Some solutions for developing cashless payment in agribank viet nam

ABBREVIATION Agribank Vietnam: Vietnam bank for Agriculture and Rural Development VND: Vietnamese Dong ATM: Automatic Teller Machine EDC: Electronic Data Capture POS: Point of Sales PIN:

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MAI THỊ TÂM

SOME SOLUTIONS FOR DEVELOPING CASHLESS

PAYMENT IN AGRIBANK VIETNAM

MỘT SỐ GIẢI PHÁP PHÁT TRIỂN THANH TOÁN KHÔNG

DÙNG TIỀN MẶT TẠI AGRIBANK VIETNAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2019

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

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MAI THỊ TÂM

SOME SOLUTIONS FOR DEVELOPING CASHLESS

PAYMENT IN AGRIBANK VIETNAM

MỘT SỐ GIẢI PHÁP PHÁT TRIỂN THANH TOÁN KHÔNG

DÙNG TIỀN MẶT TẠI AGRIBANK VIETNAM

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS TRẦN NGỌC CA

HÀ NỘI - 2019

DECLARATION

The author confirms that the research outcome in the thesis is the result of author‘s independent work during study and research period and it is not yet published in other‘s research and article

The other‘s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

ACKNOWLEDGEMENT

Thesis is the result of research of the author for a long time, by my own efforts, the enthusiastic guidance of the Associate Professor Tran Ngoc Ca and contribution of teachers, my colleague

First, the author would like to express sincerely and deeply thanks to Associate Professor Tran Ngoc Ca, who has guided, oriented, supported and encouraged the author throughout the research

The author would like to express her sincere thanks to the teachers, who have given the author the knowledge to support, the foundation of reasoning needed to study this topic Especially, the contribution and support of the Ha Noi School of Business (HSB) - Hanoi National University, Vietnam Bank for Agriculture and Rural Development - Agribank

Finally, the author would like to send deeply thanks to my family, friends who have always supported, encouraged and facilitated the author to complete this thesis

Ha Noi, December 25th 2018

Mai Thi Tam

TABLE OF CONTENTS

DECLARATION i

ACKNOWLEDGEMENT ii

TABLE OF CONTENTS iii

ABBREVIATION vi

INTRODUCTION 1

CHAPTER 1: THEORETICAL BACKGROUND 6

1.1 Digital society 6

1.2 Cash 7

1.2.1 The history of using cash 7

1.2.2 Cashless society 9

1.2.3 Cashless payment in fact 11

1.2.4 Examples of Cashless Societies 12

1.3 Types of cashless payment in the world 13

1.3.1 Cashless Payments Using RFID 13

1.3.2 Mobile Payments 13

1.3.3 Contactless Credit Cards 14

1.3.4 Cheque 14

1.3.5 Demand Draft 15

1.3.6 Online Transfer- NEFT or RTGS 15

1.3.7 E-Wallets 15

1.3.8 UPI Apps 15

1.3.9 Gift Card 16

1.3.10 Aadhaar Enabled Payment System 16

1.3.11 Unstructured Supplementary Service Data 16

1.4 Cashless payment in Viet Nam 16

1.4.1 Customers have to appear to bank sites 17

1.4.2 Customers do not need to appear in bank sites 17

1.5 Cashless payment from the view of Vietnam Government: 18

1.5.1 Overall objectives 18

1.5.2 Specific targets 19

1.5.3 Solutions: 19

CHAPTER 2: STATUS OF CASHLESS PAYMENT IN VIETNAM 21

2.1 Introduction of Agribank Vietnam 21

2.1.1 General information 21

2.1.2 Business strategy in the 2016-2020 period with a vision to 2030 23 2.1.3 Agribank network 24

2.1.4 Cultural values 25

2.1.5 Contact information: 27

2.2 Products of cashless payment 28

2.2.1 Personal Cards: 28

2.2.2 Agribank E- Mobile Banking 36

2.2.3 QR PAY 38

2.3 The situation of cashless payment in Agribank in recent years 40

2.4 Results of actual survey research 46

2.4.1 Quantitative research 46

2.4.2 Qualitative in-depth interview research 52

CHAPTER 3: SOLUTION 58

3.1 Recommended solutions to the Government, 58

3.1.1 To Issue a number of policies to encourage electronic payment 58

3.1.2 Promote e-payment in public administrative services 59

3.2 Solutions for implementation by Agribank: 60

3.2.1 Develop cashless payment in rural areas 60

3.2.2 Recruiting and training the staff to meet the increasing demands of the current market, from the perspective the service providers 61

3.2.3 Immediate and Urgent solutions 62

3.2.4 Comprehensive solutions and customer classification 63

CONCLUSION, LIMITATION AND IMPLICATION 67

REFERENCES 70

Appendix 1: Transaction fee for using international card 71

ABBREVIATION

Agribank Vietnam: Vietnam bank for Agriculture and Rural Development VND: Vietnamese Dong

ATM: Automatic Teller Machine

EDC: Electronic Data Capture

POS: Point of Sales

PIN: Personal Identification Number

ID: Identification Card

QR code: Quick Respose Code

OTP: One Time Password

IPCAS: Internal Payment and Customer Accounting System

Agribank, with a wide network in Vietnam, is one of the largerst firm and also the largest taxpayment Its main customers are farmers in the rural areas Agribank has reached 2.330 branch and transaction offices located in all 64 province of Vietnam And it also develops impressively in Hanoi and Ho Chi Minh City But the technology does not match with the speed of social development and still seems quite weak compared with other banks

Bad debt in Agribank is 49.563 billion Vietnam Dong, about 6.24 % of total debt (2016), which was mainly in Hanoi, Ho Chi Minh City and Western Provinces where we can not compete with other commercial banks With factual statistics about Vietnam economy it can be seen that profits from loan bear many risks

On the other hand, revenue from service is just about 20% of our total benefit Developing service is the safer way to increase revenues and decrease risks

in the business

According to statitstics from the World Bank, Vietnam has the lowest cashless payment, only 4.9% (2017), so that it has many free places to gain the market share We should understand and apply it to our bussiness right now

I choose the thesis ‗‘Some solution for developing cashless payment in Agribank Vietnam’’ because this problem is very important and necessary in

banking business It also helps our bank to overcome difficulties when the

benefit from loan is not good due to bad debt Exploiting in service is the right urgent way that our bank has to change to win the competition with other banks and may also contribute a right path to the development of our society

2 Literature review

The thesis of Dang Cong Hoan (2015), ‗‘Promoting cashless payment for residential areas in Vietnam‘‘, Hanoi Economic University - Hanoi National University The topic has assessed the current state of cashless payment service in the residential area of our country, clarifying the role of State policies in promoting and developing payment services In particular, the topic has evaluated the cashless payment to the economy and community according to the time series regression model with the following variables: the ratio of cashless payment/total cash; GDP per capita and total annual state budget, to perform correlative analysis However, this thesis just examines at the macro level in over all

According to Bui Thi My Huyen‘s Master thesis: ‗‘completing the cashless payment activity through bank in Ho Chi Minh‘‘ from Ho Chi Minh Economics University (2011), by the scientific quote for cashless payment through banks in comparison with the reality, the subject goes into the argument for the need to promote cashless payments through banks In particular, the topic has addressed the lessons learned in cashless payment activities of some countries that can be applied in Vietnam and the results achieved in the implementation of cashless in Vietnam for the period from the year 2006 to 2010 From researching cashless payment activities in Ho Chi Minh City, the thesis has assessed the current situation, finding out the reasons for the inadequacies and ineffectiveness, and then orient and propose solutions to complete and improve cashless payment via banks in Ho Chi Minh City

Many famous authors also have researched about cashless payment, such as cashless payment in Vietnam by Master Mai Thi Quynh Nhu (2014) The writing outlines the limitations and recommendations, and solutions to develop cashless payment in Vietnam However, the article only deals with common issues but not clarifies the limitations and solutions for a particular bank Another study is ―Cashless Payment: Trends in the World and reality in Vietnam‖ by Master Do Thi Lan Phuong from Banking Academy (2014) The article outlines trends of cashless payment in the world and in Vietnam Based

on the findings, she quoted some solutions to develop modern cashless payment products

The next research is ‖the Cashless Society‖ by Thach An (2015), which outlines the benefits of using cashless payment services with organization and individual, the developing potential services and the difficulties and challenges in Vietnam

These articles have certain limitations since they just provide overviews of payment status of cashless payment in our country in recent years and propose some solutions for development in the coming time They haven‘t touched into the depth analysis of the situation studied

Many theses of Vietnamese students also mentioned cashless payment, such as

Ms Vu Thi Nhung from Commercial University ‗‘Developing of cashless payment service in Agribank- Tay Do Branch‘‘ in 2015, Mr Nguyen van Thanh

‗‘Cashless payment in Vietin Bank- Nam Dinh province- the reality and the solution to change‘‘… all those theses only study the traditional cashless payment method like cheuque and Payment Order, while not realize the modern way to use new technology and, mobile app and wifi for the transaction And also they limited themselves only to the specific brands and places

The development of cashless payment services in recent years has been studied in a wide range of contexts, subjects and researches which has

contributed to bring a perfection to the theory system At the same time, the authors analyzed and assessed the situation of Vietnam in general and in some commercial banks in particular, pointed out the achievements and limitations, and from that proposed appropriate solutions However, the contents did not go into deep analysis of the advantages and disadvantages in some specific services They just, found out the factors that affected the use in mass of services by customers So far, there are no research and studies about Agribank Vietnam Thus, this thesis concentrates on the theoretical systemization, practical application and new perspectives in cashless payment services Based on actual service data oft Agribank Vietnam, the researcher analyzed the causes and limitations, and then gave specific solutions to develop cashless payment services in Agribank Vietnam

3 Aims of research

The thesis systematizes the theoretical basis for cashles payment, cashless society and social benefits of cashless, types of cashless payment methods and Applying modern technology to it, and based on that, to understand and assess the current status of cashless payment system at Agribank Vietnam The thesis outlines the remaining issues and proposes measures to further develop a more effective and extensive use of the cashless payment system in order to increase the competitiveness and position of Agribank on the market today

4 Objects of research

The subject of the thesis is the cashless payment system in Agribank It

focuses on three main areas: E-mobile banking, credit card and QR pay

The thesis will focus on theoretical and practical aspects, and provide solutions to develop cashless payments applied to Agribank system

5 Scope of research

Customers in Agribank, who use three types of services E- Mobile banking,

QR PAY and Credit card

6 Research methodology:

This research used primary data that were collected from direct interviews

and structured questionnaire

Moreover, the author applied in-depth interview questions to select 15

customers who used all 3 types of services

Secondary data: reports about credit cards, e-Mobile, QR pay of Agribank, numbers and incomes, reports about other banks in Viet Nam

Primary data: Qualitative study using questionnaires, collecting results from

15 service users and in- depth interview

From the interview, and questionnaires, weakness could be pointed out

suggestions and solution to improve the situation could be provided

7 Thesis structure

Besides title and conclusion chapter, the thesis will be structured to three main chapters:

Chapter 1: Theoretical Background

Chapter 2: Status of cashless payment in Agribank Viet Nam

Chapter 3: Solutions

CHAPTER 1: THEORETICAL BACKGROUND

1.1 Digital society

The world, as we know today, is continually changing, and one of the fundamental drivers is digital transformation Digital transformation isn‘t only about Internet ―unicorns‖, it is also about using the latest technology to do what you already do – but in a better way

The global economy is undergoing a digital transformation as well, and it‘s happening at the fastest speed

So, what is the digital economy? It′s the economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes The backbone of the digital economy is hyperconnectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the internet of things (IoT)

The digital economy is taking shape and undermining conventional notions about how businesses are structured; how firms interact; and how consumers obtain services, information, and goods

Professor Walter Brenner from the University of St Gallen in Switzerland

states: ―The aggressive use of data is transforming business models, facilitating new products and services, creating new processes, generating greater utility, and ushering in a new culture of management.‖

Recently, TechCrunch, a digital economy news site, noted, “Uber, the world’s largest taxi company, owns no vehicles Facebook, the world’s most popular media owner, creates no content Alibaba, the most valuable retailer, has no inventory And Airbnb, the world’s largest accommodation provider, owns no real estate… Something interesting is happening

In banking service, digital technology will change the way from the old to new, from low to fast and correct transactions

1.2 Cash

Cash is money but in the physical form of currency, such as bank notes and coins In bookkeeping and finance, cash is the current asset comprising of currency or currency equivalents which can be accessed immediately or nearly-immediately (as in the case of money market accounts) Cash is seen either as a reserve for payments, in case of a structural or incidental negative cash flow or as a way to avoid a downturn on financial markets

1.2.1 The history of using cash

In Western Europe, after the fall of the Western Roman Empire, coins, silver jewelry and hacksilver (silver objects hacked into pieces) were, for centuries, the only forms of money, until Venetian merchants started using silver bars for large transactions in the early Middle Ages In a separate development, Venetian merchants started using paper bills, instructing their bankers to make payments Similar marked silver bars were in use on lands where the Venetian merchants established representative offices The Byzantine Empire and several states in the Balkan area and Kievan Rus also used marked silver bars for large payments As the world economy developed and silver supplies increased, particularly, after the colonization of South America, coins became larger and a standard coin for international payment was developed from the 15th century: the Spanish and Spanish colonial coin

of 8 reales Its counterpart in gold was the Venetian ducat

Coin types would compete in different markets By conquering foreign markets, issuing rulers would enjoy extra income from seigniorages (the difference between the value of the coin and the value of the metal that the coin was made of) Successful coin types of high nobility would be copied by lower nobility for seigniorages Imitations were usually of a lower weight,

undermining the popularity of the original As feudal states coalesced into kingdoms, imitation of silver types abated, but gold coins, in particular, the gold ducat and the gold florin, were still issued as trade coins: coins without a fixed value, going by weight Colonial powers, without much success, also sought to take away market share from Spain by issuing trade coin equivalent

to silver Spanish coins

In the early of the 17th century, English East India Company coins were minted in England and shipped to the East

At this time coins were also being produced at the Madras mint for the East Indian Companies The currency at the company‘s Bombay and Bengal administrative regions was the rupee

Meanwhile, paper money had been developed At first, it was thought of for emergency situations, hence were most popular in the colonies of European powers In the 18th century, important paper issuance were made in colonies

of Essequibo, Demerara and Berbice

The ability to create paper money made nation-states responsible for the management of inflation through controlling money supply It also created a direct relation between the metal of the coin and its denomination superfluous From 1816, coins generally became token money, though some large silver and gold coins remained standard coins until 1927 The World War I saw standard coins disappear to a very large extent Afterwards, standard gold coins, mainly British sovereigns, were still used in colonies and less developed economies, and silver Maria Theresa thalers dated 1780 was struck as trade coins for countries in East Asia until 1946 and possibly locally

in the later time

Cash has now become a very small part of the money supply Its remaining role is to provide a form of currency storage and payment for those who do

not wish to take part in other systems, and make small payments convenient and prompt, though this latter role is being replaced more and more frequently

by electronic payment systems Research has found that the demand for cash decreases as debit card usage increases because merchants need to make less changes for customer purchases

Cash is increasing in circulation The value of the United States dollar in circulation increased by 42% from 2007 to 2012.The value of pound sterling banknotes in circulation increased by 29% from 2008 to 2013.The value of the euro in circulation increased by 34% from August 2008 to August 2013 (2% of the increase was due to the adoption of euro

in Slovakia 2009 and in Estonia 2011)

1.2.2 Cashless society

A cashless society might sound like something out of science fiction, but we‘re already on our way Several powerful forces are behind the move to a cash-free world, including governments and large financial services companies Even critics of the mainstream financial system and government-issued currencies favor doing away with cash

But we‘re not yet there In addition to logistical challenges, we need to address several social issues before giving up on cash entirely

Benefits of a Cashless Society

Less crime: With cash, it‘s easy to steal money, whether the amount is large

or small Also, illegal transactions (drug trade, corruption, money laundering for example) typically take place with cash, so that there‘s no record of the transaction—and so that the seller can be certain about getting paid

Paper trails: Financial crime should also dry up It is harder to hide income

and evade taxes when there‘s a record of every payment you receive Money laundering becomes much harder if the source of funds is always available

No cash management: It costs money to print bills and coins Businesses

need to store the money, get more when they run out, and deposit cash when they have too much on hand Moving money around and protecting large sums of cash could become a thing of the past

International payments: When you visit a foreign country, you may need to

buy local currency But payments are easy if both nations can handle cashless transactions Instead of figuring out another currency, your mobile device handles everything for you

Disadvantages of a Cash-Free World

Depending on your perspective, going cashless might actually be problematic

Privacy: Electronic payments mean less privacy You might trust the

organizations that handle your data, and you might have nothing to hide, but your payment information could turn up in ways that are impossible to predict Cash allows you to spend money and receive funds anonymously

Hacking: Hackers are the bank robbers and muggers of the electronic world

In a cashless society, the consequences are higher if somebody drains your account because you don‘t have any alternative ways to spend Even if you‘re protected under federal law, you face significant inconveniences and other consequences after a breach

Technology problems: Glitches, outages, and innocent mistakes can also

cause problems, leaving you without the ability to buy things when you need them Likewise, merchants have no way to accept payments from customers when systems malfunction Even something as simple as a dead phone battery could leave you ―penniless.‖

Inequality: The poor and unbanked will have an even harder time in a

cashless society They don‘t have expensive devices for making payments, and those who operate in the informal economy would have no way to get paid or receive aid The U.K is experimenting with contactless ways to donate to charities and homeless individuals, but there‘s still a long way to go

Fees, Fees, Fees: If we‘re forced to choose from just a few payment methods,

can we expect financial institutions to give us a fantastic deal? Payment processors may just cash in on the high volumes, eliminating the savings that should come from less cash handling

Overspending: When you spend with cash, you feel the ―pain‖ of every

dollar you spend But with electronic payments, it‘s easy to swipe, tap, or click without noticing how much you spend Consumers will need to renew their efforts to manage spending

Negative interest rates: When all money is electronic, governments have the opportunity to promote negative interest rates That‘s typically a move to stimulate national economies, but the result is that money loses purchasing power

Although there are some advantages and disadvantages, all the governments try their best to reduce the disadvantages while improve the advantages, so that our citizens understand and have a habit to move to cashless society

1.2.3 Cashless payment in fact

Without cash, payments happen electronically Instead of using paper and coins to exchange value, you authorize a transfer of funds to another person

or business The logistics are still developing, but we have some hints on how

a cashless society might evolve

Credit cards and debit cards are among the most popular cash alternatives in use today But cards alone aren‘t enough Mobile devices will

be the most likely to become the primary tool for payments

Electronic payment apps, like Zelle, PayPal, and Venmo, are helpful for P2P payments

Mobile payment services and mobile wallets like Apple Pay provide secure, cash-free payments In developing and developed nations that use cash sparingly, mobile devices are the most common tools for payments

Cryptocurrencies are also parts of the discussions: They‘re already used

for money transfers, and they introduce competition and innovation that may help keep costs low But currently they have risks and regulatory hurdles that make them impractical for most consumers, so they might not be right for the widespread use

1.2.4 Examples of Cashless Societies

Several nations are already making moves to eliminate cash, with the push coming from both consumers and government bodies Sweden and India, and China are three notable examples

Sweden: It‘s not uncommon to see signs that say ―No cash accepted‖ in

Swedish shops, and some banks no longer handle cash Cash payments are only 15 percent of retail sales in Sweden, and some point to Sweden as the model for a modern cashless society Consumers are mostly happy with this situation, but the poor and elderly still struggle with an electronic world

India: The Indian government banned 500 and 1,000 rupee notes in

November 2016 in an effort to penalize criminals and those working in the informal economy The implementation was rushed and controversial, and roughly 99 percent of those banknotes were deposited—meaning criminals didn‘t lose much money if any Electronic transactions increased temporarily, but fell to pre-demonetization levels in the next year

China

For 15 year of developing, the mobile payment in China has a value of 16,000 billion USD and use the services of two China‘s giants - Tencent and Alibaba system Three year before, Chinese people used to use cash, but the wave of digital payment has come to China with the high speed According to iResearch, 2016, China mobile payment market is valued to 5,5 million billion USD, 50 times higher compared with the United State market with 112 billion USD

Alipay of Alibaba and Wechat of Tencent are the two popular applications used in this country, and they have become different payment channels replacing cash All people in China use these 2 apps, from the luxury restaurant to the street shops, taxi and merchant shops

And can you imagine that digital payment is even used for the street artist This is not a strange scene on European Streets The artist of the Chinese Center will just perform, while payment will be duty of Alipay and Tencent Those examples suggest that going cashless is possible with sufficient infrastructure and gradual progress And Vietnam can apply cashless payment for its society

1.3 Types of cashless payment in the world

There are many types of cashless payment applied all over the world And basing on the condition of their technologies, each country has its own kind

1.3.1 Cashless Payments Using RFID

RFID technology uses radio waves to track tags containing electronic information Tiny RFID tags can be attached to wristbands, lanyards or badges, and can be scanned using dedicated scanners or modern smartphones

One of the most popular use cases for RFID, mainly in events, is using the RFID tags as ‗wallets‘ that attendees use to pay for food, drinks and merchandise (after topping them up with credits, either before or after the event)

In an RFID payment system, attendees would simply present their wristband

to the vendor, who would then use his or smartphone or dedicated scanner to charge them for whatever they‘re buying This can be used alongside traditional payment methods or as the exclusive way for consumers to conduct transactions at the event

1.3.2 Mobile Payments

Mobile payment refers to various apps that turn the smartphones consumers are already carrying into a digital wallet which can be used to pay for goods

and services Google‘s Wallet (recently rebranded Google Pay) and Apple Pay have both launched in recent years, and have seen some adoption in the United States, Europe and Australia

However, the most significant advances in e-payments have actually been in China, where Wechat Pay and Alipay have seen massive adoption of their QR-based mobile payment system; while WhatsApp payments have recently been launched in India

With at least one of these apps already available in virtually every goer‘s pocket, it only makes sense to wonder whether mobile wallets are set

event-to be the standard in cashless payments at events and elsewhere However, we believe the answer to that is negative – mostly because these devices rely on internet connectivity, which is often scarce at remote festivals

1.3.3 Contactless Credit Cards

Contactless credit cards, such as the ones provided by Visa and Mastercard, are growing increasingly popular with consumers These allow credit card transactions to be completed instantly simply by scanning the card, rather than the cumbersome method of swiping it in a reader

Contactless cards are similar to RFID wristbands in that they are both very fast and easy ways to make payments However, there are also several key differences; and similarly to mobile phones, their main drawback as a cashless payment method at events is that almost all credit card payments are processed online, which could lead to event operations breaking down or slowing down during periods of intermittent connectivity

1.3.4 Cheque

The cheque is one of the oldest methods of cashless payment It is a known method to everyone In this method, you issue a cheque for the specific amount to someone else The cheque gets deposited in the respective bank The bank processes a payment through a clearing house

The entire transaction done through cheque gets recorded and there is a proof

of payment However, there are instances where cheque payments get dishonored due to signature mismatch or insufficient fund In order to avoid such issue, you can use other cashless payment options

1.3.5 Demand Draft

Demand draft is another rudimentary way of cashless transaction It is a safest option to receive payment from anyone Demand draft (DD) never gets defaulted as it is signed by the banker The disadvantage of DD and cheque is you need to visit a bank in order to deposit cheque and demand draft The clearance of cheque or DD takes additional time

1.3.6 Online Transfer- NEFT or RTGS

The third simplest method for the cashless transaction is online transfer using NEFT or RTGS In order to do online money transfer, you need internet banking facility Online transfer using NEFT or RTGS is comparatively faster than cheque or DD Online transfer can be done from anywhere using internet facility

1.3.7 E-Wallets

E-wallet is the next cashless payment option E-wallet can be used to purchase products starting from grocery to airline tickets In order to use E-wallets customer and merchant, both require a smartphone with active internet connection The most popular example of E-wallet is PayPal Apart from PayPal, you can also use Payoneer, Transferwise, Skrill, and PayZa

After registering for E-wallet you need to link your credit card or debit card with your E-wallet id You can use e-wallet for fund transfer or online shopping It is a simplest cashless method

1.3.8 UPI Apps

UPI is a mobile payment system which allows you to do various financial transactions on your smartphone UPI allows you to send or receive money

using virtual payment address without entering bank information Merchants can enroll with banks to accept payments using UPI Like in the case of a PoS machine, the merchant would require a current account with a bank to accept UPI payments

The examples of few UPI Apps are SBI Pay, ICICI Pocket, Axis Pay UPI App, Union Bank UPI App, PNB UPI, PhonePe, TranZapp etc

1.3.9 Gift Card

The next cashless payment method is a gift card Gift Card is a readymade card and can be purchased from a merchant or from the bank The gift card is loaded with a fix cash amount you can purchase any item from the specific vendor by using a gift card

1.3.10 Aadhaar Enabled Payment System

Aadhaar Enabled Payment System (AEPS) is one of the best cashless payment methods AEPS is like Micro ATM it uses smartphone and a finger-print scanner for the transaction In order to use this facility, it is mandatory to link your Aadhaar card to your bank account You can use AEPS in order to perform transaction like Aadhar to Aadhar fund transfer, Cash withdrawal, Cash deposit etc

1.3.11 Unstructured Supplementary Service Data

You can use USSD cashless option if you don‘t have a smartphone or internet connection Unstructured Supplementary Service Data is mobile banking service From any mobile phone, you can dial *99# and use this service You can do all these things which are available to a person with smartphone and internet connection Almost all banks including SBI, ICICI, BOB, Axis Bank and PNB supports USSD payment option

1.4 Cashless payment in Viet Nam

In Vietnam, where the technology platform is not high From observation in Agribank and other banks, I realize that some types that can be applied:

1.4.1 Customers have to appear to bank sites

Cheque: a printed form, used instead of money, to make payments from your bank account: In Vietnam, we often use this kind

to withdraw money from the bank for our cash payment purpose

Authorized payment (payment order): for individuals and enterprises: this is the paper with infomation of payer, receiver, amount of money, authorised signature and stamp of payers that order the bank to pay to the account of receivers with the information provided

Letter of credit: oversea payments or to other countries for goods and services

1.4.2 Customers do not need to appear in bank sites

- Mobile banking and internet banking: we load an app on mobile and make payments and provide identification notice to make sure that you are the owner of that bank account

- Master, visa and JCB card: are the products of banks which suppy the limitation of amound of money for you to make transations when buying goods and servies

- QR code payment: is a contactless payment method where a payment is performed by scanning a QR code via the mobile app This is an alternative for doing electronic fund transfer by using a payment terminal This avoids a lot of traditional infrastructure serving for electronic payments such

as payment cards, networks, terminal and merchant accounts

To use a QR code payment the consumers scans the QR code displayed by the merchant with their phones to pay for their goods They enter the amount they have to pay and finally submit This is a more secure card-not-present method than others

ATM card: is often used to withdraw money from ATM for individual payment purposes

E- Wallets: Grap Pay, Payyoo, Shopee… customer payment through the connection of Visa, Master Card and the Wallets

Internet Banking: using computer and internet with online accounts

Because using new technology to bank requires the innovation from the top and the whole system, I choose the scope of my thesis as the system of Agribank

Technology Platform, Inteligent Mobile device with wifi and 3G, users can make payments by themselves, is the way of my thesis

In this thesis, I concentrate on E-mobile banking, QR Pay and Credit Card in Agribank

1.5 Cashless payment from the view of Vietnam Government:

Our Government is also having great concern on Cashless payment and The

Prime Minister of the Government issued Decision No 2545 / QD-TTg,

dated 30/12/2016, ―approval for the Scheme for Development of Cashless Payment in Vietnam for the period of 2016-2020‖

The content of this decision has the following notes:

1.5.1 Overall objectives

a/ To make a marked progress in non-cash payment in the national economy, thereby, changing the habit of using payment instruments in society, reducing cash payment-related social costs and the ratios of cash in circulation to the gross domestic product (GDP) and of cash to total payment instruments;

b/ To ensure security, safety and operational effectiveness of payment and settlement systems, and cashless services and payment instruments; to create effective mechanisms to protect users of cashless payment services;

c/ To promote the use of e-payment and reduce the use of cash in payment transactions between individuals, enterprises and governmental agencies; d/ To improve the effectiveness of the management and supervision by state management agencies, and make payment activities in the economy and

personal incomes transparent, thus contributing to the prevention and combat

of corruption, negative practices and economic crimes

c/ To promote e-payment in e-commerce, strive to achieve the targets set out

in the master plan on development of e-commerce during 2016-20 (100% of modern supermarkets, shopping malls and distribution centers will have card readers which enable consumers to make non-cash payments when purchasing goods; 70% of electricity, water, telecommunications and communications service providers will accept non-cash payment of charges; 50% of individuals and households in major cities will use non-cash payment instruments in their shopping and consuming activities);

d/ To concentrate efforts on developing a number of new and modern payment instruments and forms in rural, remote and deep-lying areas, thus contributing to promoting financial inclusion; to drastically increase the number of people having access to payment services, and increase the percentage of people aged 15 years or older having bank accounts to at least 70% by the end of 2020

1.5.3 Solutions:

a Improving the legal framework, mechanisms and policies

b Upgrading and expanding the interbank e-payment systems to meet the needs of the economy and the process of international economic integration

c Building and developing retail payment systems and services

d Promoting e-payments in the governmental sectors and public administrative services

e Renovating the securities clearing and finalization system

f Innovating the payment and finalization systems on the interbank monetary and foreign-currency market

h Enhancing management and supervision of international payments and money transfers

g Supervising and applying standards to payment systems according to international criteria and standards

k Stepping up information, communication, training, guidance and customer protection in non-cash payment

l Enhancing coordination to promote non-cash payment

So improving cashless payment is the way and direction that our Government wants to achieve and supports in overall The launching of Decision 2545 is the framework for Agribank and other commercial banks to develop the cashless payment system, not only for the profit and efficiency purposes, but also for the development of our society

CHAPTER 2: STATUS OF CASHLESS PAYMENT IN VIETNAM

2.1 Introduction of Agribank Vietnam

2.1.1 General information

Agribank: Leading Vietnam‘s rural credit market

Since its establishment in 1988, Vietnam‘s Agribank has continuously played

a key role in contributing to the development and gained significant achievements of the country‘s valuable agricultural industry

Vietnam Bank for Agriculture and Rural Development (Agribank) is the only 100% state-owned commercial bank in Vietnam Throughout its development, Agribank has always been the largest bank in Vietnam in terms

of total assets, operating network and customer base The bank‘s market share includes 16% of the total funding sources and outstanding loans that make up Vietnam‘s banking system as a whole

Agricultural focus

As of December 31, 2017, total assets of Agribank reached nearly VND one million two hundred thousand billion, mobilized capital reached nearly VND one million one hundred thousand billion; total outstanding loans to the economy reached nearly VND 900 trillion, of which the proportion of outstanding loans for agriculture and rural areas was 73.6%; profit before tax reached VND 5,018 billion (the highest ever), an increase of 19.9% compared

to 2016

Agribank has played a very important role in the development of the country‘s economy in general and particularly in the agricultural sector and rural areas of Vietnam – a country in which 70% of the workforce is employed in the agricultural sector and 80% of the population lives in rural areas The agricultural sector contributes to about 22% of the country‘s GDP and makes up 30% of its export turnover Over almost 30 years of

development, Agribank has been consistently pursuing its investment focus and upholding its key and leading position as a financial institution providing credit and financial services primarily to Vietnam‘s agricultural and rural areas Agribank outstanding loans for agricultural and rural areas account for 73.6% of its total outstanding loans and 50% of total outstanding loans of the banking sector for these areas

Sustaining development

Agribank has a stable structure of liabilities comprising 80% of Vietnam‘s public mobilization, which is invested in the country‘s programs and agricultural development priorities These include the lending programs for the food industry, aquaculture, coffee, husbandry, rubber, pepper and cashew planting, the national targeted program for New Rural Development, the supporting programs to lessen the loss of agricultural production, the lending program for social housing, the pilot lending to association models in the agricultural value chain from production to consumption and the models of hi-tech application to agricultural production

An international partner

Agribank‘s investment in the agricultural and rural sector has made good contributions to a positive change in the country‘s economic structure, job creation, infrastructural development, customers‘ income increases and social-economic stabilization in rural areas With its experience and prestige

in the rural credit field, Agribank is always the first partner in Vietnam entrusted by international donors including the World Bank (WB), the Asian Development Bank (ADB) the the European Investment Bank (EIB, in implementing their credit projects within the country

Agribank is also a partner and constructive member of many international associations, which include the World Savings and Retail Banking Institute (WSBI), Asia-Pacific Rural and Agricultural Credit Association (APRACA)

and the International Agricultural Credit Confederation (CICA)

Hi-tech Banking

Developing and applying technology in banking operation has also been Agribank‘s focus The bank was the first in Vietnam to complete its core banking project financed by the World Bank, which modernized the customer accounting and payment system (IPCAS) Relying on a well-invested technology base, Agribank has achieved substantial progress in governance, management and in the development of advanced banking products, services and utilities

Agribank‘s strategy for the coming years will see the bank continue to enhance its key role in the monetary and credit market for agriculture and rural areas: providing diversified products and services that are tailored to the features of each region or area, while maintaining its position as the largest commercial bank and financial institution in Vietnam, committed to contributing to the country‘s achievements in industrialization, modernization and development

2.1.2 Business strategy in the 2016-2020 period with a vision to 2030

Year 2017 is identified as a significant year in the roadmap for implementing the Business Strategy in the 2016-2020 period with a vision to 2030 Agribank's goal is to maintain its position as the leading commercial bank in Vietnam operating under the model of state-owned commercial bank; have a modern technology foundation, advanced management model, and sound financial capacity; maintain safe, efficient, stable, and sustainable development; maintain its key role in investment, development assistance, and the provision of financial and credit services for agriculture and rural areas

Agribank will continue to take firm steps, operate its business in a secure manner, achieve the set objectives, fulfill the political tasks assigned by the Party and the State, contribute positively to the implementation of monetary

policy, removing difficulties, improving business investment climate, promoting economic growth, especially in economic development of agriculture and rural areas

2.1.3 Agribank network

[as of June 30, 2017]

2.233 branches and transaction offices across the S-shape of Vietnam

Agribank is the biggest commercial bank in VietNam with an operating network of 2,233 branches and transaction offices nationwide which have been connected online In 2010, Agribank has extended the network by opening its first branch in the Kingdom of Cambodia

With the leading role in rural and agricultural financial market, Agribank has paid attention to expand its operating network to districts and communes in order to facilitate the customers across the country to get access to bank loans easily and safely The customer base of Agribank now includes 60,000 businesses, 4 million production households, and 10 million individual customers The nationwide network has created Agribank advantage in improving the competitiveness in the challenging integration process

To meet the demand for import-export payment of local and foreign customers, Agribank has focused on expanding the correspondent relations with other banks To date, Agribank has 837 correspondent banks in 88 countries and territories Agribank signed agreements with Agricultural Promotion Bank (APB), Phongsavanh Bank - Laos, Acleda Bank - Cambodia, Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) and many more on cross border payment from which customers and all parties benefit

Apart from 2.233 branches and transaction offices, as a leading commercial bank in Viet Nam, Agribank has 6 subsidiaries: Financial Leasing Company

No 1 (ALC 1), Agribank Services One Member Limited Liability Company, Agribank Gold Joint Stock Corporation (AJC), Agribank Securities Joint Stock Company, Agribank Insurance Joint Stock Corporation (ABIC), and Agribank Debt Management and Assets Exploitation Limited Co (AMC)

2.1.4 Cultural values

Agribankers always have the special cultural values with passion for work and dedication to the development of the Agribank for 30 years until now The characters are as below:

Honesty: is interpreted as per someone‘s thought, something has existed and

happened, or integrity, truthfulness (an honest person or a person with honesty)

Discipline: is interpreted as ―code of ethics that governs the society, the

organization, family to consolidate the relationship within a lifestyle that complies with the moral rules; customs and regulations form the social order; discipline must be followed‖

Creativity: is interpreted as ―creating something new or study for

improvement without compulsion In theory, ―initiative‖ is interpreted as an internal element; economic development is a change of economic activities on the basis of internal creation

Quality: is interpreted as a value of benefits (towards quantity)

Product quality (in economic terms): Product characteristics defined by

parameters which are measurable and comparable, in line with current technical conditions to meet the social and personal demand in an identified production and consumption condition Product quality reflects comprehensively the level of technology and is an important technical and economic standard to improve production efficiency and play an essential role

in economics (expand production scale and market especially international market)

Quality can be narrowed down as product quality or can be widened as job quality Product quality implies product use or the appropriateness with a certain use, meeting the quality characteristics demand of the society and the duration of those characteristics

Job quality means the guarantee of the production, technical and organization

process, resulting in qualified products and product quality improvement Job quality also includes the quality of the business decision and onsite compliance which is measured by job productivity, job efficiency, product quality and economic efficiency of various divisions and positions Job quality plays a decisive role to product quality and a guarantee to product quality The former and the latter are different but have close relations Efficiency is construed as ―an achievement in a job or in an activity‖

Efficiency: means the expected outcome or something that produces the

result that people expect and aim at, and may vary through different fields (economic efficiency, socio-economic efficiency, labor efficiency, efficiency and efficiency rate)

In production, efficiency means performance and productivity In business, efficiency means interest rate and profits In work performance, efficiency means labor productivity assessed by a period of time to produce a product or number of products produced within a period of time

Why are we committed to Agribank's core cultural values?

Corporate culture becomes internal strength in business

Corporate culture becomes governance measure, consolidating Agribank prestige and heightening up Agribank position locally and internationally Corporate culture becomes qualification, morale, working style of Agribank staff, Agribank tradition, consolidating customer belief, expanding market

share and the market scale, improving competitiveness in terms of products and services quality both locally and internationally

How do we leverage and exercise Agribank's core cultural values?

In line with Vietnam law and international conventions, following Vietnam culture which is deeply imbued with its national identity, integrated with other countries‘ advanced corporate cultures complying with the instruction from the State, the State Bank of Viet Nam and Agribank

Basing on a consistent, scientific, succeeding, realistic and evolving basis, in line with Agribank development; having a detailed program to perform corporate culture which clearly identifies the target, plan, and measures to perform in a relevant, qualitative, cost saving and efficient manner

Regularly organize supervision, review, assessment, emulation on building corporate culture

Centre at the following address:

No 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam

2.2 Products of cashless payment

2.2.1 Personal Cards:

2.2.1.1 Visa/Master debit Card

Visa/Master debit card issued by Agribank allows individual cardholders to use cards in scope of payment account balance and/or overdraft limit in order

to pay for goods, services, withdraw/advance cash and other services at ATM, EDC/POS worldwide or through internet transactions There are two kinds of these: Debit Classic and Debit Gold

With this kind of card, customers can make lots of benefits, such as withdrawing/advancing cash at ATM, EDC/POS at counters and other cash-advance points world-wide (VND in Vietnam and other currencies in other countries) or paying for goods and services at EDC or through the internet Customers can also get the account balance inquiry or change PIN code, transfer money, deposit Get account statement, pay bills, buy prepaid cards at ATM, EDC/POS at counters Customers can use Mobile Banking: balance change, a transfer, recharge for prepaid mobile, payment of mobile phone contracts, Vnmart e-pocket

In case customers have stable monthly income, they are granted an overdraft limit up to VND 30 million with a term of maximum 12 months if requested Customers get free card for accidental insurance worldwide with the insured coverage up to VND15 million/card when satisfying Agribank conditions Customers get demand interest on their payment accounts with the rate 0.2% per year Their account and personal information is kept confidential

There are some conditions for issuance for individuals that want to own a card

Agribank issues card for main card holders and also for supplementing card holders:

For main card holders

Customers are Vietnamese citizens or foreign residents living in Vietnam with duly civil capacity and civil responsibility as stipulated by the law They have a payment account opened by Agribank

Customers agree to comply with regulations of Agribank international cards issuance, management, utilisation and payment

Customers agree to sign the card using contract with Agribank

Individual customers applying for overdraft must have stable incomes and guarantee the debt payment within overdraft term and use the payment accounts opened at a Agribank branch where they apply for overdraft for salary payment and social allowances

Main card holders may be issued up to two (02) supplement cards

For supplement card holders

Customers with duly civil capacity as stipulated by applicable law or with civil capacity and from 15 to under 18 years old and accepted by their representatives in law for card use

Customers agree to comply with regulations of Agribank international cards issuance, management, utilization and payment

Supplement card holders are guaranteed by main card holders for all liabilities arising with regard to the card use

Card issuance procedures

For issuance of the card, the bank needs some personal information documents from customers:

Customers fullfil the Application form for banking service use and copy their

ID cards or passports withone 3x4cm photo taken within the last 6 months and then sign in card use contract together with salary or social allowances certificate by relevant organizations (if applying for overdraft)

Transaction limit

There is an amount limitation transaction for the card depending on the transaction at ATM or EDC/POS which limits the maximum amount of

transaction for the safety of the owner Customers can make payment under the allowed amount The following table describes the transaction limit per day

Unit: VND

Debit classic

Debit gold At

counter

s

At EDC Debit classic

limit/transaction

Max 5,000,00 Min

50,000

2.2.1.2 Visa/Master International credit cards

Credit Visa/MasterCard Cards issued by Agribank to individual clients are used and accepted for payment globally with the facilities of overdraft, purchasing goods and services in advance, and post -payment which brings favorableness to clients anytime and anywhere

There are 3 types of Visa/Master credit card:

- Standard (Visa Credit Classic)

- Gold (Visa/MasterCard Credit Gold)

- Platinum (MasterCard Credit Platinum)

With this kind of card, the usages are variable and can satisfy customer needs

Customers can withdraw/advance cash at ATM, EDC/POS at counters and other cash- advance points world-wide (VND in Vietnam and foreign currencies in other countries) Customers can pay for goods and services at EDC or through the internet, book for accommodation, air ticket, travel tour and so on, get account balance inquiry at ATM, EDC/POS at counter, change PIN code at ATM, EDC/POS at counters, get free card holder accidental insurance worldwide with the insured coverage of VND15 million/card for Standard/Gold card and up to USD 5.000 for Platinum Card when satisfying Agribank conditions Customers enjoy competitive interest of lending via credit card and are free of interest for all payments made for goods, service for 45 days when making payments to all outstanding loans upon maturity

Term of Use

This type of cards also requires some conditions for individuals who want to have a card for the purpose of managing the client‘s information The card is issued for the main card holder and supplement card holder:

For main card holders

Customers are Vietnamese citizens or foreign residents in Vietnam with duly civil capacity and civil responsibility as stipulated by the law, having a

payment account opened at Agribank For foreigners, their remaining residency/working period in Vietnam will be equal to the remaining effective period of card plus 45 days Customers must have stable and legal income and loan guarantee agreeing to comply with the regulations of Agribank international cards issuance, management, utilization and payment And also Customers agree to sign the card using contract with Agribank Main card holders are entitled to have maximum 02 supplement cards issued

For supplement card holders

Customers with duly civil capacity as stipulated by applicable law; or with civil capacity and from 15 to under 18 years old and accepted by their representatives in the law of card use Customers agree to comply with regulations of Agribank international cards issuance, management, utilization and payment Supplement card holders are guaranteed by main card holders for all liabilities arising with regard to the card use

Card issuance procedures

For the issuance of card, there are some easy procedures for customer at the

beginning

Application form for card issuance is given by Agribank A copy of the ID cards or passports, a 3x4cm photo taken within the last 6 months, and she/ he will sign the Card use contract And the last is loan guarantee documents or salary proof, social allowances by relevant authorized organizations All are with forms already printed available for customer