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Credit and other cards may have come a long way from the high transaction and other fees of the past, with banks now even offering discounts and freebies to attract customers, but they still face hurdles in popularizing the cards.
Many banks have tied up with electronics stores, supermarkets, restaurants, spas, and others to offer discounts to card users.
Sacombank clients, for instance, get 5-30 percent discounts at 200 restaurants, coffee shops, and malls in Hanoi and Ho Chi Minh City. These promotions have helped the bank to increase transactions by 30 percent since the end of last year.
Trinh Thuong Thuc, director of card services at Vietcombank in HCMC, said from September holders of American Express card will get reward points based on their transactions at more than 200 Amex points of sale. In the beginning, the reward will be 0.1 percent of transaction value and can be obtained in cash or kind.
Le Tri Thong, vice president of East Asia Bank, said increasing card transactions will decrease the use of cash, enabling banks to cut ATM and other costs.
But many banks have failed to advertise these promotions. VD, a card holder, said his bank did not inform him even about its largest ever promotion recently. Many card holders learn about promotions at restaurants and shops, and are often caught without their cards when they learn about them.
Banks claim their advertising is limited by budget constraints.
Another factor that limits the effectiveness of promotions is that only international cards like Visa and Mastercard come with the freebies while 90 percent of all cards issued in Vietnam are domestic ATM and debit cards.
A director of a card services company explained that this is because banks receive funding for promotions from international card companies, and if they want to expand the discounts to their own ATM and debit cards, they have to pay themselves.
Le Thi Thong of East Asia Bank said increasing domestic card transactions can actually be more beneficial since merchants have to pay 3 to 3.5 percent of a transaction to banks compared to just 1 percent or less in case of domestic cards.
The banks also have to spend money on installing card readers at merchants’ establishments and other infrastructure though a large chunk of the transaction fees, known as interchange fees, they collect goes to international card companies.
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