* SBV to launch card switching center by year-end
Bank cards are mainly used for cash withdrawal in the country, with the total withdrawn money accounting for 82% of the total transaction value conducted via the ATM system, said the Vietnam Bank Card Association.
The association stated bank cards are not used as an efficient non-cash payment instrument. Instead, banks must store a huge sum of cash to serve customers’ demand for cash withdrawal.
Since banks leave a large amount of money at ATMs and establish reserve fund for the ATM system, they must cover high costs in the face of stubbornly high inflation rate and liquidity hardship.
Such a practice poses big obstacles to the expansion of points of sale (POS) system in an effort to boost e-payment as local card users prefer cash payment, while the connection among POS outlets accepting local cards remains weak.
Many banks do not seek to develop new POS terminals but instead want to cooperate with owners of those POS terminals already contracted by other banks, resulting in too many POS machines of different banks at the same outlets. Therefore, some POS machines report low transactions, prompting costly investments in the POS system.
As of December 31 last year, there were 42.3 million card holders issued by 46 banks, up 33% year-on-year. Local card issuers held lion’s share with 93.55% of the cards issued while the remainder belongs to international brands.
Card payment revenue of the local banking system reached VND725 trillion, or roughly US$35 billion, in 2011, a 32% year-on-year increase.
The country had more than 13,600 ATMs as of the end of last year, up 16.2% against 2010.
* The State Bank of Vietnam (SBV) is making greater efforts to merge three local card networks namely VNBC, Banknet and Smartlink in order to establish a unified card switching center by the year-end.
The statement was told by Bui Quang Tien, head of the Payment Department of SBV in a conference on Infrastructure Optimization and Banking Services Diversity at Banking Vietnam 2012 that kicked off in Hanoi on Wednesday.
It will be hard to address connection problems due to the independent existence of the three card switching systems. Thus, SBV has launched a scheme to develop a common card switching center.
Under the proposed scheme, all card switching services will be transferred to the Vietnam National Financial Switching Joint Stock Co., or BanknetVN.
As for e-payment, SBV sets out a set of measures in order to implement the non-cash payment stimulus scheme between now and 2015.
For instance, SBV proposed improving infrastructure of POS network and expand connection between card payment systems and POS terminals. It aimed to supplement and amend policies and legal frame regarding card payment through POS machines.
The country continues paying state officials’ salaries via ATM accounts. However, it calls for payments via POS networks instead of withdrawing cash from ATMs to settle payments.
As of end-March, there were 32,000 POS machines installed by 533 credit institutions and 4,000 POS terminals that accepted e-payment. The consolidation between ATM and POS systems will create bigger values and utilities for card holders.
The Saigon Times Daily
