People still have reservations.
The era of Industry 4.0 and the COVID-19 pandemic have shifted payment trends from traditional cash transactions to card payments. According to data from the State Bank of Vietnam, over the five years from 2018 to 2022, the number of domestically issued credit cards grew at an average rate of 29.6%, higher than international cards at 17.72% per year. This indicates positive signs regarding the recognition and use of domestic credit cards in the market.
Notably, domestic credit card transactions in the first three months of this year reached 1.3 million transactions with a value of 10 trillion VND. Currently, there are over 900,000 domestic credit cards nationwide. Although the number of domestic credit cards is growing strongly, it is still modest. With a population of 100 million, this represents significant potential for credit institutions to exploit and promote the issuance of domestic credit cards in the future.
At the seminar "Unleashing the Potential of Domestic Credit Cards Towards a Cashless Society," organized by the Lao Dong Newspaper in collaboration with the Payment Department (State Bank of Vietnam) and the Vietnam National Payment Corporation (NAPAS) on May 21st, Associate Professor Dr. Dang Ngoc Duc - Head of the Finance-Banking Faculty, Dai Nam University - pointed out the reasons why domestic credit cards have not developed to their full potential.
Domestic credit cards (NAPAS credit cards) are issued by Vietnamese banks and financial companies. Associate Professor Dr. Dang Ngoc Duc stated: "Although they offer more convenience than cash spending, people are still hesitant to use credit cards. The fear of increasing financial burdens due to debt, or uncontrolled spending due to having credit card balances and being unable to repay debts, is one of the reasons why people are reluctant to use this product."
Emphasizing that the development of domestic credit card services is of paramount importance to consumers, businesses, commercial banks, and the entire Vietnamese economy from all perspectives, Associate Professor Dr. Dang Ngoc Duc believes that researching and selecting solutions for developing the use of domestic credit cards in Vietnam should be identified by commercial banks as a key task, prioritized in relation to efforts to increase consumer loan balances in particular and achieve the overall loan growth target for 2024 and subsequent years.
Solutions to promote the use of domestic credit cards.
Proposing solutions to promote the use of domestic credit cards by Vietnamese commercial banks, Associate Professor Dr. Dang Ngoc Duc said that it is necessary to enhance convenience for card users; increase understanding of credit cards (transparency); and apply Fintech to reduce credit card fees.
"According to an in-depth analysis of 26 users, who are currently using or have experience using credit cards, the benefits of credit cards are one of the key considerations when customers decide to open and use this type of card. Regarding fees, the waiver of annual fees is one of the things that users are satisfied with."
Regarding the card's features, users want to manage their spending, set spending limits to avoid overspending, and integrate with investment funds to quickly and conveniently control their investment needs.
Regarding incentive policies, users are particularly interested in cashback policies based on spending transactions, incentives tailored to individual daily spending needs, and travel privileges such as airport lounges and hotel stays. Furthermore, younger users also desire to express their individuality by designing unique cards for themselves,” suggested Associate Professor Dr. Dang Ngoc Duc.
Furthermore, according to Associate Professor Dr. Dang Ngoc Duc, in order to increase the use of internal credit cards of commercial banks in a stable and meaningful way, in addition to minimizing fees and encouraging consumers, commercial banks need to increase investment, promote technological solutions and apply Fintech to minimize financial costs, opportunity costs and transaction costs for card users.
Another important long-term strategy to consider is strengthening and enhancing the reputation of each commercial bank so that the cards they issue can be accepted for payment outside of Vietnam. Only then will consumers using cards issued by Vietnamese banks enjoy the same benefits as using international credit cards.
"To implement the solutions proposed above, in addition to the efforts of commercial banks and payment service infrastructure providers, the attention, guidance, and support of the State Bank of Vietnam and relevant agencies in organizing, supervising, and supporting the development of domestic credit cards are crucial."
"Removing barriers to the development of credit card usage must be linked to the digital transformation of the financial industry, closely coordinated with the Financial Inclusion Program, and placed within the context of sustainable development (ESG) of Vietnamese commercial banks," Associate Professor Dr. Dang Ngoc Duc affirmed.
Source: https://laodong.vn/kinh-doanh/minh-bach-phi-va-lai-suat-de-nguoi-dan-khong-con-e-ngai-voi-the-tin-dung-1343162.ldo
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