Dang Manh Pho, Director of the IT Centre of the Bank for Investment and Development of Vietnam (BIDV), quoted some figures to give perspective on the habit of Vietnamese people of using cash: four million Singaporean people use 30 million banking cards of various kinds while 85 million Vietnamese people use 6.2 million cards.
According to Mr. Pho, a lack of comprehensive connection between banks, customers and goods, service providers has made consumers timid about using and enjoying benefits of e-payment.
As for ATM networks of banks, there are up to three alliances in Vietnam now, including the alliance of the Bank for Foreign Trade of Vietnam (Vietcombank), the one between ANZ and Sacombank, and one of the East Asia Bank. If the buyer and the seller have bank accounts at different banks or ATM alliances, e-payments will not be conducted in e-commerce.
Bui Quang Tien, head of the Payment Department of the State Bank of Vietnam (SBV), commented that the disunion of ATM card alliances had caused heavy waste of resources.
In fact, banks and providers are taking initiative in offering different modes of payment. For example, Pacific Airlines has cooperated with some organisations to apply e-payment modes, using international credit cards or debit cards of Vietcombank. The Technological and Commercial Bank of Vietnam (Techcombank) has joined hands with chodientu.com, a website offering online shopping services, to provide e-payment services for Techcombank’s clients who buy goods on this website.
However, this mode of payment has only been implemented in a narrow sphere. According to Mr. Pho, e-commerce in Vietnam now is now in a state of want, with each side (banks and providers) taking initiative in offering different solutions while the role of the State Bank of Vietnam, the commander, is lacking.
While banks are trying to expand the network of points of sale (POS), providers are also trying to negotiate with each bank to establish systems allowing customers to pay for goods and services by bank cards or directly discounting their bank accounts.
Establishment of National Financial Switching Company
In fact, countries with developed e-commerce are ones that have built a complete payment infrastructure. In all modes of payment, banks are always at the centre with the role of direct service providers or an intermediate organisation supporting the e-payment system.
The model that developed countries apply is building a national financial switching company to switch payment transactions among different sides, deal with clearing payments, etc. In addition, there are payment gates built by private firms to provide services.
In late April 2007, the National Financial Switching Company (Banknet) was inaugurated. The goal of Banknet is connecting card payment networks of banks in Vietnam to create a national network and to link with international bank card organisations.
The operations of Banknet are completely different from the existing card alliances in Vietnam at present. Bank alliances are actually the negotiation of some banks to link their card networks together. Often, a bank that has a more developed card network than another calls for the connection of their networks. Meanwhile, Banknet creates a foundation network of technology and service and provides the switching service for all.
Initially, Banknet has connected the ATM networks of three banks. By August 2007, Banknet will have linked ATM systems of seven banks into one and it will gradually connect all banks which have ATM systems into this one. After that, Banknet will expand the connection abroad, for example to China Union Pay of China, NETS of Singapore. Currently, customers of the three banks that have joined Banknet can use their ATM cards at all POS of member banks.
Mr. Pho also said that Banknet was promoting the connection of Banknet with payment gates of the Vietnam Post and Telecommunications Group/Vietnam Data Communications and Electricity of Vietnam (EVN). In the future, those links will bring e-payment closer to customers.
Recently, the State Bank of Vietnam has paid more attention to this issue through the issuance of regulations and standards on card payments, guided and supported Banknet’s operations, organised workshops on e-payment.
For existing card alliances, Mr. Tien said that in the coming time, if card alliances didn’t cooperate with each other, the State Bank of Vietnam would take stronger measures on them. With the above positive moves, problems associated with the development of e-payment will be solved.
I think the State Bank of Vietnam needs to more strongly show the role of management in this field. It should not let card alliances negotiate themselves because with their partiality, the negotiation will be very difficult and time-consuming. Perhaps it will develop to the circumstance in which some alliances join hands to become bigger alliances (like the case in Thailand). It should be understood that the State Bank of Vietnam doesn’t have to force commercial banks – Dang Manh Pho, Banknet director. The most difficult issue for e-payment now is the lack of a suitable solution. If the solution is too complicated, customers will not want to make e-payments. If it is too simple, risks will be very high. Perhaps foreign banks will join this market. To solve this issue thoroughly, I think we need a community-connecting solution – Le Xuan Vu, Director of the Banking Technology Service and Product Application and Development of Techcombank. Many banks have offered Internet Banking, ATM, banking through fixed phone and mobile phones services. All of those services are the foundation for banks in supporting e-commerce. It significantly contributes to change the awareness of customers of e-payment channel. For banks, the readiness for e-payment is now at high level. However, as banks are at different development levels, they don’t have a ‘common voice’ in this issue. The guidance of the Government in this area is necessary. We need an intermediate organisation to establish a payment gateway, which connect service providers, sale points and financial institutions. That gateway will create a common standard – Dao Minh Tuan, director of the IT Centre of Vietcombank. |