The Vietnamese people remain unfamiliar with payments by credit card, an advanced financial payment mode very popular in the world. At the moment, there are some 330,000 international credit cards in circulation in Vietnam, a small number in comparison with the country’s potential. These figures were released January 29, 2007 by Visa International and ACNielsen’s survey on the financial payment habits of Vietnamese people.
Huge potential
Mr Stuart Tomlinson, Visa country manager for Vietnam, Cambodia and Laos, said about 1.2 million people in Hanoi and Ho Chi Minh City, where nearly seven million people are living, are eligible for using credit cards and this figure shows great potential in the Vietnamese market. Besides, some 10.5 million Vietnamese people are eligible for opening bank accounts and using debit cards.
Stuart Tomlinson analysed that the survey showed positive attitudes of Vietnamese people to using payment cards although the main means of payment remains cash. “The number of credit cards, debit cards and international cards issued in Vietnam is growing with geometric progression,” Tomlinson said. In 1996, Vietnam only had 400,000 cardholders, but the figure jumped to 3.5 million by 2006.
The card payment is, thus, expanded. From 2002 to late 2006, the transaction value soared to US$200 million. Especially, international tourists spent US$407 million on card transactions in Vietnam in 2006, up 323 per cent.
On the other hand, Mr Chris Morley, managing director of ACNielsen, said the Vietnamese people are beginning to get used to the notion of borrowing money from banks for consumption. Hanoians borrow money to buy cars and houses while Saigonese borrow to do business. This is essential groundwork for developing advanced financial products in the potential market.
More importantly, the incomes of Vietnamese people increase year after year, Chris Morley added. It is forecast that around a quarter of the Vietnamese population will have monthly income of over VND7 million by 2009, compared with 12 per cent in 2006 and possibly 18 per cent in 2007.
“Grasping this tendency, we think Vietnam is a huge market for credit card payments,” Stuart Tomlinson noted. Visa credit cards have been used in several locations in Vietnam since 1991. The first Visa credit cards were issued in Vietnam in 1996.
In 2005, Visa opened its first representative office in the country and has to date activated some 160,000 credit and debit cards through joint ventures with 17 banks, including state-owned commercial banks (Vietcombank, Incombank, Agribank and BIDV), commercial joint stock banks (ACB, EAB, VP Bank, VIBank and Sacombank) and foreign banks (ANZ Bank, Bangkok Bank, Citibank and HSBC).
“In spite of enjoying an annual growth rate of 70 per cent and holding 68 per cent of market share, Visa’s cardholder population in Vietnam is very small in comparison with 1.46 billion Visa cardholders worldwide, including 300 million in the Asia-Pacific,” Tomlinson added. He said Visa is planning to issue many types of other credit cards like prepaid cards and specialised cards.
Existing hindrances
The first difficulty for card issuers is the Vietnamese people’s habit of cash payment, although the number of people eligible for using more advanced financial products and utilities is huge. Surveyors interviewed eligible people but many of them didn’t know what credit cards or debit cards were.
The capacity of Vietnamese banks is another limiting factor. Vietnamese commercial banks lack experience in loans for consumption. The percentage of card holders in Vietnamese banks is much lower than world average. Only 6 per cent of Vietnamese people have bank accounts, while the figures in Singapore, Malaysia and Thailand were 95 per cent, 55 per cent and 46 per cent, respectively.
Vietnam needs strategies to quickly boost bank-based payment activities, especially after joining the World Trade Organisation (WTO). This is also an opportunity for the Vietnamese finance and banking sector, surveyors said.
Huong Ly
Vietnamese
