Financial Cards and Payments in Vietnam

Industry Overview | 23 Jan 2013

EXECUTIVE SUMMARY
Financial cards continue to record strong double-digit growth
All categories under financial cards are expected to continue to record strong double-digit growth in 2012, making the Vietnamese market one of the best performing in the world. Financial cards are still in a nascent stage in the country, where the main target market is still pretty much limited to central urban areas and mid- to high-income consumers. In 2011 and 2012, many banks have focused on expanding to suburban and rural areas, contributing to the overall growth of the industry in terms of number of cards in circulation.

Scandals dampen consumers trust in the banking system

In late 2012, Nguyen Duc Kien, a member of the board of directors and a founding member of Asia Commercial Bank (ACB), one of the biggest private banks in Vietnam, was arrested for suspected wrongdoings and corruption. Rumours also pointed to backstage support for Mr Nguyen from certain members of the government, destroying peoples hope that the government would step in to clean up the banking system. As a result, many people withdrew their cash from the banks, especially ACB. Many others chose to diversify their assets other than putting them in the local banks, such as opening overseas bank accounts, or keeping gold instead. This has had great impact on the financial cards performance, as many consumers are trying not to have too many financial products due to their low trust in the system.

Vietcombank leads financial cards for another year with growing share
Vietcombank continues to lead the financial card sector in value terms. The bank has a wide range of cards on offer, including different types of credit cards and debit cards. It is the only bank that offers credit cards under four operators, Visa, MasterCard, American Express and JCB. The banks cobranded Vietnam Airlines American Express card is one of the most popular and prestigious credit cards in Vietnam. Vietcombank is one of the longest-established banks in the country, and it has earned trust from most consumers for its stable performance.

New direction from State Bank hinders future growth of credit cards
At the beginning of 2012, the State Bank of Vietnam issued new instructions for all banks in Vietnam to restrict the growth of credit cards. Large banks can have year-on-year growth of loans through credit cards up to 17%, whilst smaller banks will have lower maximum growth limit. Whilst this is just a direction and not a legislation the State Bank has not stated that banks will be fined if they exceed the limit it will still have a great impact on credit cards performance in the future. On the other hand, this will create opportunities for other types of cards to grow, such as debit cards and pre-paid cards.

Strong double-digit growth for card payment transaction value during forecast period
Card payment transaction value is expected to see strong double-digit annual growth over the forecast period. This will mainly come from debit cards, as it is the leading category in both percentage and actual value growth. Young working adults in the urban areas will be the main customers who drive the industry, as they always seek more modern and convenient methods of payment. Banks will also play an important role, as they need to constantly upgrade and expand the card payment infrastructure to provide better accessibility and more convenience for the consumers. 2013 Euromonitor International

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