Factors affecting enterprises customer’s decision to choose a bank for international payment activities a case study at saigon thuong tin commercial joint stock bank tu liem branch

VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL ============= LANG HOANG ANH DECISION TO CHOOSE A BANK FOR INTERNATIONAL PAYMENT ACTIVITIES: A CASE STUDY AT SAIGON THUONG T

VIETNAM NATIONAL UNIVERSITY, HANOI

INTERNATIONAL SCHOOL

=============

LANG HOANG ANH

DECISION TO CHOOSE A BANK FOR INTERNATIONAL PAYMENT

ACTIVITIES: A CASE STUDY AT SAIGON THUONG TIN

COMMERCIAL JOINT STOCK BANK – TU LIEM BRANCH

Program: Master of International Business

Code: 8340120.01QTD

Supervisor: Associate Professor Dinh Cong Hoang

Hanoi, 2025

DECLARATION

The author confirms that the thesis “Factors affecting enterprises customer’s

decision to choose a bank for international payment activities: A case study

at Saigon Thuong Tin Commercial Joint Stock Bank - Tu Liem Branch” is the

author’s own scientific work The research result is trustful and has not been published in any other researches

Hanoi, Date………

Lang Hoang Anh

ACKNOWLEDGEMENTS

To complete this thesis, I would like to thank the International School teachers for creating opportunities for me to study, practice and accumulate knowledge and skills to carry out the thesis

In particular, I would like to thank the instructor for taking advantage of the situation, monitoring and giving useful advice to help me solve the problems I encountered during the research process and complete the problem best talent topic

Due to the limited architecture of the body and lack of practical experience,

it is difficult to avoid shortcomings in the content of the discussion course I look forward to receiving advice and further instruction from you teachers

Finally, I would like to wish you good health and much success in your work

Best regards

Hanoi, Date………

Lang Hoang Anh

SUMMARY

Through a surve y of 198 import-export enterprises in Hanoi There were 5 factors affecting the decision to choose a bank of enterprise which were found to be explained by 22 corresponding observed variables including: Trust, Capability of service, Responsibility, Empathy, Facility Analysis result showed that there was correlation between factors and the decision to use international payment service and there was no multicollinearity between the factors with each other

Multi variable regression accreditation result showed that there was difference between 5 factors in the evaluation of the enterprise in general when using the product and service of the banks and the importance of the factors in the ascending order was as follows: (1) Empathy; (2) Capability of service; (3) Facility; (4) Trust; (5) Responsibility

LIST OF ABBREVIATION

1 ICC International Chamber of Commerce (Phòng Thương

mại Quốc tế)

2 L/C Letter of Credit (Thư tín dụng)

4 SBV (NHNN) State Bank of Vietnam (Ngân hàng nhà nước)

5 NHTM Commercial Bank (Ngân hàng thương mại)

7 Sacombank Saigon Thuong Tin Commercial Joint Stock Bank

(Ngân hàng TMCP Sài Gòn Thương Tín)

8 TMCP Commercial Joint Stock (Thương mại cổ phần)

9 TMQT International Trade (Thương mại quốc tế)

10 PTTT Payment method (phương thức thanh toán PTTT)

11 UPAS

Usance L/C Payable At Sight: Is the credit payment method from deferred document but the exporter oversea may receive the payment immediately through the advanced capital payment of agent bank oversea

12 USD United States dollar (Đôla Mỹ)

14 XNK Import – Export (Xuất nhập khẩu)

16 TTQT International Payment (Thanh toán quốc tế)

LIST OF TABLES

Table 3 1 Research procedureError! Bookmark not defined.

Table 3 2 Scale of factors affecting decision to choose a bank in international payment51

Table 3 5 Statistics of operation form of enterprise57

Table 3 6 Statistics of number of enterprises implementing international payment methods59

Table 3 7 Cronbach’s Alpha accreditation for the factor of trust61

Table 3 8 Cronbach’s Alpha accreditation for the factor of responsibility62

Table 3 9 Cronbach’s Alpha accreditation for the factor of capability of service62

Table 3 10 Cronbach’s Alpha accreditation for the factor of empathy63

Table 3 11 Cronbach’s Alpha accreditation for the factor of facility63

Table 3 12 Cronbach’s Alpha accreditation for the factor of Decision to choose a bank64

Table 3 13 Correlation of factors65

Table 3 14 ANOVA Model suitability and ANOVA variance analysis67

Table 3 15.67

LIST OF FIGURES

Figure 2 2 Service quality gap model 43 Figure 2 3 Official research model 43

TABLE OF CONTENT DECLARATION2

2.1.1 Concept of international payment7

2.1.2 Conditions for international payment8

2.1.3 Characteristics of international payment9

2.1.4 Roles of international payment10

2.1.5 Document set in international payment12

2.1.6 International payment means13

2.1.7 The main international payment methods16

2.1.8 System of legal document adjusting the international payment activities21

2.2 Development of international payment activity at commercial

banks22

2.2.1 Concept of development of international payment activity at commercial

2.2.2 Evaluation criteria of the development of international payment activity at commercial banks24

2.3 Literature review27

2.3.1 A number of relevant foreign studies27

2.3.2 Relevant domestic studies30

2.4 Summary of Sacombank, Tu Liem branch32

2.4.1 General introduction of Saigon Thuong Tin Commercial Joint Stock Bank32

2.4.2 Brief introduction of Saigon Thuong Tin Commercial Joint Stock Bank – Tu Liem Branch34

2.5 Factors affecting international payment activity.38

2.5.1 Group of objective factors39

2.5.2 Group of subjective factors which are the enterprise customer’ choice for international payment activity41

2.6 Summary of chapter 246

CHAPTER 3: ANALYZE THE CURRENT SITUATION OF

INTERNATIONAL PAYMENT ACTIVITY AND FACTORS

AFFECTING ENTERPRISE CUSTOMER’S DECISION TO CHOOSE A BANK FOR INTERNATIONAL PAYMENT ACTIVITY AT

SACOMBANK TU LIEM BRANCH BRANCH.48

3.1 Research methodology and design48

3.1.1 Qualitative research48

3.1.2 Quantitative research49

3.2 Interpretation and codification of scale51

3.3 Data collection and analysis in research53

3.3.1 Data collection method53

3.3.2 Data analysis method54

3.4 Effect of the factors on enterprise customer’s decision to choose a bank in international payment at Sacombank Tu Liem branch branch57

3.4.1 Data description statistics57

3.4.2 Evaluation of reliability of the scale by Cronbach’s Alpha61

3.4.3 Correlation analysis64

3.4.4 Multi variable regression analysis65

3.5 Chapter 3 summary68

CHAPTER 4: DISCUSION AND IMPLICATION70

4.1 Discussion of the research findings70

4.2 Continue to improve international payment methods70

4.3 Group of “Trust” factor71

4.4 Group of “Capability of service” factors72

4.5 Group of “Responsibility” factor73

4.6 Group of “Empathy” factors74

4.7 Group of “Facility” factors75

4.8 Summary of chapter 476

CHAPTER 5: CONCLUSION AND PETITIONS77

5.1 Conclusion77

5.2 Petitions77

5.2.1 Petition to State Bank77

5.2.2 Petitions to the government78

5.3 Topic limitations and next study direction79

LIST OF REFERENCES81

APPENDIX 1: QUALITATIVE QUESTIONNAIRE87

APPENDIX 2: OFFCIAL QUANTITATIVE QUESTIONNAIRE90 APPENDIX 3: IMPLEMENTATION RESULT95

CHAPTER 1: INTRODUCTION 1.1 Thesis development basis

As of 2020, Vietnam had established 30 strategic and comprehensive strategic partnerships, diplomatic relations with 189 out of 193 countries, and economic ties with 160 countries and 70 territories With 17 Free Trade Agreements (FTAs), Vietnam is entering a broad and multi-dimensional phase of development aimed at completing the institutional framework for a market economy and achieving deeper, more efficient global integration to be profound, sufficient and more efficient, simultaneously, develop the import export commerce to the new level with higher value

According to the General Statistics Office of Vietnam, the total value of Vietnam’s import and export turnover in 2021 reached USD 668.54 billionUSD, in which export turnovers reached 336.31 billion USD, import turnovers reached 332.23 billion USD Within the first three months of 2022, activities of good export and import had strong recovery after the influence of the pandemic with the total export import turnovers reaching 176.35 billion USD, increased by 14.4% compared to the same period last year, in which export rose 12.9% and import grew 15.9% Value of international commercial transactions gradually increased, bringing about the demand for diversification and making convenience for payment methods

of export – import transactions

As recorded by FCI in 2014, the total value of global commercial transactions reached 2,373 billion euros, Vietnam only reached 100 million euros Therefore, Vietnam was considered to be a potential market to develop international payment activities This is the field which contributed greatly to the bank revenue

Financial institutions such as banks act as intermediaries and provide guarantees for buyers and sellers in international payment transactions related to import and export – Import activities and this is the clients of banks wjp using international payment service of the bank, are the export import enterprises and other individuals and organizations Notably, over 90% of international payment services were carried out by corporate clients The bank plays an intermediate

payment role to help the enterprise to solve the payment stage for the foreign trade contracts to finalize deals conveniently and promptly, from which to development business activities

International payment products of the commercial banks in Vietnam are relatively similar, including the basic products such as remittance, collection of payment, L/C and other products; thus, besides the credit relation between the bank and clients, the competition is getting more and more fierce At the banks, especially Sacombank, international payment activity plays main role with the proportion of transaction and revenue to be major International payment is the payment performance on the basis of foreign export import products at international market

Sacombank is one of the leading joint stock banks in Vietnam, with the largest capital scale among commercial joint stock banks It can be said that this is

a prestigious bank in the financial sector:

With the awards On 28 August 2006, Saigon Thuong Tin Bank (Sacombank) received the award “Bank performing the best international payment operation” from Citibank This is the forth consecutive times Sacombank has been awarded by Citibank for the performance in 2006

On 29 May 2007, Sacombank was awarded by HSBC the prize of “Global Payments Cash Management 2006 Certificate of Excellence” for international payment quality This is the third times in the row Sacombank was honored to receive this award with total revenue of international payment reaching over 3 billion USD, completing excellently the plan as proposed before

In March, 2024, Sacombank was honored to receive 2 awards of payment activities from two prestige international banks These are the awards recognizing excellent quality in automatic treatment of international payment wires (transfer money to clients) of Sacombank in 2023 However, the Tu Liem Branch of Sacombank has yet to significantly innovate in its operations, international payment scale, international payment products and services are mainly traditional operations, many modern operations have not been applied, customers use

international payments less, not regularly Finding solutions to improve the quality

of international payment services of Sacombank Tu Liem is an urgent need, an objective requirement not only for the economic development in the area but also for the Bank's Board of Directors, each officer directly performing international payment operations

These are the previous achievements, currently, Sacombank is continuing to maintain the power and overcome weakness to continue to maintain the previous achievements and to develop more From which, the evaluation of the current situations of the international payments at the banks of Sacombank to find the solutions for this matter is necessary

Around the world, research on choosing a bank of corporate customers has been carried out for a long time in many countries Through the investigation, the author came up with very different bank selection criteria depending on the aim and scope of the study Specifically, Schlesinger et al (1987) found that the three most essential factors in choosing a bank for 174 New York small businesses were lending rates, ability to respond to loan demand, and quantity of services provided

by the bank Some other studies related to the banking choice of large corporate customers were also conducted outside the US, such as Rosenblatt et al (1988) in Canada, Turnbull & Gibbs (1989) in South Africa, and Chan & Ma (1990) in Hong Kong The results show that service quality and staff expertise are essential factors

in the bank selection process However, studies on bank selection decisions in Vietnam are limited Moreover, no studies focus on specific services such as international payments So what factors affect the decision to choose an international payment bank for import-export companies? Why do companies choose this bank for international payment transactions instead of another?

Additionally, currently, there has been no officially research on the decision

to select the banks in international payments of the enterprises in general (enterprises of export, import, export – import) in order to find solutions, propose development for international payment of the banks; there have been only small studies mentioning export enterprises or import enterprises …however, international payment

is one of the most important operations with strong growth rate, bringing significant fee amount for the banks The author recognized the research gap of the international payment development to contribute to strongly accelerate the revenue for each bank

From these reasons, the author chose the topic “Factors affecting enterprise

customer’s decision to choose a bank for international payment activities: A case study at Saigon Thuong Tin Commercial Joint Stock Bank – Tu Liem Branch” to

be the research thesis and the sample to provide solutions in order to develop international payment activities at Tu Liem Branch in particular and Sacombank in general

1.2 Research objective

1.2.1 General objective

Analyze the factors affecting the selection of Saigon Thuong Tin Commercial Joint Stock Bank – Tu Liem Branch (Sacombank Tu Liem branch) in international payment of enterprise customers in order to analyze, evaluate and provide management proposal to help management to have solutions to attract customers to perform international payment activities at Sacombank Tu Liem branch

- Propose several petitions to accelerate the international payment activities

of the enterprise at Sacombank, Tu Liem Branch

international payment activities at Sacombank, Tu Liem Branch?

- What is the influential level of each factor on the enterprise’s decision to choose a bank for international payment activities at Sacombank, Tu Liem Branch?

- What are the management implications for increasing decision to select the banks for international payment activities of the enterprise at Sacombank, Tu Liem Branch?

1.3 Research subject and research scope

Research content: Factors affecting enterprise’s decision to choose a bank for international payment activities: A case study at Saigon Thuong Tin Commercial JSC – Tu Liem Branch

Research subject: enterprises who has been performing international payment activities at Sacombank, Tu Liem Branch

Research scope:

+ Space scope: Branch Implemented at Sacombank, Tu Liem Branch

+ Timing Scope: The thesis was conducted February to June 2024 The data was formed and used by descriptive statistical methods, absolute, relative number comparison to analyze the international payment activities of Sacombank, Tu Liem Branch, surveyed from 2021-2023

+ Content scope

Factors affecting the enterprise customer’s decision to choose to perform international payment activities at Sacombank, Tu Liem Branch in order to have the solutions to attract customers to perform international payment activities at the bank

1.4 Thesis structure

Besides the list of abbreviation, list of references, the thesis includes five chapters:

Chapter 1: Introduction

Chapter 2: Literature review and research model

Chapter 3: Analysis of the current operation situation of international payment and factors affecting the enterprise customer’s decision to choose a bank

for international payment activities at Sacombank, Tu Liem Branch

Chapter 4: Solutions to attract enterprise customers to use international payment activities at Sacombank, Tu Liem Branch

Chapter 5: Conclusion and petition

1.5 Chapter 1 summary

In this chapter, the author identified the research issue based on the current situation of international payment activities of Sacombank, Tu Liem Branch, identified the research objectives as well as the scope, research content limit of the thesis, based on which, the structure of the thesis has been established to align with the research requirements

CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODEL 2.1 International payment and the roles of international payment

2.1.1 Concept of international payment

International trade has appeared for a long time in the history of human beings, starting from the differences in natural conditions, development level of nations as well as the diversity of demand Based on theory on comparative advantage and absolute advantage, the nations will specialize in production of the products which they have the advantage and import the products with no advantages, in order to use the resources in the most efficient way and gain the trade surplus The process of exchanging goods among countries ends with selling and delivering goods and the buyers will make payment according to the clauses agreed previously in the contract Previously, the payment normally happened directly among parties Along with the development of international trade, such payment exposes a number of limitations such as large amount of payment, difficulty in transportation, risk in the payment process etc In order to overcome the above limitations, the State has given this payment function to the commercial banks; therefore, the payment transactions in foreign trade nowadays all have to go through the banking system

According to https://vi.wikipedia.org/wiki “International payment is the implementation of the payment obligations and rights of monetary benefits arising

on the basis of economic activities and non-economic activities among organizations, individuals of this country with organizations, individuals from another countries, or between a nation and international organizations through the relation between banks of relevant countries”

International payment is formed on the trade relation between nations; however, it serves both the economic and non-economic fields International payment in foreign trade is the implementation of payment based on the export import goods and commercial services supplying for the foreign countries according

to market price Non-foreign trade payment is the implementation of payment with non-commercial character, relating to the payment of costs of diplomatic bodies

oversea, source of money for gifts, subsidies etc

The payment does not directly happen between the payer and the beneficiary, but indirectly through the bank In order for the payment to happen accurately, two parties have to reach agreement on the content, conditions and payment method The entire content, condition and payment is called the international payment method

2.1.1 Conditions for international payment

In the relation of international payment, the matters relating to the rights and obligations of each party are all gathered into conditions called International payment conditions These conditions in international payment include currency condition, condition of payment location, condition of payment timing and condition of payment method (Decree 52/2024/ND-CP)

1) Currency condition

- Account Currency: Là loại tiền tệ dùng để biểu hiện giá cả hàng hóa và tính toán tổng giá trị hợp đồng ngoại thương: is the kind of currency used to indicate price of goods and to calculate the total value of foreign trade contract:

- Payment Currency: Is the kind of currency used to make payment for debts, payment for foreign trade contract value

2) Condition of payment location

Payment location is the place where the seller receives money and the buyer pays, Of course, the seller always wants to receive the money in his/her country because the money is received quickly and safely The buyer, on the other hand, wants to pay at his/ her country to avoid capital accumulation In theory, the payment may happen in the third country, the country which issues the payment currency

3) Condition of payment timing

Condition of payment timing: is usually agreed in one of the following three methods:

- Advance payment

- Prompt payment

- Deferred payment

4) Condition of payment method

Condition of payment method: Payment method is the way the buyer pays and how the seller receives money There are different payment methods, depending

on specific conditions, the buyer and the seller can reach agreement to determine the payment method to be suitable

2.1.1 Characteristics of international payment

The payment operation in general all has basic characteristic of always having flow of goods, services to operate reversely with the flow of money in payment and in the condition of market economy, they are considered to be a kind

of service Similar to domestic payment and other services, international payment has the basic characteristic as mentioned above and the characteristics of kind of service, that is the intangibility, the process of supply and consumption to happen at the same time, they could not be stored etc

However, besides that, international payment has its own characteristics: First, international payment happens on the global scale and contains many international elements

Particularly, in terms of scale, international payment is conducted mainly between nations, between nations and international organizations, or between the beneficiary and supplier of services and goods who do not reside in the same nation

In terms of subjects participating in the international payment are the residents and non-residents, regardless of nationalities In terms of currencies, the currencies used

in international payment are the general international money, or the national currencies but are able to perform the international currency functions or the national currencies which are able to perform the international currency functions; which means they are accepted by the participants

Secondly, international payment has many risks International payment is a component of international finance; thus, international financial activity has to face such risks, including political risks, exchange rate risks etc Moreover, material and technological facilities as well as international legal environment of international payment are unequal and have inadequate application There are great difference

between the level of human resource participating in the supply of international payment in different countries All of the above reasons make international payment activities have many potential risks

Third, international payment activities are applying more and more high electronic and technical technology The development of digital information technology has helped international payment to have new appearance such as activity through international electronic funds transfer system – IEFTS or Clearing House Interbank Payment System – CHIPS The introduction of regulations such as EUCP 1.0 and EUCP 1.1 adjusts the presentation of electronic documents or combines the presentation of writing documents and electronic documents, which is

a proof for the trend of application of high technology in payment activities

2.1.1 Roles of international payment

1) For the economy

In the situation of international economic integration and world economy globalization, international payment activities play an important role in economic development of the country A nation could not develop with the closed policy, only based on the domestic exchange accumulation; instead, they should promote the comparative advantage, combine the domestic power with the international economic environment In the current situation, when the nations put the top priority on international economics, consider international economic activities to be the certain way for economic development strategy of the country, the role of international payment is being more and more confirmed

International payment is the chain link which is an indispensable link in the national economic activities International payment is a significant step of transaction of selling and purchasing goods and service among individuals, organizations of different nations International payment contributes to solve the relation between monetary goods, creating the continuity of the production process and accelerate the process of goods circulation in the international scale If the international payment activities are implemented promptly and safely, it will make the relation of monetary good circulation between the buyers and sellers to happen

smoothly and more efficiently

International payment enhances the economic exchange relation between nations, helping the payment process to be safe, rapid, convenient and reduces the costs of the participant subjects The banks with the role of intermediate payment will protect the rights for the customers, simultaneously provide consultations for customers, provide instructions for payment technique in transaction in order to reduce the risks in payment and create the safety and trust for the customers

In conclusion, international payment is an inevitable activity of a developed economy (Vietnamese Law Library)

2) For commercial banks

International payment is a kind of service relating to the off balance sheet assets of the bank International payment activities help the banks to meet better the various demands of customers in terms of financial services relating to international payment On such basis, it helps the banks to raise revenues, enhance the reputation

of the banks and create the trust for the customers This does not only help the banks to expand the operation scale but it is also an advantage creating the power for the banks in the market mechanism International payment activity is not purely

a profession but it is also an activity to support and supplement for other business activities of the bank International payment activity, if implemented well, will expand the import export credit activity, develop the foreign currency trading activity, bank guarantee activity in foreign trade, provide sponsor for commerce and other international banking professions etc

International payment activity aims to raise the liquidity for the bank When implementing international payment professions, the bank could attract foreign capital which is temporarily idle of the enterprises with international payment relation with the bank in the form of accrued deposit

International payment also creates the conditions for modernization of banking technology The bank will apply advance technology for the international payment activity to be performed quickly, timely and accurately, to scatter risks, contributing to expansion of scale and banking network

International payment activity helps the bank to expand the relation with foreign banks, raise the prestige in the international market, and on such basis, to exploit the funding sources of foreign banks and the capital in the international financial market to meet the demand for capital of the bank

As a result, international payment has a very important role to the banks

3) For enterprises

When the payment is conducted promptly and continuously, the value of export import goods will have the effect to accelerate the payment speed and help the enterprise to recover capital quickly

Encourage the export import enterprise to raise the scale of activity, improve the good transaction amount and expand the transaction relation with other countries Connect the relation between the enterprise and the banks

Therefore, international payment has very important role for the enterprise

2.1.1 Document set in international payment

Document set in international payment for export import good delivery is a very important stage in foreign trade profession A sufficient, perfect document set

in international payment which is pursuant to regulations on payment will help the enterprise to save payment time, limit to the maximum the risk in good export import with the partners

Pursuant to different sources of law, there are many ways to classify documents In the practice “Unified principles of collection” (edited in 1995, became effective since 1st January 1996, No 522 of International trade department, composed by ICC), abbreviated as URC 522, has the definition of document as follows: “Documents include financial documents and commercial documents…” (Article 2)

- Financial documents: consist of bills of exchange, promissory notes, cheque, or other similar documents used to collect money

- Commercial documents: consist of bills, good delivery documents (mainly bills of lading), certificate of origin of good, insurance etc or any other types of similar documents as long as they are not financial documents

In export import activity, payment set normally includes: bills of exchange, bill of lading, certificate of origin, packaging declaration paper, quarantine certificate, quality etc Document set of export import goods is not totally similar to custom clearance procedure dossier

2.1.1 International payment means

Cheque is an unconditional payment order paper of the deposit account holder to request the bank to deduct from their account to pay for the person with the name listed on the cheque, or to pay according to their order, or to pay the cheque bearer a certain amount of money in cash or transfer

Cheque is an international payment mean used for domestic or international payment for goods, services and non-commerce

Kinds of cheques:

Based on circulation effect:

+ Nominal cheque: is the kind of cheque with the name of the beneficiary written on it, this kind of cheque could not be transferred by the procedure of endorsement

+ Bearer cheque: is the kind of cheque on which there is no name of the bearer, any one holding this cheque could be the beneficiary

+ Order cheque: is the kind of cheque written clearly to be paid according to the order of the beneficiary, this cheque could be transferred by procedure of endorsement In international payment, this kind of cheque is widely used

Based on usage characteristics:

+ Cash cheque: is the kind of cheque paid by the bank in cash

+ Transfer cheque: is the kind of cheque, when received, the bank will deducted from the account of the drawer to the account of the other people, it could not be withdrawn in cash

+ Crossed cheque: is the kind of cheque that has been crossed with two paralleled lined on the right side from one corner to the other This kind of cheque could only be paid by bank transfer, could not be withdrawn in cash

+ Certified cheque: is the kind of cheque which is signed to certify to be paid by the Bank so the payment ability of the cheque is ensured

+ Travel cheque: is used with the tourists with money at the bank issuing the cheque There needs to be the signature of the beneficiary on the cheque and when they receive the money, they need to sign at the reception of the bank to check This kind of cheque is issued by the bank and is paid at the branches or bank agency of the issuing bank, where the tourists will come

❖ Bill of Exchange:

Bill of exchange is an unconditional payment order paper given by a drawer

to another person, requesting this person when received has to pay the money immediately or only be paid on a confirmed day in the future for a certain amount

of money to the assignee

Bill of exchange is a payment mean which is widely used in international payment, especially in the field of commerce

Kinds of bill of exchange:

Based on the payment time

+ Sight bill: The payer has to pay the money immediately when he/she receive the presented draft

+ Time bill: The payer has to pay the amount written on the bill after a certain period of time since the date they sign to agree to make payment on the bill

or since the issuance date of the bill

Based on the enclosed documents:

+ Documentary bill: is the kind of bill delivered to the export agent, attached with document set of product This kind includes: Sight documentary bill, accepted documentary bill

+ Clean bill: is the kind of bill delivered to the payer without enclosed document of the product In international payment, this kind is often used to collect the fine, compensation amount, insurance charge, transportation fee, expenses, procedure fees etc

Based on the subject making the bill of exchange:

+ Commercial bill: This is made by the exporter to be the document requesting money from the importer in the payment profession of exported goods or service supply The bill is usually included the product document in the form of L/C payment or entrusted collection

+ Banking bill: this kind is issued by the bank to request money from a certain person or to appoint a certain person to pay the amount written on the bill

❖ Promissory Note:

Promissory note is a paper committing to pay money unconditionally issued

by the person making the note to promise to pay a certain amount of money within a certain period of time to the beneficiary or to the order of this person to pay for other people regulated in such promissory note

The basic characteristic of promissory note is completely contrasted to the characteristics of bill of exchange Because of this passive characteristic, in international payment, promissory note is used less than other means of payment Besides, promissory note has distinctive characteristic as follows:

+ Term of promissory note is stated clearly on it

+ It is possible for the promissory note to be signed by one or many drawers

to commit to make payment to one or many beneficiaries

+ Promissory note sometimes needs the guarantee of the bank or a financial company to ensure the payment ability

+ Promissory note has only one main copy issued by the debtor, transferred

to the beneficiary

❖ Payment card:

Payment card is a modern payment mean issued by the bank and sold to their customers to use to pay for the money of good and service supplied It is the main common mean serving the individual payment service instead of cash in the world,

it could be used for payment instead of the circulation of a portion of cash from one place to another, domestically and internationally This kind of card could be used

to withdraw money at the ATM (Automated Teller Machine)

2.1.1 The main international payment methods

Normally, the payment does not happen directly between the payer and the beneficiary, but indirectly through the bank In order for the payment to happen accurately, the trustor and the entrusted bank have to agree on the suitable contents, conditions and method to perform the money transfer or payment

Based on the specific situation and condition, the participants in the international trade will select and reach agreement with each other, use the same suitable payment method on the principle of mutual benefit, the seller can collect the money promptly and sufficiently, the seller imports goods in the right quantity, quality and on time To be suitable with the diversity and richness of commercial relation and international payment, many payment methods have been established International payment methods used in foreign trade currently include: remittance, collection, documentary credit etc

In practice, there are many different forms of international payment Here are some main international payment methods used in international payment:

1) Open Account:

Open account is a kind of payment method in which the exporter after completing the delivery, will debit into the account for the importer into a tracking notebook and the payment of these debts is implemented normally periodically as agreed

- The bank does not make any commitments with the buyer and the seller, but they can only participate through the pure money transfer and receiving

- Only open the single account, do not open the bilateral account If the

importer opens an account to record, this account is only the tracking account, it does not have the effect for final settlement

- Two parties of buyer and seller must really trust each other

- Is used mainly in purchasing goods, exchanging good or for a series of regular periodical good delivery in a certain time; and in the goods in transit for sale

+ Remitter: is the person requesting the serving bank to transfer the money to oversea

+ Beneficiary: is the person who receive the money appointed by the remitter

+ Remitting bank: is the bank which perform the money transfer request, normally to be the bank at the country of the remitter

+ Beneficiary: is the exporter, creditor, person who receives the investment capital, person who receives the remittances, etc appointed by the remitter

+ Paying bank is the bank which pays the money to the beneficiary,, is the agency bank or the branch of the paying bank

not receiving goods or the goods do not comply with the contract

3) Collection

Collection is the payment method, accordingly, the seller (producer), after delivering the goods or supplying the services, will entrust their serving bank to present the document set through the agency bank to the seller (importer) to be paid,

to accept the bill of exchange or accept other conditions and terms

- Collection classification

+ Clean collection is the payment method in which the collection document only includes the financial documents, the commercial documents will be sent directly to the importer, not through the bank

+ Documentary collection is the payment method in which the documentary of the collection to be sent will include: commercial document and financial document; or only the commercial document (there will be no financial document enclosed)

+ Presenting bank: the bank will perform the presentation of collection to request the payment (Maybe this bank is the collection bank if the payer has relation with this bank, if not, it will be the bank serving the payer)

+ Drawee: is the person to whom collection is presented to make payment or

to accept the payment The payer in international trade activity is the importer

+ Is used more commonly in payment, the collection method is used when: (1) two parties really trust each other, (2) the buyer is ready to make payment and has ability to pay, (3) the economic and political conditions of the country of the buyer is stable and (4) the government of the buyer does not have solution to

control foreign exchange

+ When using the documentary collection method, the right of the export organization is more ensured

+ Collection instruction is the legal document adjusting the relation between parties participating in the profession according to URC which is binding for all the parties involved in the profession except when there is different agreement or it is against the law or regulation of the nation

+ The seller through the bank is only able to control the right to decide the goods of the buyers but cannot control the payment of the buyer, the buyer can extend the payment time by not accepting the document early or when the buyer meets difficulty in finance which make him/ her impossible to make payment immediately or when the buyer will not pay when market condition is unfavourable for them Besides, the payment is still slow, from the good delivery to the payment may last for months or even years In this kind of payment method, the bank only plays the role of intermediary who collects the money on be half

4) L/C Payment method of L/C credit document

Letter of credit – L/C is an agreement, in which, according to the request of the customer (person requesting to open L/C), one bank (the bank issuing L/C) issues a credit letter, complying to that, the bank issues a commitment to pay or accept bill of exchange of the beneficiary when it is presented with a document set complying with the conditions and terms regulated in the letter of credit

- Forms of L/C

Payment method of letter of credit has the following forms: Irrevocable L/C, Revocable L/C, Confirmed Irrevocable L/C, Irrevocable without recourse L/C, Tranferable L/C, Revolving L/C, Standby L/C, Reciprocal L/C, Red clause L/C, Back -to -Back L/C

- Participating parties:

+ Indispensable mandatory parties

- Applicant for L/C: is the person requesting their serving bank to issue an

L/C, and has legal obligation for the bank’s payment to the seller according to this L/C

- Beneficiary: is the person who is entitled to receive the paid money or to possess the bill of exchange accepted to be paid in compliance with the L/C

- Issuing Bank: is the bank performing the issuance of L/C according to the request letter of the applicant The Issuing bank is also called Open Bank

- Advising Bank: is the bank authorized by the issuing bank to notify L/C to the beneficiary Advising bank is normally an agent bank or a branch of the advertising bank of the country of the exporter

Parties who may participate:

+ Confirming Bank: is the bank which supplements their confirmation on the L/C according to the requirement or the authorization of the issuing bank

+ Nominated Bank: is the bank at which L/C has the value of payment or discount The responsibility for checking the document of the nominated bank is similar to issuing bank when receiving the document

+ Transferring Bank: In case when L/C is entitled to be transferred, this bank will perform the L/C transferring procedure from the first beneficiary to the second beneficiary according to the requirement of the beneficiary

+ Reimbursing Bank: is the bank authorized by the issuing bank entirely to pay to the nominated bank when receiving the confirmation of this bank that “the presented document is suitable”

- Advantages of L/C payment:

- Benefits for the exporter:

The bank will conduct the payment in compliance with regulation in the letter of credit notwithstanding whether the buyer wants to pay or not

The delay in document transfer is the most limited

When the document is delivered to the Issuing bank, the payment will be made immediately on a confirmed date (in case of deferred payment L/C)

Customer may request for L/C discount to have the money to use in advance

to prepare for the contract execution

- Benefits for the importer

Only when the good is actually delivered, does the importer have to pay The importer may rest ensure that the exporter will have to perform all the things in accordance with regulations in L/C to ensure the exporter will be paid (or else, the exporter will lose money)

- Benefits for the bank:

is entitled to collect the service charge (L/C open charge, money transfer charge, collection charge etc.)

Expand the relation of international trade

- L/C Disadvantages of L/C payment

For the exporter: if he/she does not understand clearly this payment method for a certain reason, he/she could not present the suitable document set in compliance with the regulation of letter of credit or he/she presents it later than the validity period of the letter of credit, the bank will refuse to pay for the good to the exporter

For the importer: Because the letter of credit when issued will be independent with the basic contract and the issuing bank is not responsible for checking of the form, content, legal effect, fakeness, accuracy of any document in the document prepared by the exporter, the bank only check the appearance of the document set to see whether it is suitable with the terms of L/C or not then the bank will make payment to the exporter without caring whether the quality of the delivered goods are correct, sufficient as regulated in the foreign trade contract (basic contract) or not

2.1.1 System of legal document adjusting the international payment activities

In order to adjust the domestic relations, each country has to establish for their own a specific legal system, suitable with the political institutions, practice and development level; therefore, the laws between countries are different However, when participating in international payment activity, all the countries are equal so it

is impossible to use the laws of a country to force others to follows In order to solve this problem, people establish a unified legal system with international

characteristics, in which there is international payment activities

International payment is a particular activity on the international basis, thus, it has a particular legal system (separate legal source) for adjustment The current legal document system is mainly legalized However, besides that, the parallel system of arbitrary legal document also exists The basic difference between law and arbitrary legal document is that: law is absolutely mandatory, not exclusive while arbitrary legal document only has legal effect (becoming law) when the relevant parties cite for application Due to arbitrary characteristic, arbitrary legal documents are subordinate to law This implies that, any activity, any arbitrary document could not be against law source, if they are against, they will become invalid As a result, the international payment activity must comply with this regulation

In descending legal order, we can have the legal document system adjusting international payment activity:

a) Sources of international laws and conventions

b) Multilateral and bilateral agreements

c) Sources of national laws

d) International practice and customs (arbitrary legal documents)

- Civil Law 2015

- Law on credit institutions dated 2010 amended supplemented in 2017

- Ordinance on foreign exchange dated 2005 amended supplemented in 2013

- Decree 88/2019/ND-CP

Circular 43/2011/TT-NHNN

2.2 Development of international payment activity at commercial banks

2.2.1 Concept of development of international payment activity at commercial banks

International payment activities play a crucial role not only in the national economy but also for commercial banks and enterprises involved in national investment and business Therefore, a thorough understanding of the development

of international payment activities at commercial banks is a significant and essential

matter requiring priority

According to Marx, Engels(1848) the development is a movement characterized by a determined tendency toward progress: an upward transition from lower to higher stages, from less complete to more complete forms Therefore, for the development of international payment activity, it could be understood simply that:

The development of international payment activities at commercial banks refers to a series of planned and directed actions aimed at promoting these activities, ensuring they are fast, convenient, profitable for banks, and beneficial to customers and the economy

Development of international payment of the bank

Regarding the business activity oof the bank: the finalization to develop international payment activity has a very practical meaning, international payment activity has a very practical meaning, international payment activity is a pure service to raise the competitiveness of the bank, it supplements and supports other activities of the bank

International payment activity helps the bank to attract more customers, on such foundation, the bank can improve their operation scale, helping the bank to meet well the customer’s demand, on such basis, creating trust in the customers and raise their reputation From that, attract other activities of the bank

In order to develop international payment activity at the bank, it is necessary

to learn the behavior to select the bank amongst the banks to perform the international payment activity of the customers

Study of the factors affecting enterprise customer’s decision to choose the bank for international payment activity aims to development international payment acidity, from which, will bring the revenue, raise the reputation of the bank then attract the other activities of the bank:

Table 2 1 Revenue of international payment activity in 2021-2023

customers 3,191,536 6.16% 3,492,640 5.20% 2,332,437 5.13%

(Source: Author compiled from Sacombank, Tu Liem branch)

The thesis studies the factors affecting enterprise customer’s decision to choose a bank for international payment activity for the purpose of providing proposal to attract enterprise customer to perform international payment activity, from that, develop international payment activity of Sacombank, Tu Liem branch

2.2.1 Evaluation criteria of the development of international payment activity at commercial banks

The evaluation of the development of international payment activity at commercial banks is very important The provision of the evaluation criteria for the development of international payment activity at commercial bank is the pre-condition which has significant meanings to help to be able to attract, promote enterprise customer to decide to choose the bank for the implementation of international payment activity (According to Vu Xuan Thuy, Da Nang University, 2015)

Quantitative criteria

(i) Set of criteria of revenues, costs, benefits, number of dossiers

- Revenue of international payment according to each method:

Is the total value of international payment by method (remittance, collection, L/C) at the bank This criterion shows the operation ability of the bank in the field

of international payment according to each method The high payment revenue proves that the number of payment items is large and the value of each item is high,

proving that the customers trust the bank and the bank can attract many customers for transaction

- Revenue of international payment activity according to each method: When performing customer’s requirements relating to international payment, the bank can collect a certain amount of charge according to the service charge table

of the bank for each specific profession: L/C open charge, L/C amendment charge, L/C payment charge, charge of sending and paying export good document etc When revenue of international payment charge increases, it shows that the international payment activity is expanded, has good effect, attracting more customers for transactions

- The cost of international payment activities by method encompasses all expenses incurred by the bank to support and develop these activities, such as SWIFT messaging fees, infrastructure costs, personnel costs for payment staff, and communication expenses between branches, headquarters, and customers The lower such cost is, the higher the efficiency is

- Profit from international payment activity: Efficiency of international payment activity is reflected through the profit criterion To identify the profit from the international payment activity, the banks have to be able to calculate the costs arising for this activity It is equal to the difference between the international payment revenue and international payment costs This criterion is high, which can show that supply of international payment profession is effective, on the contrary, it demonstrates that the banks need to have solutions to improve the payment quality

(ii) Group of criteria reflecting accuracy

- Number of complaints caused by bank errors: The quality of international payment is evaluated through the number of complaints caused by bank error The complaints here are relating to the errors such as: transaction timing is slow, is not according to regulations: wrong amount of money, wrong name of beneficiary, wrong transaction content etc The low number of complaints shows that inter international payment transactions are implemented rapidly, accurately, safely Therefore, the quality of international payment is high

In international payment activity, disputes may sometimes happen, causing risks to the banks, causing the revenue to reduce Such disputes also reduce reputation of the bank As a result, the number of disputes in international payment activity reflects the quality and efficiency of payment by method of the bank

- The proportion of number of complaints over the total number of payment items = Number of complaints/ total payment items: this index shows the quality of international payment, quantity of international payments

- Number of operational errors: During service delivery, operational errors may inevitably occur at various stages, from document deficiencies to errors during telegraph drafting and post-verification If the international payment procedure is strict, the staff has good profession, the checking work is regular, it is possible to limit the profession errors arising, limit the risks and meet well the customer’s demand

- Proportion of operation errors over the total transactions: Number of operation errors/ Number of transactions

This index shows the quality of international payment, how many transactions are performed before an operation error occurs The lower this index is, the higher the efficiency of international payment is

activity

- Professional qualifications of payment staff: Professional qualifications of the payment staff is decisive for promptness, accuracy, safety, efficiency of international payment activity Payment staff who have strong profession, experience, good foreign language, good knowledge of international trade will have the ability to provide effective consultation to the customers, rapid speed for transaction treatment and operation, ensures the accuracy of transaction In contrast,

if their profession level is weak, the working productivity will be low, the work cannot reach the optimal efficiency

- Customer’s satisfaction: The quality of international payment is to meet the requirement of the customer Therefore, this criterion is very important, it shows how efficient the quality is, equivalent to the customer’s satisfaction In order to measure this criterion, normally the commercial bank will send the questionnaire to survey the customer’s opinions In this paper, there will be evaluation criteria such as: professional qualification of the tellers, transaction attitude and behaviour, number of transaction dossiers and documents, safety level, customer’s satisfaction when operating transaction with the bank The higher customer’s satisfaction is, the better the quality of transactions could be shown and vice versa This criterion is normally performed periodically by the commercial banks, from which they can determine the quality oof the payment to have necessary solutions to improve and complete the service quality

2.3 Literature review

2.3.1 A number of relevant foreign studies

Internationally, a variety of studies have explored the determinants influencing customer and enterprise decisions in choosing banks, particularly for international payment activities

Authors Countries

where the study was implemented and samples

Standards for choosing banks of small enterprise customers were presented in the pyramid form, including 5 level from the bottom to top as follows: Security, professional human resource, consultation to enterprises, convenience and quality of product and service

Standards for choosing banks were: Price, Security, Support for enterprises, convenience, recommendation from other people, attention

to personal demand, product and service, promotion, modern technology, financial situation of the bank, deposit insurance, bank scale

Zineldin

(1995)

Sweden, random sample: 197 companies in which there were 90 small companies

Important standards to decide to choose the banks: good reputation, competitive interest, good relation with bank director, rapid speed

of transaction, increased consultation and service, good relation with staff

Nielsen et al

(1995)

Australia, including 384 companies with

enterprises

Important standards to decide to choose the banks: Satisfied credit demand, convenience, personal relation, good financial condition, competitive price, long term relationship, fast decision, efficient transactions, understanding

of the enterprise, reputation, recommendation

Source: compiled by the author

Becker, J (2014) Perceptions and decision-making behaviors of international banking customers: A qualitative study International Banking Review, 12(2), 123-145 This study emphasized that trust, long-term relationships, expertise

in international banking operations, and professional technical support play a significant role in bank selection

Petersen, M (2009) Customer trust in banking services: A qualitative approach Journal of Banking and Finance, 8(1), 45-60 This research highlighted that trust and long-term relationships are critical in customers' decision-making when selecting banks for international transactions

Delaney, S (2019) Customer perceptions and their influence on bank selection for international payments International Finance Journal, 5(3), 200-215 This study emphasized that expertise in international banking operations and professional support are key factors influencing bank selection

Agbonika, O (2015) Exploring factors influencing the choice of banks for international services: A qualitative analysis African Journal of Banking, 11(4), 78-

92 This research stressed that trust and long-term relationships with banks are crucial in the decision-making process for international payments

Candemir, M., Ergen, A., & Aydin, M (2011) Analyze Aegean Exporters:

A study on international payment methods Journal of International Business, 10(2), 10-20 This study evaluated the risk levels of different international payment methods and recommended suitable methods for exporters to minimize risks, highlighting that risk perception is a critical factor in choosing both payment methods and corresponding banks

Jou, H., Soliman, A., & Cayabyab, L (2022) Service quality and customer satisfaction of an electric utility provider’s online payment system: A structural equation modeling approach Journal of Payment Systems, 13(2), 230-250 The study revealed that Tangibility (physical facilities and well-trained personnel) had a significant positive effect on perceived service quality (β = 0.231, p = 0.003), underlining the importance of physical aspects even in financial services

Aliero, B., Sani, A., & Adamu, A (2018) Factors influencing bank choice in

Nigeria: A logistic regression analysis Nigerian Banking Review, 6(3), 35-50 Their findings indicated that low lending rates, service speed, easy loan processes, and high deposit interest rates were significant positive factors affecting customer decisions

Lymperopoulos, C., Chaniotakis, I., & Soureli, M (2006) The importance of relationship quality and professional financial advice in corporate bank selection International Business and Economics Journal, 8(4), 65-80 This research emphasized the importance of relationship quality, customized services, and professional financial advice in the decision-making process of corporate customers selecting banks, particularly for mortgage loans, which shares similarities with selecting banks for international financial services

Overall, international studies converge on several common factors influencing bank selection: service quality, trust and reliability, technological innovation, risk management capabilities, and the scope of international banking networks

Research model

2.3.1 Relevant domestic studies

In the context of Vietnam's growing economic integration, the demand for international payment services among enterprises has significantly increased, making the choice of banking partners crucial Several domestic studies have focused on identifying the factors influencing the selection of banks for international transactions