Domestic credit cards have plenty of room for growth: experts | Business

A hand holding bank cards from different banks (Photo: VNA)

Hanoi (VNS/VNA) – There is still room for domestic credit card
(DCC) since the number of DCC holders is relatively low in Vietnam, according to experts at a recent DCC seminar.

Nguyen Ngoc Hien, editor of Lao Dong newspaper, pointed out that DCCs are an instrument for promoting cashless payments in the country.

DCCs allow holders to borrow loans to cover personal expenses and repay the loans later with up to 55 days interest free.

This means that people can use DCCs to withdraw short term loan with low interest rates rather than turning to loan sharks for money, which effectively curbs usury.

“Vietnam is such a potential market for DCCs with its population of nearly 100 million,” the editor said.

Le Van Tuyen, Deputy Director of the Payments Department of the State Bank of Vietnam, revealed that by the end of 2021, there were 12 DCC transmitters in Vietnam with a total of 475,000 active cards.

DCCs have become popular among many urban citizens, but not among people living in rural areas who have stable incomes and want convenient payments for daily expenses.

As a result, there is still plenty of room for growth in the rural segment.

The assistant manager also mentioned several conveniences of DCCs that have helped them gain popularity with new users.

These include a simple process, long interest-free duration, low transaction fees, and compatibility with issuers’ existing debit payment networks.

To Dinh Ton, Deputy Managing Director of Vietnam Bank for Agriculture and Rural Development (Agribank), revealed that the bank inaugurated its own DCC named Loc Viet in early 2022.

Loc Viet is a state-of-the-art duo card that combines debit and credit functions. It offers unsecured loans to its holders up to a credit limit of 30 million VND (1,311 USD) with a grace period of 55 days.

Agribank offers free point-of-sale (POS) devices with no transaction fees to promote the use of Loc Viet in rural areas.

“So far, 430,000 cards have been issued, a total overdraft of 2.5 trillion VND (109.3 million USD) has been granted and more than 5,000 new POS terminals have been installed, bringing the total number of point-of-sale terminals at 15,000 in rural areas,” he said.

Ton estimates that a customer base of almost 27 million families would give the bank a considerable advantage, enabling it to further promote cashless payments in the country.

Tran Thi An Dung, branch manager of Asia Commercial Joint Stock Bank (ACB) in Hanoi, said the bank’s DCC has been in use for five years and recorded an annual growth rate of around 80% between 2017. and 2021.

She credits DCC’s rapid growth rate to her diverse facilities.

Notably, cardholders can pay in instalments for goods and services from more than 200 ACB partners without incurring interest or fees.

For other goods and services, payments are interest-free and with small fees.

As ACB and NAPAS cooperate to accelerate DCC growth over the next 3-5 years, the manager urged NAPAS to revise its intercharging fees to reach more customers.

Nguyen Quang Minh, Deputy General Manager of National Payment Services (NAPAS), revealed that the organization introduced its DCCs (NAPAS Credit) in January 2021.

NAPAS credits are accepted by over 300,000 payment terminals and e-commerce platforms nationwide and can be used to withdraw cash at over 20,000 ATMs.

So far, the banks that have issued NAPAS DCCs are Agribank, ACB, VietinBank HDBank and Sacombank.

According to Minh, there were only 6.5 million credit cards in Vietnam at the end of June 2021.

This figure pales in comparison to the country’s population of nearly 100 million, which means a great prospect of growth for DCCs.

He expects more banks to step in in the near future, making DCCs a standard in domestic payments.

Pham Tien Dung, deputy governor of the State Bank of Vietnam, said customers would never go back to cash once they get used to cashless payments.

However, convincing cash-preferred customers to try cashless payments for the first time is no easy task.

Accordingly, the Deputy Governor recommended that DCC transmitters communicate effectively with their customers to keep them well informed of DCC amenities and facilities.

He suggested integrating payment terminals across all industries in the economy to expand the card acceptance network.

He also called for the widespread use of cashless payments and DCCs in rural areas to help disadvantaged people access financial services.

Finally, the Deputy Governor called on DCC issuers and NAPAS to ensure the security and safety of the card system and to safeguard the rights and interests of cardholders./.