(Luận văn thạc sĩ) solutions to develop payment transaction via POS in viet nam

ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

NGUYỄN HUYỀN NHUNG

SOLUTIONS TO DEVELOP PAYMENT
TRANSACTION VIA POS IN VIET NAM
GIẢI PHÁP THÚC ĐẨY GIAO DỊCH THANH TOÁN
QUA POS TẠI VIỆT NAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2018


ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

NGUYỄN HUYỀN NHUNG

SOLUTIONS TO DEVELOP PAYMENT
TRANSACTION VIA POS IN VIET NAM
GIẢI PHÁP THÚC ĐẨY GIAO DỊCH THANH TOÁN
QUA POS TẠI VIỆT NAM
Chuyên ngành: Quản trị kinh doanh
Mã số: 60 34 01 02
LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS. BÙI QUANG HƯNG

Hà Nội - 2018


DEACLARATION
The author confirms that the research outcome in the thesis is the result of
author’s independent work during study and research period and it is not yet
published in the other’s research and article
The other’s research result and documentation (extraction, table, figure, formula,
and other document) used in the thesis are cited properly and the permission (if require)
is given.
The author is responsible in front of the Thesis Assessment Committee, Hanoi,
School of Business and Management, and the laws for above-mentioned declaration.


ACKNOWNGEMENT
During the study of this thesis, I received enthusiastic support from HSB, my
company, the other organizations and my friends. I would like to express my
deepest thanks to all the collectives and individuals who have facilitated me to help
during study and research this thesis.
First and foremost, I would like to thank the Faculty of Business Administration
(HSB), Hanoi National University, and the teachers who have provided the
knowledge to throughout the learning process.
I would like to express my gratefulness to Dr. Bùi Quang Hưng, who has
enthusiastically instructed, and provided valuable contributions to me to complete
this thesis.
I also would like to express my sincere thanks to the Board of Directors and
my collage at National Payment Corporation of Vietnam(NAPAS), our partners and
member banks, for facilitating and assisting me in process of data collection,
providing the relevant documents, answering the interview and the questionnaire to

help me to complete this thesis.
Despite my efforts in the research process, the thesis still have inevitable
shortcomings due to limited conditions, so I wishes to receive comments and
feedback for further improvement.


TABLE OF CONTENT
LIST OF ACRONYMS............................................................................................... i
LIST OF TABLES ..................................................................................................... ii
LIST OF FIGURES................................................................................................... iii
LIST OF CHARTS ................................................................................................... iv
1. Rationale ...........................................................................................................1
2. Objects of research ............................................................................................2
3. Scope of research .............................................................................................2
4. Aims of research ...............................................................................................3
5. Research methodology ......................................................................................3
6. Thesis Structure.................................................................................................4
CHAPTER 1: OVERVIEW OF PAYMENT TRANSACTIONS VIA POS AND
TREND OF TECHNOLOGY IN THE WORLD .......................................................5
1. The concept of payment transaction via POS ...................................................5
2. History and development of POS .....................................................................8
3. POS technology development trend in the world .............................................9
3.1.

mPOS technology.....................................................................................11

3.2.

NFC Technology ......................................................................................14

3.3.

QRCode Technology ................................................................................18

3.4.

Biometric technology ...............................................................................21

CHAPTER 2: PAYMENT TRANSACTION VIA POS IN VIETNAM AND
IMPLEMENTATION STATUS IN NATIONAL PAYMENT CORPORATION IN
VIETNAM (NAPAS)................................................................................................25
1. Payment transation via POS in Vietnam market ............................................25
1.1.

Overview of POS payment market in Vietnam .......................................25

1.2.

Trend of POS technology in Viet Nam ....................................................35

2. The status of POS payment at National Payment Corporation in Vietnam
(NAPAS) ................................................................................................................40
2.1.

Introduction about National Payment Corporation in Vietnam ...............40


2.2.

Status of POS payments at Napas ............................................................44

CHAPTER 3: EVALUATION OF THE IMPLEMENTATION OF DEVELOPING
POS TRANSACTIONS IN VIETNAM AND NAPAS ...........................................55
1. Achievements ..................................................................................................55
1.1.

General achievements of POS payment market .......................................55

1.2.

Napas achievement ...................................................................................64

2. The shortcomings and limitations of payment via POS .................................66
2.1.

From bank who provide service ...............................................................66

2.2.

From merchant .........................................................................................68

2.3.

From NAPAS ...........................................................................................68

2.4.

From customers who use services ............................................................73

3. Reasons ...........................................................................................................74

3.1.

Legal framework ......................................................................................74

3.2.

Market plans .............................................................................................76

3.3.

POS’s technology and infrastructure .......................................................78

3.4.

Communication ........................................................................................79

CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS TO DEVELOP
TRANSTION VIA POS IN VIETNAM ...................................................................80
1. Porpose solutions ............................................................................................80
1.1.

The legal corridor .....................................................................................80

1.2.

The market planning ................................................................................82

1.3.

The technology .........................................................................................84

1.4.

PR activity ................................................................................................90

2. Recomendation................................................................................................91
2.1.

Recommendation with the State Bank .....................................................91

2.2.

Recommendation with the ministries and other departments ..................92

2.3.

Recommendation with NAPAS ...............................................................93

2.4.

Recommendation with banks ...................................................................95

CONCLUSION .........................................................................................................96
APPENDIX ...............................................................................................................97


LIST OF ACRONYMS
No.

Abbreviations

1.

ATM

Automated Teller Machine

2.

Napas

National payment corporation in Vietnam

3.

SBV

Sate bank of Vietnam

4.

VBCA

Vietnam Banks Card Association

5.

ICSO

International card switching organization

6.

MDR

Merchant Discount Rate

7.

POS

Point of Sale

i


LIST OF TABLES
Table 2.1: Merchant Discount Rate in Vietnam .......................................................33
Table 2.2. Comparision among POS & ATM transaction volume, ..........................33
Table 2.3. Numer of card and POS of Napas member banks ...................................44
Table 2.4. POS transactions volume between Napas and whole market ..................49
Table 2.5. POS transaction value between Napas and whole market .......................50
Table 2.6: The POS payment transaction number and transaction value by member
banks..........................................................................................................................51
Table 2.7. Fee revenue of POS transaction from 2013 to 2016 ...............................52
Table 2.8: Fee for POS payment service of NAPAS ................................................53
Table 3.1. List of related legal documents and policies to non-cash payment .........60
Table 3.2. Comparison of growth rate of POS transaction number over the years ..65
Table 3.3. Comparison of growth rate of POS transaction value over the years ......65

ii


LIST OF FIGURES

Figure 1.1. Transaction process on POS (off-us transaction) .....................................7
Figure 1.2. Card transaction flow on POS (on-us transaction). ..................................8
Figure 1.3. mPOS devicet .........................................................................................12
Figure 1.4. NFC technology ......................................................................................15
Figure 1.5. QR Code .................................................................................................18
Figure 2.1. The model of on –us POS transaction by domestic card ........................29
Figure 2.2. The model of off-us POS transaction by domestic card .........................29
Figure 2.3. Model of POS transaction by international card ....................................29
Figure 2.4. Progress of implement Merchants acceptance........................................30
Figure 2.5: Napas structure organization ..................................................................42
Figure 2.6: Samsungpay event in Ho chi Minh ........................................................46
Figure2.7: The payment service model of Samsung Pay ..........................................47

iii


LIST OF CHARTS
Chart 1.1. World mPOS Payment Predictions (Unit: Billion) ..................................14
Chart 1.2. Top 10 country use QR code in payment in thẻ world ............................21
Chart 2.1. Growth rate in number of POS machine in Vietnam 2007-2016 .............25
Chart 2.2. Market share by number of POS in 31/12/2016, .....................................26
Chart 2.3: The proportion of the number of cards in 31/12/2016 .............................27
Chart 2.4: The growth rate in number of cards during period 2006-2016 ................28
Chart 2.5. Proportion of domestic and international of payment transaction value via
POS in 2012-2016 period ..........................................................................................34

iv


ABSTRACT
Over the past years, the activity of payment via Point of Sale (POS) in
Vietnam has made positive changes. The number of POS terminal and payment
acceptance point has increased steadily over the years. Card payment turnover
through POS also increased significantly with an average growth rate of 29% per
year. The infrastructure of service payment via POS as well as the legal system,
mechanism and policies have also made significant improvements to promote POS
transactions. In addition, POS payment services have been developed by the banks
in terms of POS network and quality of service to bring maximum convenience to
customers.
In spite of the achievements, POS payment market in Vietnam has many
limitations to improve and more potential to exploit. Despite the growth of POS
transactions in Vietnam over the years, the number of actual transactions have not
met expectations. The number of POS transactions accounts for only about 9% of
total ATM / POS transactions. Meanwhile, in several countries in the region and the
world, card transactions via POS of the people occupy a very high rate, more than
90%. In a market that is considered to have as much development potential as in
Vietnam, surely POS payment services will have more opportunities to grow.
From the real situation of the market and services, I desire to find and
overcome the limitations and difficulties to promote payment transactions via POS,
from which to propose solutions to promote payment transactions through POS
(Point of Sale) in Vietnam. Before going into detailed research, I would like to
introduce about the Rationale, objects, aims and scope, research methodology, as
the following.
1.

Rationale
Point of Sale (POS) is a form of payment transaction using payment cards

through card accepting devices provided by banks or service providers. Merchants
are those who provide goods and services on the market (hotels, restaurants,

1


supermarkets, travel agencies...)

are installed or deployed the traditional POS

or new mobile POS technology (mobilePOS-mPOS).
With the aim of developing non-cash payment in Vietnam, promoting POS
payment transactions is one of the key tasks of the Non-Cash Payment
Development in Vietnam 2011 - 2015 and Vision 2020 to be approved by the Prime
Minister in Decision No. 2545 / QD-TTg dated 30/12/2016 on the project of
development of non-cash payment in Vietnam for 2016-2020. Specifying the
objective in Clause 2, Clause 1, "a", by the end of 2020, the ratio of cash on the
total payment means is lower than 10%. b) To strongly develop card payment
through accepting devices card at point of sale; To gradually increase the number
and value of card payment transactions through card-accepting devices. By the end
of 2020, the entire market will have 300,000 POS devices installed with a
transaction volume of around 200 million transactions per year. "
However, in order to achieve the above objectives, the determination and
efforts of the whole banking sector, especially the monitoring of the State Bank to
coordinate the ministries, branches and National Payment Corporation of Vietnam
(Napas) in regulating related policies to develop card payment transactions.
Through the research, I found that there are still many limitations in the expansion

of network Merchants and development of POS transactions:
-

The legal system and policies are still inadequate.

-

The planning and market development are not synchronous and effective.

-

There are limitations in the POS system.

-

Consumers' habits for cash-payment are still hard to change.

-

Communication has not been focused and properly oriented.

Finding out the shortcomings, difficulties to propose solutions to promote payment
on POS is very necessary and should be implemented soon.
2.

Objects of research
Objects of research: Payment transaction via POS in Viet Nam

3.

Scope of research
-

This topic focuses on the following issues:
2


 Understanding the development of the card payment market in
Vietnam from 2013 to 2016, especially focusing on POS payment
transactions, including the development of payment facilities, POS
network, payment connection infrastructure and transaction results
(number and value of payment transactions).
 Reserching POS payment services of banks, the legal system for POS
card payment, the role of the National Payment Corporation of
Vietnam in POS payment. From there, this study analyzse the
advantages, disadvantages and limitations when developing payment
on POS in Vietnam.
 Learning about the development trend of POS technology in the
world; The status of the deployment and application of these
technologies in Vietnam.
 Proposing solutions to promote payment through POS in Vietnam
based on market research as well as advantages, disadvantages and
limitations mentioned above.
4.

Aims of research
-

Understanding the status of POS payment in Vietnam.

-

Understanding the advantages and disadvantages of developing payment via
POS.

-

Understanding the trend of POS payment technology in the world and
Vietnam.

-

Proposing solutions to promote POS transactions in Vietnam, focusing on
analyzing the role of the National Payment Corporation of Vietnam and the
company's solutions combined with the Ministries, branches, the State Bank
of Vietnam and commercial banks.

5.

Research methodology
-

Approach: Theoretical approach, then based on practical experience to assess
the advantages and disadvantages of the card payment market via POS in

3


Vietnam. From there, the solution can be applied in Vietnam to promote this
payment method.

Methods and techniques of research:

-

 Research based on the information available, provide analysis and
evaluation to find the right solution.
 The methods used include statistics, description, comparison, graph.
Methodology of solving, combining theoretical and practical research.
Based on that, through the collected data sources, the author selects,
sorts the data to calculate the indicators and information necessary for
the assessment of the status of bar connection activities.. The author
also uses tables, graphs to express a visual, lively information in the
thesis.
6.

Thesis Structure
In addition to the introduction, conclusion, table of contents, index of

abbreviations, tables, firgure and references, the main contents of the thesis are
presented in four chapters:
-

Chapter 1: Overview of payment transactions via POS and trends of
technology in the world

-

Chapter 2: POS transaction Payment markets in Vietnam and
implementation status in the National Payment Corporation of Vietnam
(Napas)

-

Chapter 3: Evaluation the implementation of developing POS transactions
in Vietnam and Napas

-

Chapter 4: Solutions and recommendations to develop the POS
transactions in Vietnam

4


CHAPTER 1: OVERVIEW OF PAYMENT TRANSACTIONS VIA POS AND
TREND OF TECHNOLOGY IN THE WORLD
1.

The concept of payment transaction via POS
First of all, to understand the concept of POS transactions, we need to

understand the concept of POS - Point of Sale.
As defined by Worldbank, POS is the device used to manage the sales process
through the interface that the salesperson has access to at the locations where the
transactions are made. As defined by MasterCard, POS is understood to be a
supervised or unsupervised device located at a Merchant, which allows the
Cardholder to make the purchase of goods or services provided by Merchants
through the use of cards and / or contactless cards, in accordance with the standards
and security requirements of the back end device.
As defined in the draft circular on bank card activity of the State Bank of

Vietnam, point of sale POS (Point of Sale (POS), Electronic Data Capture (EDC),
Mobile Point of Sale (mPOS and other types of card access devices) are card
readers, terminals that are equipped and used by Merchants or installed on the
network of the organization. Card issuers, card payment organizations that
cardholders can use to withdraw cash, transfer funds, pay for goods or services or
use other services.
As such, POS can be understood as a device used mainly for the purpose of
performing payment transactions to purchase goods or services provided by
Merchants or other services such as inquiries, cash withdrawal, bank transfer...
Basically, POS consists of two popular types: wired POS and wireless POS
(using GPRS, 3G, Wifi). A wired POS system operates over a telephone line. When
making a payment, the card accepting unit should have a telephone line available to
connect the POS to the system. Wireless POS is more convenient as they are using
GPRS or ADSL technology without the need of a fixed line. With the use of GPRS
technology, wireless POS equipment not only helps to expand the coverage area but
also increases the flexibility for payment transactions. This type of device is suitable
for all types of card accepting units that need flexibility and mobility in sales,
5


payments such as sales and delivery, home remittance, bill payment at banquet
tables, applications Transportation, yachting ... The two types of wired and wireless
POS equipment are equally structured, including POS machines, network cables
with Internet connection and electrity power.
When modern POS payment technology has not been born, traditional POS
machines are considered as a superior payment solution with many outstanding
features and benefits for all parties. POS machines help merchants greatly improve
their payments, helping them improve their sales performance. With a relatively
simple transaction process, POS machines are an optimal choice to replace the
familiar cash payment method.

For the concept of "POS transactions," in Vietnam there is no specific concept
of POS transactions. As defined in Circular No. 35/2012 / TT-NHNN on
"Regulations on fees for domestic debit card services", "POS transactions" are card
transactions conducted through card readers at accepting units. POS (POS) for
payment of goods, services, account balances, refunds at the request of cardholders,
cash withdrawal and other card transactions at POS.
On the other hand, a payment transaction refers to transactions involving
financial transfer from one side to another.
Thus, within the scope of this topic, POS transactions refer to transactions
involving financial transfer from one party to another, namely, payment for goods,
services on POS, excluding non-financial transactions such as balance inquiry...
The process of POS card payment is described as follows:

6


Customer

KHÁCH HÀNG

Merchant

ĐVCNT (POS)

Issuer
Bank
NHTTT

Napas/ICWO
TCCM/TCTQT

NHPHTBank
Acquirer

Customer
requests
1. Khách
hàngtoyêu
cầupay
thanh toán

3. Customer enters

Cashier
2. 2.
Thu
ngân thực hiện
swipe/plug
quẹt/cắm
thẻ the
vàocard
máy
into và
POS
andsốenter
POS
nhập
tiền
the amount
thanh toán

pin hàng
(for domestic
3. the
Khách
nhập mã
card)
PIN
(với thẻ nội địa)

4.4.Transfer
Chuyểnthe
thông tin
customer
information
khách
hàng
tới TCCM/
to Napas/ICSO
TCTQT

Chuyểnthe
thông tin
5.5.Transfer
khách
hànginformation
tới NHPHT
customer
tương
để xác thực

to CI toứng
authentication

6. Phản hồi
6. Response
thekết
result
6. Phản hồi
kếtresult
6. Response
the
Khách hàng
7.7.Customer
signs
the
ký receipt
tên trênand
biên
fishish
the payment
lai giao
dịch

quả xác thực

quả xác thực

6. the
In biên
lai

6. Print
transaction
reciept giao dịch

Figure 1.1. Transaction process on POS (off-us transaction) Source: NAPAS
The payment process mentioned above applies to both domestic and
international cards. Specific:
Step 1: Customers request payment by card.
Step 2: Cashiers of Merchants swipe / plug the card into the POS machine
and enter the payment amount.
Step 3: Customers enter personal identification number (PIN) (with domestic
debit card). International card does not require the customer to enter a PIN.
Step 4: Customer information and billing information is transferred from the
Acquirer to NAPAS (with domestic debit card) or card organizations such as Visa,
MasterCard, JCB, UnionPay, Amex (with international card), for authentication.
Step 5: NAPAS/International switching Card Oragnization forwards
customer information to respective Issuers

7


Step 6: Issuers reply the authentication results. If the information is verified
by the Issuer, the transaction is approved. Merchants print transaction receipts.
Step 7: The customer sign the transaction receipt which is printed out and the
payment process completed. Employees at Merchants are responsible for checking
the cardholder's signature on the receipt with the signature on the card to protect the
customer and minimize the risk to the customer.
With on-us transactions, which are issued by Bank A, perform transactions on
POS machines of Bank A, the transaction processing process is simpler, without
involvement of intermediaries such as Domestic switching organizations and

International card organizations. For customers, the transaction process remains
unchanged.

Customer
Khách
hàng

Merchant
ĐVCNT
POS

(POS)

Figure 1.2. Card transaction flow on POS (on-us transaction)

Issuer==
NHTTT
Acquier
NHPHT

Source: The

author.
2.

History and development of POS
In 1970, the first POS device was introduced by IBM. At this point, the POS

device is connected to a computer, which has a main processing function, while the
POS device only displays information without the ability to process transaction.

Continuing its first POS development, in 1973, POS models were introduced by
well-known manufacturers such as IBM System 3653 and NCR2150, along with
other computer manufacturer such as Rigitel, TRW, and Datachecked. That same
year, the UPC / EAN barcode scanner came out and integrated on the POS system.
In 1978, the POS equipment was upgraded, incorporated more applications
and operated on an Apple computer for the purpose of ordering for customer and
was connected to a remote printer. Then, in 1986, the POS equipment is upgraded

8


incorporating a color-graphical interface and a touch screen. In the same year, POS
systems were operated the same as PCs with the newly born technology IBM4683.
In most of the 1980s and 1990s, credit devices were developed and integrated
into the POS system for easier and safer payments. Some common examples
include VeriFone Tranz 330, Hypercom T7 Plus, or Lipman Nurit 2085. These
devices are relatively simple (compared to today's technology), and have grown in
recent years to handle More applications (credit card, debit card, gift card, employee
card) and also verify personal information of each employee. All processes can be
located on only one device (All-in-one). Some POS machines that use wireless
protocol not only allow mobile payment processing such as restaurants, they also
allow the machine to process its entire process.
Currently, POS retail systems are the most sophisticated and convenient
computers in the commercial field. In fact, most POS systems also integrate existing
solutions including accounting, inventory tracker, ordering and sales, customer
relationship management (CRM), service management, renting services, activity
reports and payroll modules. Features on POS are available, but users are only
dedicated to a certain application such as retail management software, business
management and POS software. To this day, POS has been developed and
distributed globally.

3.

POS technology development trend in the world
Although widely deployed and used in many part of the world, POS machines

have been showing many limitations, specifically:
-

High POS investment cost. This is one of the major obstacles as
banks deploy more POS machines at merchants. With a wired POS
machine, the investment cost of buying equipment is about 5 million
VND / machine. For wireless POS line using new technology, the
price is much higher. It does not include warranty, maintenance,
upgrades, new functions (when needed). With such a high cost, if
the payment volume at the Merchant is so small, the bank will not

9


be able to offset the cost. This is considered one of the factors that
prevent banks from investing in POS machines.
-

The majority of POS machines being used in the market are wired
machines, which when operating, a fixed line phone is required.
This means that merchants who want to accept payments on POS
must have a phone line available. Moreover, the quality of service
will depend on the quality of transmission. If the transmission line is
not good, it will affect the speed of transaction processing, cause
unsatisfactory psychology to customers and ultimately affect the

services of both Merchants and banks.

-

The installation or configuration of POS equipment is not simple
and must be done by bank staff or equipment suppliers that can not
be performed manually by the Merchants's employees.

-

When a fault occurs or the bank wants to perform maintenance of
the equipment, the bank's technician must go to the merchant to
bring back the equipment for maintenance, repair and installation at
the Merchants later on. Consequently, maintenance costs require
human resources, time and money of the bank, while disrupting
payment services at Merchants.

-

It is difficult to expand new POS features and services (for example,
the ability to connect POS machines to merchants' sales systems ...).

-

Not suitable for small business units, as the sales volume may not
cover the costs. Thus, it makes it difficult for banks to expand the
POS card payment service to all types of merchants.

In recent years, with the explosive growth of mobile devices, the emergence
and popularity of new payment platforms (such as electronic wallets) and the

development and completion of e-commerce infrastructure thanks to the application
of information technology, POS systems have gradually changed and developed in
the direction of: Turn mobile phones into a new payment means next to payment

10


cards, and Provides new communication technology standards between payment
data reader and payment data storage device, typically mPOS, NFC and QRCode.
The use of mobile phones and new payment technologies is becoming more
and more popular for a number of reasons:
Firstly, the rapid development and rapid dissemination of smartphones.
According to data from International Data Corporation (IDC) estimates, the number
of smartphones worldwide by the end of 2015 was about 1.43 billion units with a
growth rate of 9.8% over 2014.
Secondly, the need for payment is varied in certain environments where
traditional POS equipment can not or does not meet these constraints, for example:
transaction at the buyer's house or fast transaction at bus station.
Thirdly, the need to use some means of payment outside the card, which is
relatively independent of the banking system of financial technology companies,
also makes them spend a great deal of effort in developing, promote their own
systems and payment instruments. Typical examples are Paypal, Apple with Apple
Pay, Google with Google Pay or Samsung with Samsung Pay ...
Some of the payment

technologies which are currently used in the

world:
3.1.

mPOS technology
Mobile POS or mPOS is a point-to-point solution for accepting payment

cards on mobile devices. This is a modern technology that allows payment of
different types of cards, from domestic cards to international cards (Visa,
MasterCard, JCB, Amex, UnionPay), suitable for all types of services, from
restaurants, cafes, small businesses, individuals businesses to companies that
provide delivery and COD services at home to ensure safety and efficiency.
In order to be able to use mPOS to pay for goods or services, a Merchant
should have a set of equipments including a card reader connected to a mobile
phone installed with a payment card application, possibly with a PIN pad and
bluetooth printer. There are now many types of card readers that include a PIN pad
with a PIN code input function. Therefore, Merchants only have to use a small
11


device instead of two separate devices, enabling Merchants to be more flexible on
the process of making payment by customers at any time, anywhere.

Figure 1.3. mPOS device, source: internet
mPos technology has the following advantages and disadvantages:
Advantages:
-

Helping the customers to pay quickly and conveniently:
This is the first advantage that this technology brings to customers. Paying
through mPOS help customers pay bills or purchase goods and services
quickly, conveniently. They do not have to wait and queue long because the
payment can be made anywhere. Since then, customers will be more satisfied
and the merchant also benefit from not losing customers due to customer

long queue to pay.

-

Supporting Merchants in sales and payment process from basicly anywhere:
MPOS gives Merchants the opportunity to sell anywhere, allowing them to
grow their business in a variety of ways. Whenever a sales location is a
pavement outside a store, any location, or delivery wherever required by the
customer, merchants can accept payment by card through an compact mPOS
device that they carry. Sales and payment by card are no longer restricted to
the store.

12


-

Reducing cost for banks:
The cost of investing in mPOS devices is much lower than the cost of a
traditional POS. Although mPOS solutions come with a few related costs
such as hardware, software and maintenance, these types of costs are usually
much lower than traditional POS solutions.
In addition, with mPOS, customers can choose to print transaction receipts or
send via SMS, email if not required. The paperless nature of mPOS
technology reduces costs (previously spent on paper and printing).

-

Is currently supported by the international card payment platform:
Payment cards (especially international cards) can be used with mPOS due to

mPOS standard compatibility and network card payment systems. This is a
great advantage for this payment technology to grow quickly and widely.

Disadvantages:
-

The quality service is not stable
Quality of service depends very much on the quality of the connection, the
service requires mobile phones / tablets with Internet connection to transfer
data. Therefore, the quality of service will be influenced by countries or
regions where the Internet and 3G networks are unstable.

-

Safety and security
By making payments through a card reader connected to a mobile device,
this service is likely to face risks associated with counterfeit devices, hacked
or unreliable mobile payment applications resulting in stolen card
information.
Moreover, on the customer side, customers often have a psychological
anxiety when making transactions on the mobile phone of an individual,
resulting in them not selecting this service for payment.

Experience in developing and applying this techonology in payment.
The original mPOS solution was limited to small card acceptors. However,
mPOS today is becoming a popular payment According to the World Bank survey,
from 2011 to 2012, the number of mPOS payment points operated worldwide
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increased by 111%, from 4.5 million to 9.5 million. The market expects that number
to continue to rise to 38 million by 2017 and be extended to large card acceptors.
(Source: paymentscardsandmobile).
According to a Timetric report, global mPOS payment transactions reach $ 0.5
billion by 2012 and are projected to increase to $ 5.4 billion by 2018.

6

5.4

5
4

3.6

3

2.4

2
1

1.6
0.5

0.7

0.9

0

2012

2013

2014

2015

2016

2017

2018

Chart 1.1. World mPOS Payment Predictions (Unit: Billion) (source:
paymentscardsandmobile)
In the world, this solution has been implemented in countries such as
Australia, Belgium, France, USA. In Asia alone, mobile payment is widely used in
Korea and Japan. Even small eateries in Seoul, Tokyo, customers can easily swipe
cards on this mobile payment device. In Japan, mPOS is also widely used in
payment, especially suitable for low value payments. However, in these countries,
the vast majority of cards used in payment are chip cards with high security levels.
In Vietnam, more than 90% of cards issued are debit cards and magnetic cards.
Therefore, when applying mPOS payment technology in Vietnam, issues related to
card transaction security should be paid special attention.
3.2.

NFC Technology

NFC (short for Near-Field Communications) is a near field communication

technology that uses magnetic induction to make connections between devices

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when in direct contact or close proximity. NFC is developed based on the principle
of identification through radio frequency signals with a maximum data transfer rate
of 424 Kbps. The NFC card is a very thin, simple (writeable) record and does not
need to be powered.
Due to the relatively short data transmission distance (within 4 cm), transactions via
NFC technology are considered safe. Equipment equipped with NFC is usually a
mobile phone. Smart cards will attach chips inside (often called tags). Mobile phones
can communicate directly with this card. In addition to communicating with the card,
the phone can also communicate with other devices such as a phone or other electronic
entertainment device that supports NFC.A lot of NFC model testing projects are being
implemented in countries around the world. In Asia, there are many projects using
NFC technology that have been successfully tested and deployed such as Singapore,
China, Korea, Japan, Thailand, Australia and Sri Lanka.

Figure 1.4. NFC technology, source: internet
For NFC to work, two devices are required, one is the reader (usually the
phone) and the other is the target (usually the other phone, nfc card, speakerphone,
device that accepting payment ...). The reader will actively generate radio waves
(basically electromagnetic radiation) sufficient to power the target device in passive
mode. Therefore, the NFC card does not need the energy to operate, which when
needed it will be taken from the reading device. This is an extremely important

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