Before that reality, the research and proposal of solutions to complete the management regime for payment activity through payment service providers are urgent for the innovation, modern
Trang 1INTRODUCTION
In recent years, the market economy in our country managed by the State with socialist orientation has developed comprehensively with high speed in which there is a significant development of payment service providers, methods of payment and payment tools creating strong changing step in the payment activity However, in addition to that development, the payment activity of payment service providers has many weaknesses, shortcomings, especially in organization and management as follows: The organization scale is still small and narrow with the nature of lording over a region, ununited and unassociated together The system of payment tools and services developed but the payment regime and policy are insufficient, non-synchronous and not managed closely leading to losses and risks
in payment, especially the rate of payment in cash is really high
Before that reality, the research and proposal of solutions to complete the management regime for payment activity through payment service providers are urgent for the innovation, modernization of the bank system and the enhancement of competitive capacity of credit organization system in Viet Nam Therefore, the author chose the
subject “Completing the management regime for payment activity through payment service providers in Viet Nam”
Structure of the thesis:
In addition to the introduction, list of abbreviation, list of tables, conclusion, reference, the thesis include 3 chapters:
Chapter 1: Theoretical foundation of management regime for payment activity through payment service providers in the economy
Chapter 2: Reality of management regime for payment activity through payment service providers inVietnam
Chapter 3: Solutions and recommendations to complete management regime and organization for payment activity through payment service providers inVietnam
Trang 2CHAPTER 1: THEORETICAL FOUNDATION OF MANAGEMENT REGIME FOR PAYMENT ACTIVITY
THROUGH PAYMENT SERVICE PROVIDERS IN THE
ECONOMY
This chapter mentions the theories of payment and management regime for payment activity through payment service providers in the economy
The author presented systematically and logically the contents into five parts:
First part: Firstly, starting from the formation and development
of the payment activity then evidencing the final theory that the payment comes into the world from the implementation of currency functions and necessary, important concepts The theory is as follows:
“Payment is a method of using currency as a measurement to pay for goods, pay tax, salary, pay for other services in social and economic activities”
“Payment not in cash is the payment carried out by transferring money from the account of the payer to the account of the beneficiary
or balancing each other through payment service providers”
“Payment service is the supply of means, methods of payment and other payment services to transact the payment”
Secondly, this chapter presents the role of payment activity in the
economy including: role to the bank; role to customers; role to the economy
Thirdly, Function of payment activity
Second part: Presenting, analyzing the management of payment
activity
Firstly, Concept of management: There are many different
approaches to give out a concept of management According to the systematic approach, it is possible to give out the concept:
“Managemetn is the organizational and oriented impact of the management subject on the management entity, management object in order to use in the most effective way the resources, opportunities of
an organization to achieve designated targets in the fluctuated environment”
Trang 3
Outline 1.1: Systematic approach in management
(Source: Academy of Finance, Syllabus of Management science, p 13)
Management is the combination of efforts of everyone in the organization and best use of resources of the organization to achieve the common target of the organization and particular target of each person cleverly and efficiently Management must answer the following questions: “Which target must be achieved?” “How and in what way is the target achieved?”
Secondly, Concept of payment activity management
From the targets in oriented plan and general solutions to develop the socio-economy of the country in which there is the oriented target to develop the activity of banking sector to the implementation organization including the relationship responsibility
of ministries, relative sectors and responsibility of local authorities (provinces, cities directly under the Central Government), it is possible to give out the concept of payment activity management as
follows: The State (the Central Bank) uses policy regime to organize and impact the payment activity of payment service providers in order that the payment activity in the economy is transparent, favourable
with highest efficiency
Thirdly, Concept of management regime for payment activity
“The management regime for payment activity is the method of managing payment activity following the direction, guidance of the State on the basis of requirements of the socio-economic development
Trang 4 Role of payment regime to the implementation of currency policy of the Central Bank
Role of the Central Bank in the development of payment regime in the market economy
Third part: Contents of managing payment activity
- Setting, building legally normative acts
- Instructing and organizing the implementation of legally normative acts on payment activity
- Considering to license and supervising the implementation
- Organizing the management system for payment activity
Efficiency in payment management: shown in payment time, reliability of payment activity and costs for a payment transaction
Detailed expression of an efficient payment organization regime is: Minimizing the risks
Methods to reduce transaction costs to increase service quality is possible to carry out
Fourth part: Elements impacting the management regime for
- System of payment means in providing payment service
- Payment organization model
- Management competence and human resources for payment
activity of bank system
Fifth part: Presenting some experiences of the world on payment
organization and management for payment activity and from that point taking out lessons for Vietnam
Trang 5CHAPTER 2: REALITY OF MANAGEMENT REGIME FOR PAYMENT ACTIVITY THROUGH PAYMENT SERVICE
PROVIDERS IN VIETNAM
To answer and assess the reality of management and organization regime for payment activity through payment service providers in Viet Nam in recent yers, the author spent much time to approach to management divisions, payment activity of the Central Bank (Transaction office, Department of Finance – Accounting, Informatics centre, Department of Payment) in many ways such as: via website, telephone and direct contact with standing division at National payment centre These approaches help to catch the situation, collect necessary data and documents serving the completion of this thesis
- With the activities of approaching and researching, necessary documents presented in chapter 2 are fairly abundant with the following contents:
Firstly, it is the overview on payment activity of payment
- Reality of payment activity organization includes:
Methods, means of payment
Organizations participating in payment system
Transmission distribution and methods
Secondly, to prove the reality of payment activity organization,
the author systhesizes, analyzes the results of payment system
activities in recent years as follows:
Firstly, they are payment systems organized and managed by the
State Bank (Balancing payment system; Interbank electronic payment system)
Secondly, they are bilateral payment systems organized by some
Trang 6Thirdly, they are small and individual automatic transactions
which are mainly credit card transaction processed via card commutation system organized by Card commutation companies (Banknetvn, Smartlink và VNBC)
The detailed results are as follows:
a/ Electronic balancing payment system
The electronic balancing payment system was started in May
2002 and after 6 years of implementation to June 2008, the electronic balancing payment system is carried out all over the country (except 5 provinces and cities implemented with phase I of the Interbank electronic payment system which are: Hanoi, Hai Phong, Ho Chi Minh City, Can Tho and Da Nang) In provinces and cities, the electronic balancing payment system processes and balances the interbank electronic payment transactions among the member banks
participating in this system in the provinces and cities (including transaction with value under 500 million dongs, over or equal to 500 million dongs excluding transactions with value over 500 million dongs to the external provinces)
According to the statistics of payment transactions not in cash in
2010, the rate of payment transaction via the State Bank (balancing payment and other payments via accounts at the State Bank) account for approximately 7.7% of transactions, 25% of transaction value not
in cash and the rate of bilateral payment transactions is about 7.4% of transactions
Different from the low value small system called Interbank electronic payment system, the electronic balancing system only transfers the payment order to the receiving bank after processing balance final account in session (usually 2 – 3 sessions/day) because the balancing payment system is very safe, reliable in making final account
According to the report data of the units who implemented, until the end of 2010, the entire Electronic balancing payment system has about 950 members (average members in each province or city are
Trang 7about 15-20) increased by 18.4% compared to year 2009 (in addition, there are more than 230 members carry out Balancing payment on paper at the five provinces mentioned above) with the total transactions in 2010 of 9.5 million transactions achieving 2,444,827 billion dongs approximately increased by 48% in number of transactions and nearly 95% in transaction value compared to year
2009 (Source: Report on payment activity situation of 63 branches of
the State Bank – synthesized by the Central Bank)
b/ Electronic money transfer system
The electronic money transfer system is the internal payment system of the State Bank which has been applied since 1998 in order
to meet the demand of payment to external provinces, cities of the State Bank as well as Credit organizations via the branches of the State Bank The Electronic money transfer system replaced the file transmission payment system in the past helping to strengthen the confidentiality and hasten the payment speed meeting the demand of transferring money to external provinces and cities for all Credit organizations
Until the end of October 2008 (before implementing phase II of the Interbank electronic payment system), the system had operated stably, safely connecting the entire 68 units of the State Bank serving over 690 credit organizations who opened accounts at the units of the State Bank with the total transactions in 2008 of 890,346 transactions (achieving 2,023,990 billion dongs, accounting for 9.5% of total
payment value processed by electronic methods) (source: Report on
payment activity situation at 63 branches of the State Bank) Since the beginning of 2009, the electronic money transfer system was replaced and played the role of a provision system for the Interbank electronic payment system (in the beginning of 2009, there were 24 money transfer transactions with the value of 28,561 billion dongs)
c/ Interbank electronic payment system
Operation situation and achieved results:
Trang 8The interbank electronic payment system is the online electronic payment system which is modern and sponsored by the World Bank Currently, the interbank electronic payment system is assessed as the fastest payment channel in Vietnam Generally, the system operates stably; the scale and number of transactions and transaction revenue are increasing meeting the demand of payment and money transfer of member units as well as improving the payment activity to be fast, favorable, exact, safe and confidential
- Phase I began from May 2012 to 2008 The system was only implemented as model in 5 big provinces and cities such as Hanoi, Hai Phong, Da Nang, Ho Chi Minh City and Can Tho
- Phase II was deployed all over the country since the end of
2008 (pursuant to Decision No 2751/QD-NHNN dated 13thNovember 2008 by the Governor of the State Bank)
Until the end of year 2010, the interbank electronic payment system has been expanded for 63 branches of the State Bank in provinces, cities, 3 units directly under the State Bank and nearly 800 direct members (branch) of 97 credit organizations (main club-house) all over the nation which are twice as compared to year 2008 – the point before implementing phase II of the interbank electronic payment system This led to the dramatic increase in the number and value of transactions via the system with the average transaction times
of about 60,000 – 70,000 transactions/day and average revenue of approximately 100,000 billion dongs/day
In 2010, the total value of transactions via the interbank electronic payment system reached 26,344,056 billion dongs with 17,375 transactions increased by about 70% in value and 39% in number of transactions compared to year 2009 (table 03) In which the payment transactions among units of the State Bank is 678 thousand transactions/11,745,070 billion dongs accounting for 4% of transactions and 44.6% of transaction value
Trang 9Table 2.1 : Transaction data of Interbank electronic payment from 2005 to 2010
Total arising amount Increase, decrease
(%) Total arising amount
Number of transactions Amount
Number of transactions (transaction)
Transaction value (billion dongs)
Number of transactions Amount
Number of transactions Amount
Trang 10- The low value payment flow was operated since November
2003 At the beginning, there were 13 bank eligible to participate with the average number of transactions up to March 2008 achieving about 2,500 – 3,500 transactions/day which accounts for only 13% of transactions/day Until the end of year 2010, 62 out of 97 banks were eligible and accepted to participate increasing the number of units participating in the low value payment flow to 677 members In 2010, only in low value payment flow, nearly 50,000 transactions/day were processed increasing by 40% compared to year 2009, accounting for 53.5% compared to the total number of balancing payment transactions via the State Bank (this rate in 2009 was 45.1%)
Table 2.2: Synthesis of payment transaction via two systems called Electronic Funds Transfer and Interbank electronic payment
Total arising amount Increase, decrease
(%) Year Number of
transactions (transaction)
Transaction value (billion dongs)
Number of transactions Amount
(Source: Report data of the State Bank in 2010)
The growth of payment transaction has not fluctuated much since the merge of two systems in 2009 The high growth rate of transactions in
2009 may result from the influence of decrease in 2008 The interbank electronic payment system received and implemented well the function of the electronic money transfer system
- The situation of money transfer among units of the State Bank from 2005 to 2012: The number and value of transactions among units of the State Bank increased dramatically in 2010 (Table 2.2) It shows that the system is not expanded with maximum number of payment service providers in provinces, cities to participate as direct members in order to reduce the indirect transactions via units directly under the State Bank
Trang 11Table 2.3 Synthesis of money transfer transaction among units of the State Bank via Electronic Funds Transfer and Interbank
electronic payment Electronic Funds Transfer + Interbank electronic
payment (Internal of the State Bank) Total arising amount Increase, decrease
(%) Year
Number of transactions (transaction)
Transaction value (billion dongs)
Number of transactions Amount
(Source: Report data of the State Bank in 2010)
- Liquidity situation: according to reports from the units of the State Bank as well as member banks of the payment system, all member banks assure the liquidity capacity to make final account for payment transactions However, in 2010, although the balancing loan and especially overnight loan of the State Bank decreased compared to year 2009, it was really high This showed the difficulties in liquidity
of the payment system in the difficult and unstable economy context
in 2011
Bilateral payment among payment service providers
Currently, besides the participation of members in the payment system managed and operated by the State Bank, the majority of credit organizations also participate, establish bilateral electronic payment channel with one/some bank with great scale, investment and development in infrastructure serving the payment activity such as: Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB-Money system with 181 partners), Vietnam Joint Stock Commercial bank for Industry and Trade (INCAS system with 5 banking partners), Bank for Investment and Development of Vietnam (BIDV Homebanking system with 7 banking partners), Vietnam Bank for Agriculture and Rural Development (VBA system with 2 banking partners) Vietnam Joint Stock Commercial bank for Industry and
Trang 12Vietnam Bank for Agriculture and Rural Development directly connect with others to create the bilateral payment network in addition
to the great VCB-Money system of Joint Stock Commercial Bank for Foreign Trade of Vietnam
Table 2.4: Average bilateral payment transaction in VND through some payment service providers who play the central/original role in payment in 2010
No Payment service
providers
Average numbers of transaction (transaction/day)
Average transaction value (billion dongs/day)
1 Joint Stock Commercial
Bank for Foreign Trade of
3 Vietnam Bank for
Agriculture and Rural
Development
14.014 2.233
4 Vietnam Joint Stock
Commercial Bank for
Industry and Trade