Some solutions for developing cashless payment in agribank viet nam

Agribank Vietnam: Vietnam bank for Agriculture and Rural DevelopmentVND: Vietnamese Dong ATM: Automatic Teller Machine EDC: Electronic Data Capture POS: Point of Sales PIN: Personal Iden

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

-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

-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

The author confirms that the research outcome in the thesis is theresult of author‘s independent work during study and research period and it isnot 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 andthe permission (if required) is given

The author is responsible in front of the Thesis AssessmentCommittee, Hanoi School of Business and Management, and the laws forabove-mentioned declaration

Thesis is the result of research of the author for a long time, by my ownefforts, the enthusiastic guidance of the Associate Professor Tran Ngoc Ca andcontribution of teachers, my colleague

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

The author would like to express her sincere thanks to the teachers, who havegiven the author the knowledge to support, the foundation of reasoningneeded to study this topic Especially, the contribution and support of the HaNoi School of Business (HSB) - Hanoi National University, Vietnam Bank forAgriculture and Rural Development - Agribank

Finally, the author would like to send deeply thanks to my family, friends whohave always supported, encouraged and facilitated the author to complete thisthesis

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

Agribank Vietnam: Vietnam bank for Agriculture and Rural DevelopmentVND: 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 alsothe largest taxpayment Its main customers are farmers in the rural areas.Agribank has reached 2.330 branch and transaction offices located in all 64province of Vietnam And it also develops impressively in Hanoi and Ho ChiMinh City But the technology does not match with the speed of socialdevelopment and still seems quite weak compared with other banks.

Bad debt in Agribank is 49.563 billion Vietnam Dong, about 6.24 % of totaldebt (2016), which was mainly in Hanoi, Ho Chi Minh City and WesternProvinces where we can not compete with other commercial banks Withfactual statistics about Vietnam economy it can be seen that profits from loanbear 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 inthe business

According to statitstics from the World Bank, Vietnam has the lowest cashlesspayment, only 4.9% (2017), so that it has many free places to gain the marketshare 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 righturgent way that our bank has to change to win the competition with otherbanks 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 forresidential areas in Vietnam‘‘, Hanoi Economic University - Hanoi NationalUniversity The topic has assessed the current state of cashless paymentservice in the residential area of our country, clarifying the role of Statepolicies in promoting and developing payment services In particular, thetopic has evaluated the cashless payment to the economy and communityaccording to the time series regression model with the following variables: theratio of cashless payment/total cash; GDP per capita and total annual statebudget, to perform correlative analysis However, this thesis just examines atthe macro level in over all

According to Bui Thi My Huyen‘s Master thesis: ‗‘completing the cashlesspayment activity through bank in Ho Chi Minh‘‘ from Ho Chi MinhEconomics University (2011), by the scientific quote for cashless paymentthrough banks in comparison with the reality, the subject goes into theargument for the need to promote cashless payments through banks Inparticular, the topic has addressed the lessons learned in cashless paymentactivities of some countries that can be applied in Vietnam and the resultsachieved in the implementation of cashless in Vietnam for the period from theyear 2006 to 2010 From researching cashless payment activities in Ho ChiMinh City, the thesis has assessed the current situation, finding out the reasonsfor 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 ascashless payment in Vietnam by Master Mai Thi Quynh Nhu (2014) The writingoutlines the limitations and recommendations, and solutions to develop cashlesspayment in Vietnam However, the article only deals with common issues but notclarifies the limitations and solutions for a particular bank.

Another study is ―Cashless Payment: Trends in the World and reality inVietnam‖ by Master Do Thi Lan Phuong from Banking Academy (2014) Thearticle outlines trends of cashless payment in the world and in Vietnam Based

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

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

These articles have certain limitations since they just provide overviews ofpayment status of cashless payment in our country in recent years and proposesome solutions for development in the coming time They haven‘t touchedinto 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 cashlesspayment service in Agribank- Tay Do Branch‘‘ in 2015, Mr Nguyen van Thanh

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

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

contributed to bring a perfection to the theory system At the same time, theauthors analyzed and assessed the situation of Vietnam in general and in somecommercial 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 specificservices They just, found out the factors that affected the use in mass ofservices by customers So far, there are no research and studies aboutAgribank Vietnam Thus, this thesis concentrates on the theoreticalsystemization, practical application and new perspectives in cashless paymentservices Based on actual service data oft Agribank Vietnam, the researcheranalyzed the causes and limitations, and then gave specific solutions todevelop cashless payment services in Agribank Vietnam

3 Aims of research

The thesis systematizes the theoretical basis for cashles payment, cashlesssociety and social benefits of cashless, types of cashless payment methods andApplying modern technology to it, and based on that, to understand and assessthe current status of cashless payment system at Agribank Vietnam The thesisoutlines the remaining issues and proposes measures to further develop amore effective and extensive use of the cashless payment system in order toincrease 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 providesolutions 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 outsuggestions and solution to improve the situation could be provided

7 Thesis structure

Besides title and conclusion chapter, the thesis will be structured to threemain 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 thefundamental drivers is digital transformation Digital transformation isn‘t onlyabout Internet ―unicorns‖, it is also about using the latest technology to dowhat you already do – but in a better way

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

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

The digital economy is taking shape and undermining conventional notionsabout how businesses are structured; how firms interact; and how consumersobtain 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 tonew, from low to fast and correct transactions.

1.2 Cash

Cash is money but in the physical form of currency, such as bank notes andcoins In bookkeeping and finance, cash is the current asset comprising ofcurrency or currency equivalents which can be accessed immediately ornearly-immediately (as in the case of money market accounts) Cash is seeneither as a reserve for payments, in case of a structural or incidental negativecash 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, silverjewelry and hacksilver (silver objects hacked into pieces) were, for centuries,the only forms of money, until Venetian merchants started using silver bars forlarge transactions in the early Middle Ages In a separate development,Venetian merchants started using paper bills, instructing their bankers to makepayments Similar marked silver bars were in use on lands where the Venetianmerchants established representative offices The Byzantine Empire andseveral states in the Balkan area and Kievan Rus also used marked silver barsfor large payments As the world economy developed and silver suppliesincreased, particularly, after the colonization of South America, coins becamelarger and a standard coin for international payment was developed from the15th century: the Spanish and Spanish colonial coin of 8 reales Itscounterpart in gold was the Venetian ducat

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

undermining the popularity of the original As feudal states coalesced intokingdoms, imitation of silver types abated, but gold coins, in particular, thegold ducat and the gold florin were still issued as trade coins: coins without afixed value, going by weight Colonial powers, without much success, alsosought 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 wereminted in England and shipped to the East

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

Meanwhile, paper money had been developed At first, it was thought of foremergency situations, hence were most popular in the colonies of Europeanpowers In the 18th century, important paper issuance were made in coloniessuch as Ceylon and the bordering colonies of Essequibo, Demerara andBerbice

The ability to create paper money made nation-states responsible for themanagement of inflation through controlling money supply It also created adirect relation between the metal of the coin and its denomination superfluous.From 1816, coins generally became token money, though some large silverand gold coins remained standard coins until 1927 The World War I sawstandard coins disappear to a very large extent Afterwards, standard goldcoins, mainly British sovereigns, were still used in colonies and lessdeveloped economies, and silver Maria Theresa thalers dated 1780 was struck

as trade coins for countries in East Asia until 1946 and possibly locally in thelater time

Cash has now become a very small part of the money supply Its remainingrole 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 convenientand prompt, though this latter role is being replaced more and more frequently

by electronic payment systems Research has found that the demand for cashdecreases as debit card usage increases because merchants need to make lesschanges for customer purchases

Cash is increasing in circulation The value of the United States dollar incirculation increased by 42% from 2007 to 2012.The value of pound sterlingbanknotes in circulation increased by 29% from 2008 to 2013.The value ofthe 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 inEstonia 2011)

1.2.2 Cashless society

A cashless society might sound like something out of science fiction, butwe‘re already on our way Several powerful forces are behind the move to acash-free world, including governments and large financial servicescompanies 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 toaddress 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 launderingfor example) typically take place with cash, so that there‘s no record of thetransaction—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 whenthey have too much on hand Moving money around and protecting largesums 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 cashlesstransactions Instead of figuring out another currency, your mobile devicehandles 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, butyour payment information could turn up in ways that are impossible topredict 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 youraccount because you don‘t have any alternative ways to spend Even if you‘re

protected under federal law, you face significant inconveniences and otherconsequences after a breach

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

cause problems, leaving you without the ability to buy things when you needthem Likewise, merchants have no way to accept payments from customerswhen systems malfunction Even something as simple as a dead phone batterycould 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 whooperate 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 andhomeless 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? Paymentprocessors may just cash in on the high volumes, eliminating the savings thatshould 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, orclick without noticing how much you spend Consumers will need to renewtheir 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 governmentstry their best to reduce the disadvantages while improve the advantages, sothat 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 andcoins to exchange value, you authorize a transfer of funds to another person orbusiness The logistics are still developing, but we have some hints on how acashless society might evolve

Credit cards and debit cards are among the most popular cashalternatives 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 forP2P payments

Mobile payment services and mobile wallets like Apple Pay providesecure, cash-free payments In developing and developed nations that use cashsparingly, 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 mayhelp keep costs low But currently they have risks and regulatory hurdles thatmake them impractical for most consumers, so they might not be right for thewidespread use.

1.2.4 Examples of Cashless Societies

Several nations are already making moves to eliminate cash, with the pushcoming from both consumers and government bodies Sweden and India, andChina 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 themodel for a modern cashless society Consumers are mostly happy with thissituation, 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 theinformal economy The implementation was rushed and controversial, androughly 99 percent of those banknotes were deposited—meaning criminalsdidn‘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 16,000billion USD and use the services of two China‘s giants - Tencent and Alibabasystem Three year before, Chinese people used to use cash, but the wave ofdigital payment has come to China with the high speed According toiResearch, 2016, China mobile payment market is valued to 5,5 millionbillion USD, 50 times higher compared with the United State market with 112billion USD

Alipay of Alibaba and Wechat of Tencent are the two popular applicationsused in this country, and they have become different payment channelsreplacing cash All people in China use these 2 apps, from the luxuryrestaurant 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 ChineseCenter will just perform, while payment will be duty of Alipay and Tencent.Those examples suggest that going cashless is possible with sufficientinfrastructure and gradual progress And Vietnam can apply cashless paymentfor its society

1.3 Types of cashless payment in the world

There are many types of cashless payment applied all over the world Andbasing 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 electronicinformation Tiny RFID tags can be attached to wristbands, lanyards orbadges, 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 RFIDtags as ‗wallets‘ that attendees use to pay for food, drinks and merchandise (aftertopping 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 tocharge them for whatever they‘re buying This can be used alongsidetraditional payment methods or as the exclusive way for consumers to conducttransactions at the event

1.3.2 Mobile Payments

Mobile payment refers to various apps that turn the smartphones consumersare 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 Payhave both launched in recent years, and have seen some adoption in theUnited States, Europe and Australia.

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

event-be the standard in cashless payments at events and elsewhere However, webelieve the answer to that is negative – mostly because these devices rely oninternet 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 cardtransactions to be completed instantly simply by scanning the card, rather thanthe cumbersome method of swiping it in a reader

Contactless cards are similar to RFID wristbands in that they are both veryfast and easy ways to make payments However, there are also several keydifferences; and similarly to mobile phones, their main drawback as a cashlesspayment method at events is that almost all credit card payments areprocessed online, which could lead to event operations breaking down orslowing down during periods of intermittent connectivity

1.3.4 Cheque

The cheque is one of the oldest methods of cashless payment It is a knownmethod to everyone In this method, you issue a cheque for the specificamount 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 getdishonored due to signature mismatch or insufficient fund In order to avoidsuch 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 safestoption to receive payment from anyone Demand draft (DD) never getsdefaulted as it is signed by the banker The disadvantage of DD and cheque isyou need to visit a bank in order to deposit cheque and demand draft Theclearance 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 usingNEFT or RTGS In order to do online money transfer, you need internetbanking facility Online transfer using NEFT or RTGS is comparatively fasterthan cheque or DD Online transfer can be done from anywhere using internetfacility

1.3.7 E-Wallets

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

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

1.3.8 UPI Apps

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

using virtual payment address without entering bank information Merchantscan enroll with banks to accept payments using UPI Like in the case of a PoSmachine, the merchant would require a current account with a bank to acceptUPI payments.

The examples of few UPI Apps are SBI Pay, ICICI Pocket, Axis Pay UPIApp, 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 readymadecard and can be purchased from a merchant or from the bank The gift card isloaded with a fix cash amount you can purchase any item from the specificvendor by using a gift card

1.3.10 Aadhaar Enabled Payment System

Aadhaar Enabled Payment System (AEPS) is one of the best cashlesspayment 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 tolink your Aadhaar card to your bank account You can use AEPS in order toperform 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 internetconnection Unstructured Supplementary Service Data is mobile bankingservice From any mobile phone, you can dial *99# and use this service Youcan do all these things which are available to a person with smartphone andinternet connection Almost all banks including SBI, ICICI, BOB, Axis Bankand PNB supports USSD payment option

1.4 Cashless payment in Viet Nam

In Vietnam, where the technology platform is not high From observation inAgribank 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, tomake payments from your bank account: In Vietnam, we often use this kind towithdraw money from the bank for our cash payment purpose

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

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

1.4.2 Customers do not need to appear in bank sites

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

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

- QR code payment: is a contactless payment method where a payment isperformed by scanning a QR code via the mobile app This is an alternativefor 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 themerchant with their phones to pay for their goods They enter the amount theyhave to pay and finally submit This is a more secure card-not-present methodthan others

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

E- Wallets: Grap Pay, Payyoo, Shopee… customer payment through theconnection 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 topand the whole system, I choose the scope of my thesis as the system ofAgribank

Technology Platform, Inteligent Mobile device with wifi and 3G, users canmake 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 decisionhas 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, reducingcash payment-related social costs and the ratios of cash in circulation to thegross domestic product (GDP) and of cash to total payment instruments;

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

c/ To promote the use of e-payment and reduce the use of cash in paymenttransactions between individuals, enterprises and governmental agencies;d/ To improve the effectiveness of the management and supervision by statemanagement 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% ofmodern supermarkets, shopping malls and distribution centers will have cardreaders which enable consumers to make non-cash payments whenpurchasing goods; 70% of electricity, water, telecommunications andcommunications service providers will accept non-cash payment of charges;50% of individuals and households in major cities will use non-cash paymentinstruments in their shopping and consuming activities);

d/ To concentrate efforts on developing a number of new and modernpayment instruments and forms in rural, remote and deep-lying areas, thuscontributing to promoting financial inclusion; to drastically increase thenumber of people having access to payment services, and increase thepercentage of people aged 15 years or older having bank accounts to at least70% 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 theneeds 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 publicadministrative services

e Renovating the securities clearing and finalization system

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

h Enhancing management and supervision of international payments andmoney transfers

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

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

l Enhancing coordination to promote non-cash payment

So improving cashless payment is the way and direction that our Governmentwants to achieve and supports in overall The launching of Decision 2545 isthe framework for Agribank and other commercial banks to develop thecashless payment system, not only for the profit and efficiency purposes, butalso 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 significantachievements of the country‘s valuable agricultural industry

Vietnam Bank for Agriculture and Rural Development (Agribank) is the only100% 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‘sbanking system as a whole

Agricultural focus

As of December 31, 2017, total assets of Agribank reached nearly VND onemillion two hundred thousand billion, mobilized capital reached nearly VNDone million one hundred thousand billion; total outstanding loans to theeconomy reached nearly VND 900 trillion, of which the proportion ofoutstanding loans for agriculture and rural areas was 73.6%; profit before taxreached 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 thecountry‘s economy in general and particularly in the agricultural sector andrural areas of Vietnam – a country in which 70% of the workforce isemployed in the agricultural sector and 80% of the population lives in ruralareas The agricultural sector contributes to about 22% of the country‘s GDPand makes up 30% of its export turnover Over almost 30 years of

development, Agribank has been consistently pursuing its investment focusand upholding its key and leading position as a financial institution providingcredit and financial services primarily to Vietnam‘s agricultural and ruralareas Agribank outstanding loans for agricultural and rural areas account for73.6% of its total outstanding loans and 50% of total outstanding loans of thebanking sector for these areas.

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

in the rural credit field, Agribank is always the first partner in Vietnamentrusted by international donors including the World Bank (WB), the AsianDevelopment Bank (ADB) the the European Investment Bank (EIB, inimplementing their credit projects within the country

Agribank is also a partner and constructive member of many internationalassociations, 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 beenAgribank‘s focus The bank was the first in Vietnam to complete its corebanking project financed by the World Bank, which modernized the customeraccounting and payment system (IPCAS) Relying on a well-investedtechnology base, Agribank has achieved substantial progress in governance,management and in the development of advanced banking products, servicesand utilities

Agribank‘s strategy for the coming years will see the bank continue toenhance its key role in the monetary and credit market for agriculture andrural areas: providing diversified products and services that are tailored to thefeatures of each region or area, while maintaining its position as the largestcommercial bank and financial institution in Vietnam, committed tocontributing to the country‘s achievements in industrialization, modernizationand 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 implementingthe 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 inVietnam operating under the model of state-owned commercial bank; have amodern technology foundation, advanced management model, and soundfinancial capacity; maintain safe, efficient, stable, and sustainabledevelopment; maintain its key role in investment, development assistance, andthe provision of financial and credit services for agriculture and rural areas.Agribank will continue to take firm steps, operate its business in a securemanner, achieve the set objectives, fulfill the political tasks assigned by theParty and the State, contribute positively to the implementation of monetary

policy, removing difficulties, improving business investment climate,promoting economic growth, especially in economic development ofagriculture 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 operatingnetwork of 2,233 branches and transaction offices nationwide which havebeen connected online In 2010, Agribank has extended the network byopening its first branch in the Kingdom of Cambodia

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

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

Apart from 2.233 branches and transaction offices, as a leading commercialbank 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 JointStock Company, Agribank Insurance Joint Stock Corporation (ABIC), andAgribank Debt Management and Assets Exploitation Limited Co (AMC)

2.1.4 Cultural values

Agribankers always have the special cultural values with passion for workand dedication to the development of the Agribank for 30 years until now Thecharacters 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 withhonesty)

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

organization, family to consolidate the relationship within a lifestyle thatcomplies 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 aninternal element; economic development is a change of economic activities onthe 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 currenttechnical conditions to meet the social and personal demand in an identifiedproduction and consumption condition Product quality reflectscomprehensively the level of technology and is an important technical andeconomic standard to improve production efficiency and play an essential role

in economics (expand production scale and market especially internationalmarket)

Quality can be narrowed down as product quality or can be widened as jobquality Product quality implies product use or the appropriateness with acertain use, meeting the quality characteristics demand of the society and theduration 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, efficiencymeans labor productivity assessed by a period of time to produce a product ornumber 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 productsand 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 Vietnamculture which is deeply imbued with its national identity, integrated with othercountries‘ advanced corporate cultures complying with the instruction fromthe State, the State Bank of Viet Nam and Agribank

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

Regularly organize supervision, review, assessment, emulation on buildingcorporate culture

Centre at the following address:

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

Telephone: (+84-4)-8313729 CARD CENTRE

No 18 Tran Huu Duc street, My Dinh, Nam Tu Liem district, Hanoi, VietnamHotline: 1900558818

Telephone: (+84-4)-8687437 - 8687913

Fax : (+84-4)-8687910

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 touse 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 ofthese: Debit Classic and Debit Gold

With this kind of card, customers can make lots of benefits, such aswithdrawing/advancing cash at ATM, EDC/POS at counters and other cash-advance points world-wide (VND in Vietnam and other currencies in othercountries) 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 atATM, EDC/POS at counters Customers can use Mobile Banking: balancechange, a transfer, recharge for prepaid mobile, payment of mobile phonecontracts, 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 cardholders:

For main card holders

Customers are Vietnamese citizens or foreign residents living in Vietnam withduly 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 cardsissuance, management, utilisation and payment

Customers agree to sign the card using contract with Agribank

Individual customers applying for overdraft must have stable incomes andguarantee the debt payment within overdraft term and use the paymentaccounts opened at a Agribank branch where they apply for overdraft forsalary 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 withcivil capacity and from 15 to under 18 years old and accepted by theirrepresentatives in law for card use

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

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

Card issuance procedures

For issuance of the card, the bank needs some personal informationdocuments 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 monthsand then sign in card use contract together with salary or social allowancescertificate by relevant organizations (if applying for overdraft)

Transaction limit

There is an amount limitation transaction for the card depending on thetransaction 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.

30

2.2.1.2 Visa/Master International credit cards

Credit Visa/MasterCard Cards issued by Agribank to individual clients areused and accepted for payment globally with the facilities of overdraft,purchasing goods and services in advance, and post -payment which bringsfavorableness 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 andother cash- advance points world-wide (VND in Vietnam and foreigncurrencies in other countries) Customers can pay for goods and services atEDC or through the internet, book for accommodation, air ticket, travel tourand so on, get account balance inquiry at ATM, EDC/POS at counter, changePIN code at ATM, EDC/POS at counters, get free card holder accidentalinsurance worldwide with the insured coverage of VND15 million/card forStandard/Gold card and up to USD 5.000 for Platinum Card when satisfyingAgribank conditions Customers enjoy competitive interest of lending viacredit card and are free of interest for all payments made for goods, servicefor 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 dulycivil capacity and civil responsibility as stipulated by the law, having a