON THE CARD PAYMENT ACTIVITY ..... 4
1.1 OVERVIEW OF THE BANK CARD AND REAL SITUATION OF THE

CARD PAYMENT.................................................................................................. 4
1.1.1 Definition of the bank card and card payment ................................................. 4
1.1.2 Classification of bank card and form of card payment..................................... 5
1.1.3 The of formation and development history of the payment card in Vietnam.... 7
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
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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

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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
3. 2. 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. 3.3 Promotion and media ................................................................................... 95
3.3. 4 Place - Distribution channels....................................................................... 97
3. 3.5 Human resource ........................................................................................... 99
3. 3.6 The process ................................................................................................ 100
3. 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 1

Apenndix 2
Appendix 3

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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
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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 3 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.

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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.

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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
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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

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 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.

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1.2.3 Charges and charges sharing rate in the card payment activity
The card payment charges are the charges which the Merchants have to pay for the
payment bank, means the bank owning this card payment machin. The average
charges which the Merchants have to pay for the bank are 2%.
These charges are included the after-sale service charges including supplying paper to
print the monthly invoices, hiring the card payment machine, providing the documents
and the advertisement instruments, after sales services …
These returned charges will be distributed, normally 50% of which will be paid for the
financial switching organization.
1.3 THE ROLES AND THE MEANINGS OF CARD PAYMENT ACTIVITY
1.3.1 For the society- national economy.
 Reduce the social charges to organize the payment activity
 Limit the fraudulent, tax evasion, debt delayed payment, create conditions to
anti-circulate the false money, money laundering.
 The card payment facilitates the commercial exchange to occur without being
limited by time and space
1.3.2 For the bank joining in the payment
 Benefits of the payment Bank are : Charge fee for card payment, Deposit fund
mobilization, Foreign curency mobilization
 Benefit of the issuance bank are : Charge fee for card payment, Interest,
Overdues fines.
 Benefit of the Card organization: Switching charges, the member charges.

1.3.3 Impact on the card owner and the unit accepting the card payment
 Impact on the card owner:
Strength: Customers do not have to draw cash for payment. So that they get quickly
pay, convenience and safety, ability with the distance payment
Weaknesses:

the risk of revealing the account information and password. Many

Merchants receive the external charges on customers.
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 Impact on the Merchant accepting the card payment or the place of cash
advance
In the viewpoint of the Merchants, there is the comparison table between the
advantages and the disadvantages as follows:
Advantages: Reduce the risk of cash, Save time of checking the large number of
money, repaying the loose cash, Increase the sales revenue, Increase the satisfaction of
the customers, Create the professional image of the Merchants in the customer’s eyes
Disadvantages: The Merchants have to bear a card payment charge from 1 to 3%
value of the purchased goods, The payment is based on the transmission line’s quality
and network, machine techniques, Transparency on the goods revenue if being
required by the tax office.
CHAPTER 2
THE FACTUAL SITUATION OF CARD PAYMENT IN VIETINBANK
2.1 GENERAL INTRODUCTION ON VIETINBANK
2.1.1 The general introduction on VietinBank
Company profile
Name of company: Vietnam Joint Stock Commercial Bank for Industry and Trade (
Short for VietinBank)

Established in 1988 after being separated from State Bank of Vietnam.
One of the four largest State-owned commercial banks of Vietnam,
Total assets account for over 20 percent of the market share of the whole Vietnamese
banking system. Charter capital: VND 370.000.000.000.000 ( 2010)
Operations network: 01 Transaction Centers, 149 branches, 527 transaction offices,
166 savings offices, 02 Representative offices, 04 Subsidiaries, 03 administrative units
and 1200 automatic Telling Machines (ATMs). Has established correspondent
relationship with 850 banks, financial institutions of 90 countries and territories all
over the world.

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Being the founder of the following Financial Credit Institutions: Saigon Bank for
Commerce and Industry, Indovina Bank (the first joint-venture bank in Vietnam),
Vietnam International Leasing Company – VILC (the first financial leasing company
in Vietnam), Vietinbank Insurance Company Ltd. In addition, VietinBank also is the
official member of Vietnam’s Banker Association, Asian Banker’s Association,
Society for Worldwide Interbank Financial Telecommunications (SWIFT), Visa
International Services Association
2.1.2 The general introduction on VietinBank Card business Center
VietinBank Card Business Center was established in 2001 on the base of development
and restructuring the model of personnel organization of the Card Team with only 10
persons.
Card Business Center was officially established in 2009 with 30 person and now reach
nearly 160 members now.
Functions: Researching for the development, managing, executing, organizing for
implementation, inspecting and supervising the card business in VietinBank and
conducting the direct card business.
Most of the cadres of the Center are at young age with good capacity and they are very

dynamic and flexible in exploring the information and opportunities for the card
service in the market.
The appearance of Card business Centre contributes to bring VietinBank to be one of
the biggest organizations of card issue in the market.
Debit Card: G-card, P-card, S card, C card, 12 card, linked card…
Credit Card: Standard, Popular, Gold, Platinum Card.
2.1.3 The process of formation and development of payment operation by card at
VietinBank.
VietinBank conducted researching and has officially entered into the market of card
service since 2001. After more than 10 years of implementation, the card service of
VietinBank has gained the significant achievements, which confirms the position and
trademark in the market.
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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 1 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
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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 4 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

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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 2. 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 3
years comparing to the 5 year circle of the machine. The rate of profit is 1, 22; it
means that if 1 VND is spent, after 3 years, it is possible to receive one VND spent
and within next 2 years, the interest is
0, 22 VND. In fact, the rate of profit of Vietcombank is 2, 3 and time of capital
repaying is 1 year and 4 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

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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.

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On 27/9/2010, Vietnam State Bank released the Dispatch No 7305/NHNN-TT about
opening the POS connection in Hanoi. Accordingly, 8 banks and 2 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 do 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
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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.

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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 do 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
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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 1. Strikingly development pace in 2 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

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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. 1 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.

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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

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CHAPTER 3

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 3 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%/

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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 do 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.
3. 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

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