A memorandum of understanding will be signed on Wednesday between the nation’s two biggest card unions, Smartlink Card Services Joint Stock Company (Smartlink) and Vietnam National Financial Switching Joint Stock Co. (Banknetvn), to merge the former into the latter.
According to a source from the State Bank of Vietnam (SBV), the agreement marks the first step of merging three card unions on the market into a single brand of Banknetvn. Besides Smartlink, Vina Smart Card Joint Stock Company (VNBC) is expected to merge into Banknetvn in the first half of next year.
After the merger is complete, Banknetvn will become the only card switching company on the market with the central bank holding a 25% stake.
Explaining why Banknetvn is partially held by the central bank, the representative said that SBV must play a role in the enterprise given social distinctions of the switching network and the non-cash payment market. The central bank will continue to maintain its 25% stake in the enterprise after the merger with Smartlink and VNBC.
Auditing and evaluation organizations will be invited to examine enterprises to be merged into Banknetvn following the Company Law, he added.
Banknetvn actually has taken over switching function from the two card unions since 2011. Members of VNBC have also completed direct connection with Banknetvn switching system.
The three card unions have reached agreement on adjustments, technical connection and card payment infrastructure. Large banks belonging to the three unions that account for 90% of the card market have technically connected, allowing card users to transact at almost all automated teller machines countrywide.
Besides, cardholders are also able to pay at any POS (points of sale), not only POS of one issuer like before.
The merger is part of a project establishing a national card switching center approved by the Government.
The representative also said the Banknetvn after the merger will develop following the model of China UnionPay, building an automated clearing house (ACH). Currently, banks are connecting with one another to perform retail clearing transactions such as electricity, water and insurance fee payments. ACH will gather all these retail payments into a package and help clear this package among banks.
Banknetvn will also build up a common POS network for all banks in Vietnam to reduce scattered POS development of local lenders at the moment.
Banknetvn general director Ngo Ngoc Dong in a statement published on the SBV website said that the company is expanding connection with foreign switching organizations such as UnionPay of China, UC of Russia and those belonging to the Asian Payment Network such as South Korea’s KFTC, Thailand’s ITMX and Malaysia’s MEPS. This will allows holders of debit cards issued by Vietnamese banks to make transactions overseas and vice versa.
The Saigon Times Daily