The financial sector in Vietnam consists essentiallyof the banking sector.
The State Bank of Vietnam (SBV) was the country’s monobank until 1988,when commercial and central banking activities were separated. Financialreform began at the end of the 1980s, extending banking services toinclude a wide variety of ownership structures. Since then, a large numberof financial institutions have been established. The present banking systemincludes many types of bank: state bank, state-owned commercial bank,joint-stock bank, joint-venture bank, foreign bank branch, credit cooperative,etc. The total number of branches and bank offices of all types amounts to over4,500.Despite many advances of e-payment system, applyingthis method in Vietnam’s market economy still faces the challenges intechnology, legal framework and external constraints.
To begin withtechnological issues, the shortage of funds contributes to preventingmodernizing the payment system in many banks. The payment instruments availableand the quality of banking services do not meet the needs of customers for alow-cost. According to Bui Quang Tien, Director of State Bank of Vietnam, thevalue of cash transactions though POS is not much, especially domestic cardpayment through POS. Besides, transaction types mare not abundant and thedistribution of points of card acceptance is uneven. Therefore, they focusmainly on places to serve foreign customers with large business scale.
Inaddition, because the use of payment instruments is sometimes complicated, manypeople prefer cash to non-cash instruments when conducting paymenttransactions. The choice of payment instruments is limited and does not meetmodern requirements. The constraints of the current payment systems make itdifficult to develop new products and to offer new services which could becomean important source of fee income for the commercial banking sector.The second serious problem needs addressing relatingto legal framework.
Although a legal of framework was established for organization ofpayments in the banking system, it has still not been completed and has certainfeatures that may restrict payment transactions through the banking system.Finally, external constraints are also challengesbaring the development of e-payments. Vietnamese per capita income is stilllow, standing at only US$ 300.Vietnam is in the lowest per capita income group in South-East Asia. Hence, thedemand for holding deposits with banks and making payment transactions throughbanks is very low. Moreover, the differencesbetween various types of bank, especially between foreign and domestic banks,in terms of sophistication level, payment equipment and technology lead todiffering views on the same rules andregulations.
This makes it hard for the regulator to draw up a uniformregulation for all types of bank without giving rise to complaints.
