Developing online payment service for tourism businesses at VTC pay

The research purposes; To systematize of theories related to online payment, online payment methods and conditions for its developments in Vietnam. To analyzes the establishment and development of VTC Pay in order to evaluate its achievements and limitations. To forecast and define the development trends in Vietnam market and suggest some solutions to more develop this market in the near future. To figure out the solutions of online payment service for tourism businesses in Vietnam in general and in VTC Pay in particular. The research scope. Scope of spatial research: As a thesis of students dissertation, the research scope of the topic is of micro scale, limited to a certain enterprise. Specifically, the research scope of the thesis is to study the theory, situation and propose solutions to develop online payment service provider model, focusing on developing online payment services of VTC Pay and focusing on tourism businesses at VTC Pay. Scope of research on time: The limit of research on the time of thesis is the surveyed data from 2017 to 2019 of VTC Pay, combined with external secondary data in within the past 5 years.

VIETNAM NATIONAL UNIVERSITY - HANOI

INTERNATIONAL SCHOOL

*****************

Nguyen Thanh Thao

DEVELOPING ONLINE PAYMENT SERVICE FOR TOURISM

BUSINESSES AT VTC PAY

MASTER THESIS

Hanoi - 2020

VIETNAM NATIONAL UNIVERSITY - HANOI

INTERNATIONAL SCHOOL

*****************

Nguyen Thanh Thao

DEVELOPING ONLINE PAYMENT SERVICE FOR TOURISM

ABSTRACT Thesis Title: Developing of online payment service for tourism businesses at VTC Pay

Pages: 73

University: Vietnam National University

Graduate School: International School

Date: October, 2019 Degree: Master

Graduate Student: Nguyen Thanh Thao Supervisor: Assoc Prof Dr Nguyen Van Dinh

Keywords: online payment, customer behavior, mobile payment, payment methods,

electronic payment, information technology, digital, e-ecommerce, tourism industry

With the explosive growth of the Internet, electronic commerce (e-commerce) is an increasingly important segment of commercial activities on the web With ever increasing popularity of online shopping, Debit or Credit card fraud and personal information security are major concerns for customers, merchants and banks; online payment became the most essential part of growth economy

The purpose of this thesis is to introduce an overview of electronic payment, concepts and benefits of electronic payment, and the author presents the electronic payment infrastructure, electronic payment systems and electronic payment methods in Vietnam

The main contents of this thesis are to introduce theoretical background of online payment, online payment service providers in general and the current status of online payment service provider of VTC Pay and online payment solution for tourism business in Vietnam

ACKNOWLEDGEMENT

During the performance of this thesis, I have received much assistance from the people who help me to complete the thesis I could not finish this thesis without helping from them, so I wanted to express my deep gratitude to those people

First, I would like to express my most sincere thanks to the teachers of the International School, Vietnam National University, Hanoi, who taught me and helped

me throughout the course

Next, I would like to express my most gratitude to my supervisors, to Assoc Prof Dr Nguyen Van Dinh from International School, Vietnam National University, Hanoi who supported me through the course of my research and gave me guidance and useful feedback to complete the thesis

Besides, I would like to thank my MFM1 classmates who shared documents and help me during the implementation of this research

Finally, I want to give my wishes for all teachers, hopefully they have good health and gain more successful in career Again, sincerely thanks!

Thank you! Author Nguyen Thanh Thao

TABLE OF CONTENTS

ABSTRACT 1

ACKNOWLEDGEMENT 2

TABLE OF CONTENTS 3

LIST OF TABLES 7

LIST OF FIGURES AND GRAPHS 8

LIST OF ABBREVIATIONS 9

INTRODUCTION 10

1 The general context and reasons for choosing the research topic 10

2 Establish and declare research issues 11

3 The research purpose 11

4 The research scope 12

5 The structure of the research 12

CHAPTER 1: THEORITICAL BACKGROUND AND LITERATURE REVIEWS 14

1.1 Theoretical background 14

1.1.1 Research papers in Vietnam 14

1.1.2 Research papers in the world 14

1.2 Definitions of online payment and online payment service provider 15

1.2.1 Definition of online payment 15

1.2.2 Definition of online payment service provider 16

1.3 The theories of research problems 16

1.3.1 Online payment methods 16

1.3.2 Payment process through using traditional credit cards 18

1.3.3 Methods of international payment and application in traditional tourism business 19 1.4 Characteristics of online payment and online payment service providers 20

1.4.1 Characteristics of online payment 20

1.4.2 Characteristics of online payment service providers 20

1.5 The role and importance of online payment and online payment service providers in

e-commerce activities 21

1.5.1 The role and importance of online payment 21

1.5.2 The role and importance of online payment service provider 22

1.6 Classification of online payment service providers 23

CHAPTER 2: RESEARCH METHODOLOGY 24

2.1 Research methods 24

2.1.1 Data collection methods 24

2.1.2 Method of processing data 26

CHAPTER 3: ANALYSIS ABOUT THE DEVELOPEMNT OF ONLINE PAYMENT SERVICES OF VTC PAY AND PROPOSE THE SOLUTIONS TO DEVELOP ONLINE PAYMENT SERVICES FOR TOURISM BUSINESSES AT VTC PAY 28

3.1 General assessment 28

3.2 Actual situation 30

3.3 The factors affecting the provision of electronic payment services in Vietnam 31

3.3.1 The competitive environment in the country and abroad 31

3.3.2 The habit of using cash 32

3.3.3 The safety issues when using online payment 33

3.3.4 The factors related to telecommunications network infrastructure 34

3.3.5 The factors related to legal infrastructure 35

3.4 Types of online payment service products on the market for the tourism industry 35

3.4.1 Online payment solution for service providers who want to authenticate and collect money right through the business website system 35

3.4.2 Online payment solutions for businesses without websites 36

3.4.3 Solution of infrastructure system for issuing prepaid cards 36

3.5 Evaluate the situation and impacts of business environment factors on VTC Pay's service provision for tourism businesses 36

3.5.1 Introduction about VTC Pay 36

3.5.2 Overview of the situation related to the provision of online payment service of VTC

Pay 39

3.5.3 Factors affects VTC Pay's online payment service provision for tourism businesses

43

3.6 Analysis results and data processing 48

3.6.1 Status of products and services are provided by VTC Pay 48

3.6.2 The current situation of tourism businesses in implementing online payment system 52 3.6.3 Situation of business efficiency of tourism businesses when implementing online payment system 53

3.6.4 The situation of impact assessment between environment and online payment 54

3.6.5 Evaluate the development of the online payment market in the tourism industry 56

3.7 Conclusions and findings through research 56

3.7.1 The successes achieved from the provision of online payment service of VTC Pay 56 3.7.2 The existing problems and weaknesses 57

3.7.3 Opportunities for development of VTC Pay 58

3.7.4 Threats for development of VTC Pay 58

3.8 The solution for development of VTC Pay’s online payment services 59

3.8.1 General solutions for VTC Pay's online payment model 59

Enhancing PR and advertising activities to attract business customers and end consumers to know VTC Pay more. 59

3.8.2.Solutions for attracting tourism businesses to use VTC Pay's online payment service 59

3.9 Recommendations to the State 60

3.9.1 Information technology infrastructure 60

3.9.2 Legal infrastructure 60

3.9.3 Training and promoting cooperation in developing online payment 61

3.9.4 Enhance support to tourism businesses through government tools 61

CONCLUSION 62

APPENDIX 01: LIST OF SURVEYED COMPANIES 66

Công Ty Cổ Phần Việt Nam Booking 66

Công Ty TNHH Du Lịch Quốc Tế Đại Việt 67

Công Ty Cổ Phần Tập Đoàn Nam Phong 67

GoldenTour & Convention 67

Công Ty TNHH Du Lịch Nam Phúc 67

Công Ty TNHH Ixoline 67

Công Ty TNHH Du Lịch Hạng A - AClass Travel 67

Công Ty Cổ Phần Phát Triển Thương Mại & Du Lịch Tầm Nhìn Việt Nam 67

Công Ty Cổ Phần Du Lịch Và TM Quốc Tế Á Âu (ASIA HOLIDAY TRAVEL) 67

Công Ty TNHH Cổ Phần Truyền Thông Và Du Lịch Thiên Thai 67

Công Ty TNHH OneTour Việt Nam 67

Công Ty CP Mặt Trời Việt Nam 68

Công Ty Cổ Phần Lữ Hành Thăng Long 68

Công Ty TNHH ATC Việt Nam 68

ông Ty TNHH Thương Mại Và Dịch Vụ Du Lịch Vietmountain 68

Công Ty Cổ Phần Thương Mại Và Phát Triển Du Lịch Hà Nội (Handetour) 68

Công Ty TNHH Dịch Vụ Và Du Lịch VIETSENSE 68

APPENDIX 02: PHIẾU KHẢO SÁT 69

LIST OF TABLES

Table 1: The number of ATM and POS by the second quarter of 2019 30

Table 2: Statistics on tourism in Vietnam 42

Table 3: List of companies providing online payment services in Vietnam 45

Table 4: Some legal documents related to online payment 47

Table 5: Results of statistical services are deployed by VTC Pay 49

Table 6: Assess the satisfaction level of the enterprise 51

Table 7: Estimating the impact of customer complaints and system downtime on business satisfaction 52

Table 8: Assess the readiness of a tourism business 53

Table 9: The growth rate of international tourists after implementing online payment system 53

Table 10: The revenue growth rate after implementing online payment system 54

Table 11: The level of obstacles to the implementation of online payment in Vietnam 55

Table 12: The impact of online payment systems to business activities of tourism enterprises 56

LIST OF FIGURES AND GRAPHS

Graph 1: The development of ATM and POS by the second quarter of 2019 31

Graph 2: The development among types of payment 32

Graph 3: The percentages among each types of payment methods 33

Graph 4: The rate of using security measures in enterprise 35

Graph 5: VTC Pay Payment Gateway's growth in transaction volume and total value of payment by quarterly in 2018 43

Graph 6: Online payment transaction volume in China from 2009 to 2019 (in billion yuan) 46

Graph 7: The rate of time deploying the online payment system 50

Diagram 1: The organizational structure of the VTC Telecom 39

LIST OF ABBREVIATIONS

5 VTC Intecom VTC Technology and Digital Content Company

INTRODUCTION

Online payment comes along with the development of the Internet and commerce that is a developing new form of traditional electronic payment Nowadays, when e-commerce is growing strongly in the world, the new payment methods have brought convenience, fast and economical for both businesses and consumers Besides the traditional methods such as e-payment transfers, ATM, POS or a guarantee, there are others forms of payment such as mobile, internet payment that are increasingly popular in countries around the world

E-China is a neighboring country with characteristics similar to Vietnam but their e-commerce in general and online payment in particular are ahead with a speed up to 5 years of explosive growth, the average annual increase of 181% Only Alipay – a Chinese mobile payment service now has more than 1 billion users worldwide by the beginning of January 2019 Meanwhile, in Vietnam, e-commerce has only really developed in the past of 6-7 years, starting early with the forms of products promotion

on the website, creating shopping cart and support online customers Another important step in e-commerce is that payment is still just traditional payment, delivery and receive money at home or civilized than via bank transfer, payment by post

Online payment of Vietnam has only really started the first steps from the end of

2006 and the beginning of 2007 when a series of enterprises providing Payment gateway services were established such as Vietpay, Paynet, Mobivi, Fibo…However, the emergency of businesses massively appearance did not quickly bring online payment to development in Vietnam Enterprises unavoidable reality “that which does not” work perfunctorily and almost no development Only a few businesses with the right path like PayNet, OnePay or VASC can continue to develop and achieve certain

successes And VTC Pay is a brand powered by VTC Technology and Digital Content Company (VTC Intecom) is such an enterprise, which provides online payment in Vietnam VTC Pay is the leading payment solution provider for merchants in Vietnam and provides various products, services to countries in region and worldwide VTC Pay realized to be able to successfully develop and international integration must be professional from the start Therefore, VTC Pay has built a supplier model that conforms to the world standard models In addition, VTC Pay also soon identified that tourism will be the industry that can develop the first online payment in Vietnam but not e-commerce Each year, Vietnam receives an average of 15.5 million international visitors - those who are already in the habit of paying online with international credit cards - will be the most potential market for tourism businesses and online payment service providers Because of these right judgments, VTC Pay has now become the leading enterprise in the online payment market in Vietnam with more than 400 merchants (May 2019) in which the number of tourism enterprises accounts for about

80 %

In the near future, Vietnam's tourism industry is aiming at the number of 30 million international tourists to Vietnam each year and 80 million domestic tourists, this will really be a potential market for payment development of online payment in Vietnam With its position as a market leader in Vietnam, VTC Pay is getting certain advantages in the competition between online payment service providers With 10 years of experience, but with only 3 years of online payment, VTC Pay has also been unable to avoid shortcomings and the quality of products and services is not perfect From the above fact, in order to contribute to promoting the development of online

payment in Vietnam, I decided to choose the topic "Developing online payment service for tourism businesses at VTC Pay” as the subject of their graduation thesis

The purpose of the thesis is to systematize of theories related to online payment, online payment service providers, survey and research to clarify the status of online payment service provider model of VTC Pay in general and for tourism businesses in particular in Vietnam, thereby proposing solutions for developing online payment services In order to reach these aims, the basic research tasks have been set up as follows:

 To systematize of theories related to online payment, online payment methods and conditions for its developments in Vietnam

 To analyzes the establishment and development of VTC Pay in order to evaluate its achievements and limitations

 To find out the development solutions for VTC Pay services in both quality and quantity

 To figure out the solutions of online payment service for tourism businesses in Vietnam in general and in VTC Pay in particular

Scope of spatial research: As a thesis of students' dissertation, the research

scope of the topic is of micro scale, limited to a certain enterprise Specifically, the research scope of the thesis is to study the theory, situation and propose solutions to develop online payment service provider model, focusing on developing online payment services of VTC Pay and focusing on tourism businesses at VTC Pay

Scope of research on time: The limit of research on the time of thesis is the

surveyed data from 2017 to 2019 of VTC Pay, combined with external secondary data

in within the past 5 years

In addition to the table of contents, lists of tables, diagrams, drawings, lists of abbreviations, references and other appendices, the thesis's research topic consists of three main parts:

Chapter 1: Theoretical background and literature reviews

Chapter 2: Research methodology

Chapter 3: Analysis about the development of online payment services of VTC

Pay and propose solutions to develop online payment service for tourism businesses at VTC Pay

CHAPTER 1: THEORITICAL BACKGROUND AND

LITERATURE REVIEWS

1.1 Theoretical background

1.1.1 Research papers in Vietnam

At present, there are almost no documents or direct scientific researches on online payment and official online payment service provider models published Mostly enterprises are self-proactively learning from different sources in the world and applying cooperatively to deploy online payment service providers in Vietnam with international organizations and businesses

Even Vietnam universities have specialized training in e-commerce and are also

no official training courses on electronic payment Almost documents are still summarized and translated from international universities, international research organizations or businesses of e-commerce in general and online payment in the world

in particular The basic e-commerce textbooks of the University of Commerce and Foreign Trade University also spend a very small part to introduce the current forms of e-commerce in the world

Previous graduate thesis topics also focused on introducing the electronic

payment system of commercial banks in Vietnam such as "Solutions to improve the quality of electronic money transfer payment at VietinBank – Dong Da branch – Hanoi” by student Nguyen Thi Luc Binh - Banking Academy, or the topic “payment in e-commerce” by Le Thi Duy Linh of GOL company referring to the means of payment

in commerce and difficulties in applying commerce models in the world to commerce in Vietnam

e-1.1.2 Research papers in the world

E-commerce in general and online payment in particular in the world have developed since 1998, 1999 – that is booming period of Internet and dotcom

companies in the world – thanks to a solid technological foundation from traditional electronic payment from previous time Therefore, researches in the world on online payment are very intensive and scientific Some online payment books and documents such as: Electronic Payment System for E-Commerce by Donal O’Mahony, Michael Peirce, Hitesh Tewari; The truth about Online Payments by Russell O’Brien; Electronic Bill Presentment and Payment by Kornel Terplan, New Payment World by Mary S Schaeffer, Payment System in Global Perspectives by Maxwell J.Fry, Isaack Kilato and author group…

The book “Electronic Payment System” for E-Commerce by the authors Donal O’Mahony, Michael Peirce and Histesh Tewari has introduced quite sufficiently and in detail the technology and systems used to make payments via the internet The book is written for researchers and industry experts to expand and develop new technologies in this field

Meanwhile, the book “New Payment World” of Mary S Schaeffer gives us an overview of the history of payment services around the world, the payment methods of

"yesterday", "present" and in the "future" around the world The book is a complete introduction to system security techniques in Electronic Payment for different fields such as finance, banking, securities, tax, customs or as business transactions and users

in e-commerce

1.2 Definitions of online payment and online payment service provider

1.2.1 Definition of online payment

Accessing the concept of Online Payment, we need to better understand the concepts of Electronic Payments in traditional trade and in eCommerce today According to the European Commission, electronic payment is understood as the implementation of payment operations through electronic means based on the

processing of electronic data transmission From the above definition, we can learn the concepts of online payment

According to the Ministry of Trade's National E-Commerce Technical Report,

"Online payment is the payment and receipt of goods for goods and services purchased and sold on the Internet through electronic messages instead of for cash handover "

There are also other online payment concepts as follows: According to

Net-builder, a company that provides online services, “Online payment is a transaction of goods and money in any form of through the online media”1

1.2.2 Definition of online payment service provider

A payment service provider (PSP) offers online services for accepting electronic payments by a variety of payment methods including credit card, bank-based payments such as direct debit, bank transfer, and real-time bank transfer based on online banking Typically, they use a software as a service model and form a single payment gateway for their clients (merchants) to multiple payment methods.2

There are also other online payment concepts as follows: According to

Net-builder, a company that provides online services, “Online Payment Provider is a third party that provides credit card transaction processing in real time on the behalf of website/organization” 3

1.3 The theories of research problems

1.3.1 Online payment methods

a Online payment by cards

Online payment by payment cards is the simplest and also the most popular today Types of cards that can be paid online are:

- A credit card is a thin rectangular slab of plastic issued by a financial company, that lets cardholders borrow funds with which to pay for good and services Credit cards impose the condition that cardholders pay back the borrowed money, plus interest, as well as any additional agree-upon charges

- A debit card is a type of card that has a direct relationship and is attached

to the deposit account This card when used to buy goods and services, the value of transactions will be immediately deducted to the cardholder’s account through electronic devices located in shops and hotels…simultaneously instant transfer funds to the hotel store account Debit cards allow the users to withdraw cash from automated teller machine

There are two basic types of debit cards: online and offline Online card is a type of card whose value is immediately deducted from cardholder’s account The offline card is the type of card whose value is deducted from the cardholder’s account a few day later

b Electronic check

An electronic check, also referred to as an e-check, is a form of payment made via the Internet, or another data network, designed to perform the same function as a conventional paper check Since the check is in an electronic format, it can be processed in fewer steps Additionally, it has more security features than standard paper checks including authentication, public key cryptography, digital signatures, and encryption among others

c Electronic Money

Electronic money (e-money) is broadly defined as an electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer The device acts as a prepaid bearer instrument which does not necessarily involve bank accounts in transactions

E-money products can be hardware-based or software-based, depending on the

technology used to store the monetary value

d Person-to-Person Payment (P2P Payment)

Person-to-person payments (P2P) is an online technology that allows customers

to transfer funds from their bank account or credit card to another individual's account via the Internet or a mobile phone

e Electronic wallet (E-wallet)

E-wallet is a type of electronic card which is used for transactions made online through a computer or a smartphone Its utility is same as a credit or debit card An E-wallet needs to be linked with the individual’s bank account to make payments

E-wallet is a type of pre-paid account in which a user can store his/her money for any future online transaction An E-wallet is protected with a password With the help of an E-wallet, one can make payments for groceries, online purchases, and flight tickets, among others

f Payment Gateway (PG)

A payment gateway is a service that authorizes a user’s transfer of funds between financial institutions to sellers without direct delivery of either bank or credit card account information

Payment gateways allow the indirect use of bank accounts and credit card accounts online at stores that offer both online and in-person retail purchasing, also known as clicks and mortar, or traditional retail with only brick and mortar stores When using a payment gateway, the user’s financial data is never submitted directly but transferred between a payment portal and the user’s bank or credit card The information is transferred covertly and protected by encryption

1.3.2 Payment process through using traditional credit cards

In a payment operation using a credit card usually includes the following basic steps:

(1) Issuing credit cards to a potential card holder

(2) The card owner presents the card to the business unit when he needs to pay for the goods and services purchased

(3) Business unit requires confirmation from the card brand organization and the transaction is paid by credit Business units retain a sales slip

(4) The business unit transfers the sales slip to the accepting bank and pays them a fee for this service

(5) The bank accepting payment requires the organization of the card trademark except credit and payment After that, the card brand organization requested the deducted amount with the issuing bank

(6) Amount transferred from issuing bank to card brand organization The equivalent amount is deducted from the card holder's account at the issuing bank

In the traditional card payment system, the described process is only partially automated However, when applying e-commerce, the whole process must be fully automated on the internet with a guaranteed method During the e-payment process, the computer requires the buyer to enter the card's information to perform the payment process However, this method raises a concern for customers as security issues when sending over the internet

1.3.3 Methods of international payment and application in traditional tourism business

- Cash payment method is the simplest payment method, tourists pay

directly money to tourism businesses

- Card swipe at the POS counter method: As a traditional e-payment

method, tourists swipe ATM cards at POS machines at the transaction counter of tourism businesses

- Money transfer method: A method in which tourists (who need to

transfer money) require their bank to transfer a certain amount of money to a tourist service provider (beneficiary) in one location determined by means of money transfer requested by tourists

- Book entry method: A payment method in which a travel company opens

an account (or a book) to debit tourists after the tourism enterprise has completed the provision of tourism services, periodically buyers will pay for the business

- Collection method: As a method of payment in which a tourism

enterprise has completed its obligation to provide services to tourists, it authorizes its bank to collect the customer's money on the basis of draft of the enterprise

- Voucher credit method: A payment method in which a bank (bank opens

a letter of credit) at the request of tourists will pay a certain amount of money to businesses providing travel services

1.4 Characteristics of online payment and online payment service providers

1.4.1 Characteristics of online payment

- Payment is not limited by space and time: From the perspective of commerce, online payment activities are no longer restricted within a country, an area that is connected on a global scale in 24 hours / day and 7 days / week

e Real-time payment: Online payment is the payment system through the computer network and the internet achieves real-time payment speed A payment transaction between the user and the card-accepting units in the two countries far apart can be done in a couple of seconds after the button is pressed to complete the transaction

- Effective, convenient, easy to use: The cost per transaction is very small, especially for low-value transactions

- Flexibility, unity and reliability: Provide many convenient payment methods for all subjects with a unified application interface and avoid unnecessary mistakes

1.4.2 Characteristics of online payment service providers

Online payment service provider model must follow certain international standards of payment In order for an online payment service provider to be accepted and connected with international payment organizations, they must build a model according to international payment organizations and meet the standards prescribed by PCI DSS4 regulation

Online payment solution provider is an intermedate payment, service provider and online payment support solution So this service is very interest to small-scale online businesses, especially those who are new to this business The supplier’s business revenue is entitled to the percentage of payment value and the number of customer’s transactions

1.5 The role and importance of online payment and online payment service providers in e-commerce activities

1.5.1 The role and importance of online payment

By applying information technology, internet and inter-bank computer network

in business, online payment service providers have created an effective payment channel in e-commerce Thereby e-commerce businesses can easily build a complete sales process in e-commerce Moreover, Online payment plays an increasingly important role in the development of the digital economy

Online payment plays an important role in e-commerce activities, it is considered as a necessary condition for e-commerce to develop comprehensively The fact that e-commerce is difficult to promote all its advantages without the online payment system with strong capacity The speed of e-commerce development is fast or slow depends very much on online payment to help businesses and consumers make the most of the benefits of this business method

Moreover, online payment is not only considered as an element of e-commerce promotion but also plays an important role in the modernization of the payment

system, thereby enhancing the competitiveness of enterprises , commercial banks, credit institutions in the banking and financial services industry

For the economy in general, online payment is seen as an important payment channel, contributing to promoting the development of a non-cash economy Online payment will contribute to reducing the amount of cash in circulation, reducing the cost

of printing and issuing paper money, contributing to curb inflation and meet payment efficiency in the economy to promote Production of goods and online commerce is more developed

1.5.2 The role and importance of online payment service provider

The online payment service provider plays a very important role in promoting commerce development and accelerating the implementation of the government's non-cash economic project For an e-commerce enterprise, online payment is considered to

e-be the most critical step to complete the e-commerce process in a professional manner For businesses, especially small and medium enterprises, it is almost impossible to deploy an online payment system when they lack and weak both in human resources, technology and budget The presence of online payment service providers has opened a new direction, a new solution for e-commerce development of businesses They may not have to invest a lot of money and effort but still have a high-quality, secure and secure online payment system

Another important role of online payment service providers is an intermediary between parties including cardholders, card issuing banks, international card organizations, card acceptance units and Bank payment It makes the payment process simple, fast, convenient, safe and economical

For an economy, online payment service providers are an important link to create a convenient, reasonable and secure new payment channel in addition to financial banks and credit institutions…contribute to accelerating the process of

economic modernization and creating a civilized and transparent environment in payment

1.6 Classification of online payment service providers

There are three types of online payment service providers that are direct providers of Online Payments, intermediate providers of online payment services and third parties providing online payment services

Direct Providers of Online payment services are usually units directly providing online payment services such as commercial banks or credit institutions Completed orders will be sent from the seller’s website to the bank via Payment Gateway

Intermediary service providers act as an intermediary between businesses and direct providers Bussinesses can use this service and pay a discount rate of 2% -5%

A third-party online payment service provider is a business or organization that transfer the credit card payment process from an order on a website by its own account, then the payment of customer will be done through the merchant account Businesses will not need to be concerned about the authenticity of credit card holders because service providers will be direct sellers, while the seller has become an agent

CHAPTER 2: RESEARCH METHODOLOGY

2.1 Research methods

2.1.1 Data collection methods

In the process of collecting data for the study and implementation of the thesis topic, the author used the following data collection methods as below:

Methods of investigating primary data:

- Survey: Send to tourism companies and e-commerce businesses who are

VTC Pay’s customers via email (Sample of survey form is attached in the Appendix)

Specifically, the questionnaire method is as follows:

 Purpose of using survey method: Surveys align the needs of customers

with the goods and services that companies provide They serve different purposes for the company and the customer, so each has incentive to create or participate in the survey experience Surveys are beneficial for customers in that they give them an outlet to praise good service or air grievances Customers can have an impact on company procedure – or at least, they can feel like they’re making a difference In this way, companies can form an emotional connection with their customers, build customer loyalty, and gain insights that will help them to better provide what customers want In this survey, I want to find out the purposes when companies use VTC Pay services, the satisfactions and the complains from their end users and how about their risk management

 Contents of investigation: Application and deployment situation of online

payment services at businesses that are VTC Pay’s customers; quality of online payment services that VTC Pay is providing and feed back from customers when using online payment servies on their website

 How to proceed: The questionnaires after being designed will be sent to

customers’ businesses under the introduction from VTC Pay Businesses, after answering the questionnaires, will return them and be gathered and put into the database of SPSS software for processing and analysis The purpose of applying this method is to help gather information in the fastest, most economical way and handle it

in the most accurate way so that it can give the most accurate assessments and results

 Advantages and disadvantages of this investigation:

o Advantages: fast, convenient and highly efficient

o Disadvantages: businesses may not respond or provide correct answers

 Sample objects: Customers of VTC Pay

o Tourism businesses: 25 questionnaires

o E-commerce businesses: 5 questionnaires

 Number of surveys:

o Number of surveys given: 30 questionnaires

o Number of surveys response: 25 questionnaires

o Number of valid surveys: 20 questionnaires

- Expert interview:

 Interview content: Viewpoints of VTC Pay on the situation of domestic

and foreign online payment market; assess the model of online payment service provider that VTC Pay is implementing; VTC Pay's current service quality; VTC Pay's development orientation Besides, from the interviews, finding out some development solutions for internal services and how to manage risks from VTC Pay’s services

 How to investigate: Direct interview at the company

 Subjects of the study: Experts are invited to interview directly at the

enterprise, including the director; sales manager; in charge of security and confidentiality, in charge of marketing

o Advantages: Being in real contact with managers should visually observe attitudes and ways when responding to interviews to assess the authenticity of information; Obtain subjective comments from enterprises on industry issues

o Disadvantages: It is difficult to get an overview and objective assessments about the market, the business model of the company

Methods of investigating secondary data:

- Report of business activities results of VTC Pay

 Content: As the result of synthesis report on the status of business activities in the 2 years 2017 and 2018 of VTC Pay

 Advantages and disadvantages: The statistics on businesses give us a

visual view of business performance of businesses

 Secondary data is exploited from sources such as E-Commerce Report

over the years by the Department of E-Commerce - Ministry of Industry and Trade, seminars and forums on electronic payment, newspapers in the country and internationally and from Internet source about the development of e-payment in Vietnam and around the world

 Content: is information on general development of online payment in the

world and Vietnam; evaluate, evaluate and forecast the development speed in the coming time of Online Payment and E-Commerce

 Advantages and disadvantages: Quick, easy search, diverse data

However, the accuracy and updating of the data is difficult to verify

2.1.2 Method of processing data

- Quantitative method

SPSS is software that provides data management and statistical analysis systems

in a graphical environment, using descriptive menus and simple dialogs to perform

most statistical analysis data for users Users can easily use SPSS for regression analysis, frequency statistics, graph construction

Methods of synthesizing and analyzing data by average value: The results of

the collected questionnaires are synthesized on SPSS and analyzed by average and statistical indicators The statistics from the company's performance are handled by two detailed analytical methods and illustrated charts

- Qualitative method

Analyze and evaluate information through interview questions Interview questions were built from general industry to intensive companies Methods of general analysis in the form of inductive, assessing different issues and then synthesizing and making general and specific judgments

CHAPTER 3: ANALYSIS ABOUT THE DEVELOPEMNT OF ONLINE PAYMENT SERVICES

OF VTC PAY AND PROPOSE THE SOLUTIONS TO DEVELOP ONLINE PAYMENT SERVICES FOR

TOURISM BUSINESSES AT VTC PAY

3.1 General assessment

In the world, e-commerce websites have the ability to pay online by credit cards very popular In Vietnam - with the habit of using cash with restrictions on legal corridors, technology, support from banks, the concept of online payment is still quite strange to almost people

With a population of 97 million people (July, 2019), of which 65% of the population is young (under 30) and the number of Vietnamese people using the Internet

is nearly 30 million people but cash is still a payment instrument with a large proportion in business and account for the majority in the payment transactions of residential areas This statement is reflected in the actual payment survey in 2018, the results show that in more than 165,000 Vietnamese enterprises in the North, Central and South, the using cash in payment is as follows:

 Private businesses with more than 500 workers have about 73% of their transactions conducted through the banking system

 Businesses with fewer than 25 workers, the proportion was 47%

 Most foreign businesses only have more than 90% of transactions done through banks

 Most state-owned enterprises and private businesses use 70% of their progress to pay wages

 82% of household businesses still pay cash for their goods or commodities

 72% of private business households pay taxes in cash

These figures show that changes in payment activities in Vietnam seem to have not caught up with the rapid fluctuations of the whole economy in general and of the banking system in particular

From just about 135,000 accounts in 2000, by the end of 2004 it had increased almost 10 times to 1,297,000 accounts and in 2007 it was over 7 million accounts and

by the end of 2018 there were more than 45 million accounts according to Mr Pham Tien Dung – Director General of Payment Department – State Bank of Vietnam The average annual growth rate is from 130% -150% on account numbers Currently, inter-bank electronic payment system has been established, connecting 63 branches in provinces and cities From there are just over 11,000 ATMs (Automatic Teller Machines) and about 37,000 POS (Point of Sale) in 2010, by the second quarter of

2019, the number of ATM and POS according to the state bank's statistics is as follows:

Table 1: The number of ATM and POS by the second quarter of 2019

Graph 1: The development of ATM and POS by the second quarter of 2019

From this table and chart, we can see that after nearly 10 years, the number of ATMs in 2019 increased to 170% compared to 2010 and the number of POS machines increased more than 7 times Besides, the using ATM for make payment is more popular than using POS

3.2 Actual situation

According to information at the Annual Meeting of the Bank Card Association Vietnam 2018, the transactions via ATM are still mainly cash withdraw transactions, accounting for 86.81% of local card usage, cash withdrawal/ATM/year turnover still increased over the year (from 60 billion in 2012 to 128 billion VND in 2018), which shows that people’s cash habits are still very popular

Most online shoppers still choose to pay cash when receiving goods with 91%

of respondents saying they use this method, followed by 48% using bank transfer, 20%

of respondents said they used each type of payment cards

Graph 2: The development among types of payment

3.3 The factors affecting the provision of electronic payment services in Vietnam

3.3.1 The competitive environment in the country and abroad

Evaluating domestic and foreign competitive environment helps enterprises get

an overview of the market situation in the world and Vietnam in the field of online payment Enterprises must know the level of development in the world at what level and where the domestic level is, inferior to the general level of the world to be able to make accurate decisions Since then, enterprises can know which types of products and services are popular in the world, what types of products are suitable for Vietnam's market to provide such information services At the same time, enterprises need to

companies such as Visa, MasterCard, JCB, Amex in order to take alliance steps to cooperate with card organizations Internationally, not only learning experience, but also transferring technology, shortening the time for researching and developing online payment products and services in the country

3.3.2 The habit of using cash

The percentage of units receiving salaries from the State budget to pay salaries via bank accounts is 45% but in fact there are many accounts where the balance of time exists on the account is only calculated by the hour not only by their need to withdraw money to spend but still have the mentality "to leave money in bank accounts is not reassuring" Not many people believe that, having to keep money in hand is their own money, but not in the account do not know how

Graph 3: The percentages among each types of payment methods

In shopping, too, the majority of buyers and sellers are still familiar with the method of "no money, no talk", because consumers are worried that when buying products online, they may buy unused products or substances The amount is not as good as expected or even not receiving goods even though the money has been

transferred, while Vietnam's law on consumer protection is not really effective This habit, coupled with the psychological fear of publicizing income, is hindering and limiting the development of trade finance in Vietnam

3.3.3 The safety issues when using online payment

Some customers when using online payment system fear about the level of privacy of personal information Maybe it's because the WEB system or payment system is broken On the other hand, it may be due to:

• Hackers infiltrate

• Identity theft

• Exploiting technical flaws

• Denial of service attacks

• Viruses and malicious codes

• Exploiting operation errors

• Attack the application

• Others

Thus their personal information will be taken advantage of by others, may use

up all their money in their account or a more dangerous thing is to use it for illegal purposes It is for some reasons that some people are very afraid to use this system compared to using cash

Therefore, the government and some businesses are gradually overcoming these disadvantages so that customers can be more secure when making transactions

Graph 4: The rate of using security measures in enterprise

3.3.4 The factors related to telecommunications network infrastructure

Factors related to telecommunications network infrastructure affect online payment service provision activities such as:

Speed of ADSL services development: The development of ADSL services will create a highly competitive environment, low prices and improved quality, allowing users to access broadband and cost reasonable

International internet connection capacity: Every country when connected to the Internet must go through international connection stations, and the capacity of these cable lines allows international outbound connections to be implemented quickly or slowly

Speed of VNIX national internet transit system: Like international internet connection, national internet transit systems also play an important role, affecting the

quality of online payment transactions on the internet in particular, e-commerce transactions and internet access in general

3.3.5 The factors related to legal infrastructure

The elements of legal infrastructure for e-commerce in general and online payment in particular are legal framework, oriented nature, helping enterprises apply and deploy online payment into operation E-commerce activities legally, having fair and healthy competition in the market Legal infrastructure characteristics affect online payment service provision:

Government orientation on developing online payment such as building a master plan for non-cash economic development and e-commerce development plan through stages

Speed of promulgating policies and legal documents, decrees, circulars guiding the implementation of laws related to e-payment and adjusting aspects related to e-commerce such as the Law on Delivery Electronic translation, Commercial law, Customs law, Intellectual Property law, Information technology law

Policies to support and encourage e-commerce enterprises in general and online payment in particular on the basis of international cooperation and technology transfer

3.4 Types of online payment service products on the market for the tourism industry

3.4.1 Online payment solution for service providers who want to authenticate and collect money right through the business website system

Provide online payment solutions for businesses that want to authenticate and collect money immediately from customers through the website system Customer money deducted and transferred to the account of tourism businesses at a bank Customers can use international and domestic credit / debit cards to make online payments The number of acceptable cards depends on the connection program of the