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The financial sector in Vietnam consists essentially
of the banking sector.
The State Bank of Vietnam (SBV) was the country’s monobank until 1988,
when commercial and central banking activities were separated. Financial
reform began at the end of the 1980s, extending banking services to
include a wide variety of ownership structures. Since then, a large number
of financial institutions have been established. The present banking system
includes 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 over
4,500.

Despite many advances of e-payment system, applying
this method in Vietnam’s market economy still faces the challenges in
technology, legal framework and external constraints. To begin with
technological issues, the shortage of funds contributes to preventing
modernizing the payment system in many banks. The payment instruments available
and the quality of banking services do not meet the needs of customers for a
low-cost. According to Bui Quang Tien, Director of State Bank of Vietnam, the
value of cash transactions though POS is not much, especially domestic card
payment through POS. Besides, transaction types mare not abundant and the
distribution of points of card acceptance is uneven. Therefore, they focus
mainly on places to serve foreign customers with large business scale. In
addition, because the use of payment instruments is sometimes complicated, many
people prefer cash to non-cash instruments when conducting payment
transactions. The choice of payment instruments is limited and does not meet
modern requirements. The constraints of the current payment systems make it
difficult to develop new products and to offer new services which could become
an important source of fee income for the commercial banking sector.

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The second serious problem needs addressing relating
to legal framework. Although a legal of framework was established for organization of
payments in the banking system, it has still not been completed and has certain
features that may restrict payment transactions through the banking system.

Finally, external constraints are also challenges
baring the development of e-payments. Vietnamese per capita income is still
low, standing at only US$ 300.
Vietnam is in the lowest per capita income group in South-East Asia. Hence, the
demand for holding deposits with banks and making payment transactions through
banks is very low. Moreover, the differences
between various types of bank, especially between foreign and domestic banks,
in terms of sophistication level, payment equipment and technology lead to
differing views on the same rules and
regulations. This makes it hard for the regulator to draw up a uniform
regulation for all types of bank without giving rise to complaints.

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