Vietnam's card market possesses real potential for development into the future.
Vietnam’s card industry is one the most dynamic in the world and sees competition among domestic and foreign banks.
Growth in the industry stood at 18.5 per cent during the 2011- 2014 period, according to the Vietnam Plastic Card Market Forecast to 2013 report released by the US-based Research & Markets.
Figures from the Payment Department at the State Bank of Vietnam show that revenue from card transactions has grown significantly, totaling VND114 trillion ($5.3 million) in the first nine months of the year. In Q3 the figure was VND43.7 trillion ($2.03 million), an increase of 34 per cent compared to the same period last year.
Vietnam, however, remains dominated by cash payments, though continuous government support and a rapidly rising population has contributed to cash payments falling and people have been encouraged to use non-cash methods. Vietnam now has 76.1 million cards, including 68.1 million domestic cards, accounting for 90 per cent, and 8 million international cards. The country’s payment card market has been growing rapidly over the last few years, fuelled by a young population, technological developments, and the emerging popularity of e-commerce, the report stated.
According to Mr. Chau Dinh Linh from the Banking University of Ho Chi Minh City, all cards are available in large cities. Meanwhile, rural areas are yet to be fully tapped, which has potential and is a target of credit institutions. In particular, the credit card and prepaid card categories will see strong growth in the future. In 2010 the number of credit cards was 440,000, which increased 137 per cent in 2011 and reached 2.43 million in 2013, or 87 per cent higher than in 2012.
In the first nine months of 2014, the credit card category recorded the highest growth of all card categories, of 25 per cent compared to the same period of 2013. The debit card category held the greatest market share, of more than 90 per cent in terms of the number of cards in circulation, followed by the credit card category and the prepaid card category.
One of the means for developing all types of cards is to build and connect payment infrastructure. Since 2011 banks have turned from developing ATMs to POS, as a way to make non-cash payments more popular. The number of POS machines rose from 70,000 in 2011 to 159,000 in the first nine months of this year and is estimated to be 200,000 for 2014 as a whole.
Thirty-seven banks are now providing payment services via POS. Banks recorded VND41.3 trillion ($1.92 million) in total transaction revenue via POS in the first nine months of 2014, with 8.3 million transactions. Meanwhile, transaction revenue via ATMs was VND311 billion ($14.46 million), with 15,809 machines and 153.7 million transactions. The State bank of Vietnam previously approved an increase to ATM cash withdrawal fees to restrict the amount of cash transactions.
The scale of Vietnam’s card market remains small. Non-cash payments are still a relatively new concept in the country and are yet to win the full trust of consumers, while the quality of goods sold on e-commerce websites is often questioned. According to the report, Vietnam’s credit card market remains largely untapped and represents major opportunities for card issuers, suppliers and manufacturers, given that cards can be increasingly used at shopping malls and online for purchasing luxury, world-class consumer goods. The credit card category is expected to increase from 1.9 million cards in 2013 to 4.4 million in 2017.
The number of smartphone users is rising strongly in Vietnam and the country recorded the second-highest growth in Southeast Asia, behind Indonesia, in Q1 2014. The number of smartphone users accounted for 20 per cent of the population and 40 per cent of these buy goods via their smartphone, according to a GfK report from June 2012 to June 2013. This is the foundation for developing online payments and replacing the preference for cash payments.