Vietnam Credit Card Market Forecast to Boom Soon

3:26:34 PM | 7/8/2005

Vietnam Credit Card Market Forecast to Boom Soon


Cash remains king in Vietnam but credit card issuers are predicting an imminent boom in the card market with the number of Vietnamese cardholders potentially growing by 10 times the current number of nearly one million.


Nguyen Thu Ha, chairperson of the Vietnam Card Association under the Vietnam Banking Association, said from both the macro-economic and banking perspective, the domestic card market is considered very strong given the rising incomes among the country's 82-million people, rapid economic growth and improving legal system.


Increasing tourist arrivals and the influx of money remitted home by overseas Vietnamese would also facilitate credit card growth, Ha said at a conference touting the potential for electronic payments in Hanoi last week.


"Look at Hanoi's Old Quarter alone. There are thousands of places that could potentially accept card payments," said Ha, who is also a deputy general director at Vietcombank, the country's biggest state-owned commercial bank.


Vietnam now has about 10,000 places that accept card payments, concentrated in big cities like Hanoi and Ho Chi Minh City and other major tourism sites, but Ha believed the number is "too small to serve Vietnamese cardholders alone".


Gordon Cooper, Visa International's country manager for Vietnam, Laos and Cambodia shared Ha's upbeat outlook on the market potential. He cited Visa's research on likely Vietnamese adopters of credit cards, which pointed to almost 9.5 million people who could become customers of card issuers.


Vietnam has only 15 banks issuing payment cards with almost 80% of the nearly one million cards issued by domestic institutions.


Banks offering international payment cards are Vietcombank, ACB, Eximbank and ANZ - with 125,000 cards issued since 1996. Of this number, Visa-member banks claimed 62,000 by the end of last year, a year-on-year growth of 67%. Other international brands available are MasterCard, American Express and Maestro.


After obtaining a license from the State Bank last month to open the first representative office in Vietnam, Visa executives said they expected the number of Visa cards issued in the country to hit half-a-million during the next five years.


"Electronic payments have grown rapidly worldwide and Vietnamese consumers now demand the convenience of cards," said Cooper.


However, 89% of merchant sales volume via Visa cards in Vietnam is still generated by foreigners, mostly in Hanoi and Ho Chi Minh City. Retail purchases and cash withdrawals made by domestic card issuers in 2004 topped $72 million, a relatively small amount compared with the $237 million worth of purchases and cash withdrawals in Vietnam by international visitors.