People are still apprehensive
The era of technology 4.0 and the COVID-19 pandemic have changed the spending payment trend from traditional cash to card payment. According to data from the State Bank, within 5 years (from 2018 - 2022), the number of domestic credit cards issued had an average growth rate of 29.6%, higher than international cards at 17.72%/year. This shows that the recognition and use of domestic credit cards in the market have positive signals.
Notably, domestic credit card transactions in the first 3 months of this year reached 1.3 million transactions with a value of VND10,000 billion. Currently, the country has more than 900,000 domestic credit cards. Although the number of domestic credit cards has grown strongly, it is still modest. With a population of 100 million people, this is a great potential for credit institutions to exploit and promote the issuance of domestic credit cards in the coming time.
At the workshop “Promoting the potential of domestic credit cards towards a cashless society” organized by Lao Dong Newspaper in collaboration with the Payment Department (State Bank of Vietnam) and the National Payment Corporation of Vietnam (NAPAS) on May 21, Associate Professor, Dr. Dang Ngoc Duc - Head of the Faculty of Finance and Banking, Dai Nam University - pointed out the reasons why domestic credit cards have not developed commensurate with their potential.
Domestic credit cards (NAPAS credit cards) are issued by Vietnamese banks and financial companies. Associate Professor, Dr. Dang Ngoc Duc said: “Although it brings more convenience than cash spending, people are still hesitant to use credit cards. The fear of increasing financial burden when having debt, or spending out of control due to having more credit card money, making it impossible to pay off debt, is also one of the reasons why people are hesitant to use this product.”
Emphasizing that the development of domestic credit card services is extremely important for consumers, businesses, commercial banks and the entire Vietnamese economy from all perspectives, Associate Professor, Dr. Dang Ngoc Duc said that the research and selection of solutions to develop the use of domestic credit cards in Vietnam must be identified by commercial banks as a key task, which must be prioritized in connection with efforts to increase consumer debt in particular and achieve the target of growth rate of debt in general in 2024 as well as the following 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 it is necessary to increase convenience for card users; increase understanding of credit cards (transparency); and apply Fintech to reduce credit card fees.
“According to the results of an in-depth analysis of 26 users, who are directly using or have experience using credit cards, the benefits of credit cards are one of the considerations that make customers decide to open and use this type of card. Regarding the fee, the annual fee waiver is one of the things that makes users feel satisfied.
Regarding card features, users want to manage spending, set spending limits to avoid overspending, and link to investment funds to be able to control investment needs quickly and conveniently.
Regarding preferential policies, users are particularly interested in cashback policies based on spending transactions, incentives designed specifically for each daily spending need, and travel privileges such as airport lounges and hotels. In addition, for users who are young customers, they also want to express their own personality by designing unique cards for themselves" - Associate Professor, Dr. Dang Ngoc Duc suggested.
In addition, according to Associate Professor Dr. Dang Ngoc Duc, to increase the use of internal credit cards of commercial banks in a stable and truly meaningful way, in addition to minimizing fees and encouraging consumers, commercial banks need to increase investment, promote technological solutions and apply Fintech to minimize both financial costs, opportunity costs and transaction costs for card users.
Another important thing that should be considered as a long-term strategy is to strengthen and enhance the reputation of each commercial bank so that the cards issued can be accepted for payment outside of Vietnam. Only then can consumers using cards issued by Vietnamese banks have the same benefits as using international credit cards.
“To implement the above proposed solutions, in addition to the efforts of commercial banks as well as payment service infrastructure providers, the attention, direction and support of the State Bank and competent authorities in organizing, supervising and supporting the development of domestic credit cards are decisive.
Removing barriers to developing credit card usage needs to be linked to the digital transformation process of the financial industry, closely coordinated with the Financial Inclusion Program and placed in the context of sustainable development (ESG) of Vietnamese commercial banks" - Assoc. Prof. 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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