South Korean credit card issuers, which are struggling with unfavorable business environment due to lower credit card fees paid by small and medium stores, are seeking to push into the Vietnamese market.
According to investment banking industry sources on November 2, the Vietnamese credit card market was worth 3.5 trillion won (US$3.14 billion) in total usage last year with a total of 5.3 million card issuance, showing a rapid growth in the last five years. In particular, the annual average number of card issuance grew 34.5 percent during the period, while the amount of usage increased 26.6 percent. The market is also expected to show more than a 14 percent of growth every year in the future.
With such rosy prospects, Visa Card, a global payments technology company, acquired a license from Vietnam Central Bank last month to open its local office. Gordon Cooper, Visa International's country manager for Vietnam, said, “The number of Visa Cards to be issued in Vietnam over the next five years will reach 500,000.”
Domestic card issuers are also aggressively trying to enter the Vietnamese market. Lotte Card signed a corporate transfer contract at the end of September to enter the Vietnamese consumer credit market, buying the entire holdings of Techcom Finance, a subsidiary of Vietnam's fifth largest bank Techcombank. However, the company will be able to issue credit cards for locals in 2019 considering the fact that it takes about six months to complete Vietnam Central Bank’s financial company evaluation for share acquisitions.
BC Card also signed a memorandum of understanding (MOU) on payment business with Vietnam’s National Payment Corporation of Vietnam (NAPAS) in September. With the latest MOU, the company will cooperate with the Vietnamese payment service provider for the development of a cashless economy, which is the project of the State Bank of Vietnam (SBV), and to transfer money between Korea and Vietnam.
An official from BC Card said, “Currently, over 80 percent of consumers in Vietnam are using debit cards issued by local banks. With the SBV and NAPAS, we are seeking ways to activate non-cash payment methods and reduce the number of cash payments to account for less than 10 percent of total market transactions by 2020.”
Since it is easier for bank-affiliated credit card companies to break into the Vietnamese market, they are actively issuing credit cards. Woori Card doesn’t have a local subsidiary in Vietnam but it has released a total of seven credit cards, including six personal credit cards and one business credit card, in Vietnam in September through the partnership with Woori Bank. Credit cards issued by Woori Bank Vietnam introduce customized services and benefits for consumers in Vietnam, such as provision of discounts at affiliated stores and free movie tickets at CGV Vietnam when consumers spend a certain amount of money with the credit cards. Shinhan Card also conducts credit card business through Shinhan Bank Vietnam.