Tài liệu Olutions to develop payment transaction via pos in viet nam

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGUYỄN HUYỀN NHUNG SOLUTIONS TO DEVELOP PAYMENT TRANSACTION VIA POS IN VIET NAM GIẢI PHÁP THÚC ĐẨY GIAO DỊCH THANH TOÁN QUA POS TẠI VIỆT NAM LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2018 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --------------------- NGUYỄN HUYỀN NHUNG SOLUTIONS TO DEVELOP PAYMENT TRANSACTION VIA POS IN VIET NAM GIẢI PHÁP THÚC ĐẨY GIAO DỊCH THANH TOÁN QUA POS TẠI VIỆT NAM Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: TS. BÙI QUANG HƯNG Hà Nội - 2018 DEACLARATION The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in the other’s research and article The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if require) is given. The author is responsible in front of the Thesis Assessment Committee, Hanoi, School of Business and Management, and the laws for above-mentioned declaration. ACKNOWNGEMENT During the study of this thesis, I received enthusiastic support from HSB, my company, the other organizations and my friends. I would like to express my deepest thanks to all the collectives and individuals who have facilitated me to help during study and research this thesis. First and foremost, I would like to thank the Faculty of Business Administration (HSB), Hanoi National University, and the teachers who have provided the knowledge to throughout the learning process. I would like to express my gratefulness to Dr. Bùi Quang Hưng, who has enthusiastically instructed, and provided valuable contributions to me to complete this thesis. I also would like to express my sincere thanks to the Board of Directors and my collage at National Payment Corporation of Vietnam(NAPAS), our partners and member banks, for facilitating and assisting me in process of data collection, providing the relevant documents, answering the interview and the questionnaire to help me to complete this thesis. Despite my efforts in the research process, the thesis still have inevitable shortcomings due to limited conditions, so I wishes to receive comments and feedback for further improvement. TABLE OF CONTENT LIST OF ACRONYMS............................................................................................... i LIST OF TABLES ..................................................................................................... ii LIST OF FIGURES................................................................................................... iii LIST OF CHARTS ................................................................................................... iv 1. Rationale ...........................................................................................................1 2. Objects of research ............................................................................................2 3. Scope of research .............................................................................................2 4. Aims of research ...............................................................................................3 5. Research methodology ......................................................................................3 6. Thesis Structure.................................................................................................4 CHAPTER 1: OVERVIEW OF PAYMENT TRANSACTIONS VIA POS AND TREND OF TECHNOLOGY IN THE WORLD .......................................................5 1. The concept of payment transaction via POS ...................................................5 2. History and development of POS .....................................................................8 3. POS technology development trend in the world .............................................9 3.1. mPOS technology.....................................................................................11 3.2. NFC Technology ......................................................................................14 3.3. QRCode Technology ................................................................................18 3.4. Biometric technology ...............................................................................21 CHAPTER 2: PAYMENT TRANSACTION VIA POS IN VIETNAM AND IMPLEMENTATION STATUS IN NATIONAL PAYMENT CORPORATION IN VIETNAM (NAPAS)................................................................................................25 1. Payment transation via POS in Vietnam market ............................................25 1.1. Overview of POS payment market in Vietnam .......................................25 1.2. Trend of POS technology in Viet Nam ....................................................35 2. The status of POS payment at National Payment Corporation in Vietnam (NAPAS) ................................................................................................................40 2.1. Introduction about National Payment Corporation in Vietnam ...............40 2.2. Status of POS payments at Napas ............................................................44 CHAPTER 3: EVALUATION OF THE IMPLEMENTATION OF DEVELOPING POS TRANSACTIONS IN VIETNAM AND NAPAS ...........................................55 1. Achievements ..................................................................................................55 1.1. General achievements of POS payment market .......................................55 1.2. Napas achievement ...................................................................................64 2. The shortcomings and limitations of payment via POS .................................66 2.1. From bank who provide service ...............................................................66 2.2. From merchant .........................................................................................68 2.3. From NAPAS ...........................................................................................68 2.4. From customers who use services ............................................................73 3. Reasons ...........................................................................................................74 3.1. Legal framework ......................................................................................74 3.2. Market plans .............................................................................................76 3.3. POS’s technology and infrastructure .......................................................78 3.4. Communication ........................................................................................79 CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS TO DEVELOP TRANSTION VIA POS IN VIETNAM ...................................................................80 1. Porpose solutions ............................................................................................80 1.1. The legal corridor .....................................................................................80 1.2. The market planning ................................................................................82 1.3. The technology .........................................................................................84 1.4. PR activity ................................................................................................90 2. Recomendation................................................................................................91 2.1. Recommendation with the State Bank .....................................................91 2.2. Recommendation with the ministries and other departments ..................92 2.3. Recommendation with NAPAS ...............................................................93 2.4. Recommendation with banks ...................................................................95 CONCLUSION .........................................................................................................96 APPENDIX ...............................................................................................................97 LIST OF ACRONYMS No. Abbreviations 1. ATM Automated Teller Machine 2. Napas National payment corporation in Vietnam 3. SBV Sate bank of Vietnam 4. VBCA Vietnam Banks Card Association 5. ICSO International card switching organization 6. MDR Merchant Discount Rate 7. POS Point of Sale i LIST OF TABLES Table 2.1: Merchant Discount Rate in Vietnam .......................................................33 Table 2.2. Comparision among POS & ATM transaction volume, ..........................33 Table 2.3. Numer of card and POS of Napas member banks ...................................44 Table 2.4. POS transactions volume between Napas and whole market ..................49 Table 2.5. POS transaction value between Napas and whole market .......................50 Table 2.6: The POS payment transaction number and transaction value by member banks..........................................................................................................................51 Table 2.7. Fee revenue of POS transaction from 2013 to 2016 ...............................52 Table 2.8: Fee for POS payment service of NAPAS ................................................53 Table 3.1. List of related legal documents and policies to non-cash payment .........60 Table 3.2. Comparison of growth rate of POS transaction number over the years ..65 Table 3.3. Comparison of growth rate of POS transaction value over the years ......65 ii LIST OF FIGURES Figure 1.1. Transaction process on POS (off-us transaction) .....................................7 Figure 1.2. Card transaction flow on POS (on-us transaction). ..................................8 Figure 1.3. mPOS devicet .........................................................................................12 Figure 1.4. NFC technology ......................................................................................15 Figure 1.5. QR Code .................................................................................................18 Figure 2.1. The model of on –us POS transaction by domestic card ........................29 Figure 2.2. The model of off-us POS transaction by domestic card .........................29 Figure 2.3. Model of POS transaction by international card ....................................29 Figure 2.4. Progress of implement Merchants acceptance........................................30 Figure 2.5: Napas structure organization ..................................................................42 Figure 2.6: Samsungpay event in Ho chi Minh ........................................................46 Figure2.7: The payment service model of Samsung Pay ..........................................47 iii LIST OF CHARTS Chart 1.1. World mPOS Payment Predictions (Unit: Billion) ..................................14 Chart 1.2. Top 10 country use QR code in payment in thẻ world ............................21 Chart 2.1. Growth rate in number of POS machine in Vietnam 2007-2016 .............25 Chart 2.2. Market share by number of POS in 31/12/2016, .....................................26 Chart 2.3: The proportion of the number of cards in 31/12/2016 .............................27 Chart 2.4: The growth rate in number of cards during period 2006-2016 ................28 Chart 2.5. Proportion of domestic and international of payment transaction value via POS in 2012-2016 period ..........................................................................................34 iv ABSTRACT Over the past years, the activity of payment via Point of Sale (POS) in Vietnam has made positive changes. The number of POS terminal and payment acceptance point has increased steadily over the years. Card payment turnover through POS also increased significantly with an average growth rate of 29% per year. The infrastructure of service payment via POS as well as the legal system, mechanism and policies have also made significant improvements to promote POS transactions. In addition, POS payment services have been developed by the banks in terms of POS network and quality of service to bring maximum convenience to customers. In spite of the achievements, POS payment market in Vietnam has many limitations to improve and more potential to exploit. Despite the growth of POS transactions in Vietnam over the years, the number of actual transactions have not met expectations. The number of POS transactions accounts for only about 9% of total ATM / POS transactions. Meanwhile, in several countries in the region and the world, card transactions via POS of the people occupy a very high rate, more than 90%. In a market that is considered to have as much development potential as in Vietnam, surely POS payment services will have more opportunities to grow. From the real situation of the market and services, I desire to find and overcome the limitations and difficulties to promote payment transactions via POS, from which to propose solutions to promote payment transactions through POS (Point of Sale) in Vietnam. Before going into detailed research, I would like to introduce about the Rationale, objects, aims and scope, research methodology, as the following. 1. Rationale Point of Sale (POS) is a form of payment transaction using payment cards through card accepting devices provided by banks or service providers. Merchants are those who provide goods and services on the market (hotels, restaurants, 1 supermarkets, travel agencies...) are installed or deployed the traditional POS or new mobile POS technology (mobilePOS-mPOS). With the aim of developing non-cash payment in Vietnam, promoting POS payment transactions is one of the key tasks of the Non-Cash Payment Development in Vietnam 2011 - 2015 and Vision 2020 to be approved by the Prime Minister in Decision No. 2545 / QD-TTg dated 30/12/2016 on the project of development of non-cash payment in Vietnam for 2016-2020. Specifying the objective in Clause 2, Clause 1, "a", by the end of 2020, the ratio of cash on the total payment means is lower than 10%. b) To strongly develop card payment through accepting devices card at point of sale; To gradually increase the number and value of card payment transactions through card-accepting devices. By the end of 2020, the entire market will have 300,000 POS devices installed with a transaction volume of around 200 million transactions per year. " However, in order to achieve the above objectives, the determination and efforts of the whole banking sector, especially the monitoring of the State Bank to coordinate the ministries, branches and National Payment Corporation of Vietnam (Napas) in regulating related policies to develop card payment transactions. Through the research, I found that there are still many limitations in the expansion of network Merchants and development of POS transactions: - The legal system and policies are still inadequate. - The planning and market development are not synchronous and effective. - There are limitations in the POS system. - Consumers' habits for cash-payment are still hard to change. - Communication has not been focused and properly oriented. Finding out the shortcomings, difficulties to propose solutions to promote payment on POS is very necessary and should be implemented soon. 2. Objects of research Objects of research: Payment transaction via POS in Viet Nam 3. Scope of research - This topic focuses on the following issues: 2  Understanding the development of the card payment market in Vietnam from 2013 to 2016, especially focusing on POS payment transactions, including the development of payment facilities, POS network, payment connection infrastructure and transaction results (number and value of payment transactions).  Reserching POS payment services of banks, the legal system for POS card payment, the role of the National Payment Corporation of Vietnam in POS payment. From there, this study analyzse the advantages, disadvantages and limitations when developing payment on POS in Vietnam.  Learning about the development trend of POS technology in the world; The status of the deployment and application of these technologies in Vietnam.  Proposing solutions to promote payment through POS in Vietnam based on market research as well as advantages, disadvantages and limitations mentioned above. 4. Aims of research - Understanding the status of POS payment in Vietnam. - Understanding the advantages and disadvantages of developing payment via POS. - Understanding the trend of POS payment technology in the world and Vietnam. - Proposing solutions to promote POS transactions in Vietnam, focusing on analyzing the role of the National Payment Corporation of Vietnam and the company's solutions combined with the Ministries, branches, the State Bank of Vietnam and commercial banks. 5. Research methodology - Approach: Theoretical approach, then based on practical experience to assess the advantages and disadvantages of the card payment market via POS in 3 Vietnam. From there, the solution can be applied in Vietnam to promote this payment method. Methods and techniques of research: -  Research based on the information available, provide analysis and evaluation to find the right solution.  The methods used include statistics, description, comparison, graph. Methodology of solving, combining theoretical and practical research. Based on that, through the collected data sources, the author selects, sorts the data to calculate the indicators and information necessary for the assessment of the status of bar connection activities.. The author also uses tables, graphs to express a visual, lively information in the thesis. 6. Thesis Structure In addition to the introduction, conclusion, table of contents, index of abbreviations, tables, firgure and references, the main contents of the thesis are presented in four chapters: - Chapter 1: Overview of payment transactions via POS and trends of technology in the world - Chapter 2: POS transaction Payment markets in Vietnam and implementation status in the National Payment Corporation of Vietnam (Napas) - Chapter 3: Evaluation the implementation of developing POS transactions in Vietnam and Napas - Chapter 4: Solutions and recommendations to develop the POS transactions in Vietnam 4 CHAPTER 1: OVERVIEW OF PAYMENT TRANSACTIONS VIA POS AND TREND OF TECHNOLOGY IN THE WORLD 1. The concept of payment transaction via POS First of all, to understand the concept of POS transactions, we need to understand the concept of POS - Point of Sale. As defined by Worldbank, POS is the device used to manage the sales process through the interface that the salesperson has access to at the locations where the transactions are made. As defined by MasterCard, POS is understood to be a supervised or unsupervised device located at a Merchant, which allows the Cardholder to make the purchase of goods or services provided by Merchants through the use of cards and / or contactless cards, in accordance with the standards and security requirements of the back end device. As defined in the draft circular on bank card activity of the State Bank of Vietnam, point of sale POS (Point of Sale (POS), Electronic Data Capture (EDC), Mobile Point of Sale (mPOS and other types of card access devices) are card readers, terminals that are equipped and used by Merchants or installed on the network of the organization. Card issuers, card payment organizations that cardholders can use to withdraw cash, transfer funds, pay for goods or services or use other services. As such, POS can be understood as a device used mainly for the purpose of performing payment transactions to purchase goods or services provided by Merchants or other services such as inquiries, cash withdrawal, bank transfer... Basically, POS consists of two popular types: wired POS and wireless POS (using GPRS, 3G, Wifi). A wired POS system operates over a telephone line. When making a payment, the card accepting unit should have a telephone line available to connect the POS to the system. Wireless POS is more convenient as they are using GPRS or ADSL technology without the need of a fixed line. With the use of GPRS technology, wireless POS equipment not only helps to expand the coverage area but also increases the flexibility for payment transactions. This type of device is suitable for all types of card accepting units that need flexibility and mobility in sales, 5 payments such as sales and delivery, home remittance, bill payment at banquet tables, applications Transportation, yachting ... The two types of wired and wireless POS equipment are equally structured, including POS machines, network cables with Internet connection and electrity power. When modern POS payment technology has not been born, traditional POS machines are considered as a superior payment solution with many outstanding features and benefits for all parties. POS machines help merchants greatly improve their payments, helping them improve their sales performance. With a relatively simple transaction process, POS machines are an optimal choice to replace the familiar cash payment method. For the concept of "POS transactions," in Vietnam there is no specific concept of POS transactions. As defined in Circular No. 35/2012 / TT-NHNN on "Regulations on fees for domestic debit card services", "POS transactions" are card transactions conducted through card readers at accepting units. POS (POS) for payment of goods, services, account balances, refunds at the request of cardholders, cash withdrawal and other card transactions at POS. On the other hand, a payment transaction refers to transactions involving financial transfer from one side to another. Thus, within the scope of this topic, POS transactions refer to transactions involving financial transfer from one party to another, namely, payment for goods, services on POS, excluding non-financial transactions such as balance inquiry... The process of POS card payment is described as follows: 6 Customer KHÁCH HÀNG Merchant ĐVCNT (POS) Issuer Bank NHTTT Napas/ICWO TCCM/TCTQT NHPHTBank Acquirer Customer requests 1. Khách hàngtoyêu cầupay thanh toán 3. Customer enters Cashier 2. 2. Thu ngân thực hiện swipe/plug quẹt/cắm thẻ the vàocard máy into và POS andsốenter POS nhập tiền the amount thanh toán pin hàng (for domestic 3. the Khách nhập mã card) PIN (với thẻ nội địa) 4.4.Transfer Chuyểnthe thông tin customer information khách hàng tới TCCM/ to Napas/ICSO TCTQT Chuyểnthe thông tin 5.5.Transfer khách hànginformation tới NHPHT customer tương để xác thực to CI toứng authentication 6. Phản hồi 6. Response thekết result 6. Phản hồi kếtresult 6. Response the Khách hàng 7.7.Customer signs the ký receipt tên trênand biên fishish the payment lai giao dịch quả xác thực quả xác thực 6. the In biên lai 6. Print transaction reciept giao dịch Figure 1.1. Transaction process on POS (off-us transaction) Source: NAPAS The payment process mentioned above applies to both domestic and international cards. Specific: Step 1: Customers request payment by card. Step 2: Cashiers of Merchants swipe / plug the card into the POS machine and enter the payment amount. Step 3: Customers enter personal identification number (PIN) (with domestic debit card). International card does not require the customer to enter a PIN. Step 4: Customer information and billing information is transferred from the Acquirer to NAPAS (with domestic debit card) or card organizations such as Visa, MasterCard, JCB, UnionPay, Amex (with international card), for authentication. Step 5: NAPAS/International switching Card Oragnization forwards customer information to respective Issuers 7 Step 6: Issuers reply the authentication results. If the information is verified by the Issuer, the transaction is approved. Merchants print transaction receipts. Step 7: The customer sign the transaction receipt which is printed out and the payment process completed. Employees at Merchants are responsible for checking the cardholder's signature on the receipt with the signature on the card to protect the customer and minimize the risk to the customer. With on-us transactions, which are issued by Bank A, perform transactions on POS machines of Bank A, the transaction processing process is simpler, without involvement of intermediaries such as Domestic switching organizations and International card organizations. For customers, the transaction process remains unchanged. Customer Khách hàng Merchant ĐVCNT POS (POS) Figure 1.2. Card transaction flow on POS (on-us transaction) Issuer== NHTTT Acquier NHPHT Source: The author. 2. History and development of POS In 1970, the first POS device was introduced by IBM. At this point, the POS device is connected to a computer, which has a main processing function, while the POS device only displays information without the ability to process transaction. Continuing its first POS development, in 1973, POS models were introduced by well-known manufacturers such as IBM System 3653 and NCR2150, along with other computer manufacturer such as Rigitel, TRW, and Datachecked. That same year, the UPC / EAN barcode scanner came out and integrated on the POS system. In 1978, the POS equipment was upgraded, incorporated more applications and operated on an Apple computer for the purpose of ordering for customer and was connected to a remote printer. Then, in 1986, the POS equipment is upgraded 8 incorporating a color-graphical interface and a touch screen. In the same year, POS systems were operated the same as PCs with the newly born technology IBM4683. In most of the 1980s and 1990s, credit devices were developed and integrated into the POS system for easier and safer payments. Some common examples include VeriFone Tranz 330, Hypercom T7 Plus, or Lipman Nurit 2085. These devices are relatively simple (compared to today's technology), and have grown in recent years to handle More applications (credit card, debit card, gift card, employee card) and also verify personal information of each employee. All processes can be located on only one device (All-in-one). Some POS machines that use wireless protocol not only allow mobile payment processing such as restaurants, they also allow the machine to process its entire process. Currently, POS retail systems are the most sophisticated and convenient computers in the commercial field. In fact, most POS systems also integrate existing solutions including accounting, inventory tracker, ordering and sales, customer relationship management (CRM), service management, renting services, activity reports and payroll modules. Features on POS are available, but users are only dedicated to a certain application such as retail management software, business management and POS software. To this day, POS has been developed and distributed globally. 3. POS technology development trend in the world Although widely deployed and used in many part of the world, POS machines have been showing many limitations, specifically: - High POS investment cost. This is one of the major obstacles as banks deploy more POS machines at merchants. With a wired POS machine, the investment cost of buying equipment is about 5 million VND / machine. For wireless POS line using new technology, the price is much higher. It does not include warranty, maintenance, upgrades, new functions (when needed). With such a high cost, if the payment volume at the Merchant is so small, the bank will not 9 be able to offset the cost. This is considered one of the factors that prevent banks from investing in POS machines. - The majority of POS machines being used in the market are wired machines, which when operating, a fixed line phone is required. This means that merchants who want to accept payments on POS must have a phone line available. Moreover, the quality of service will depend on the quality of transmission. If the transmission line is not good, it will affect the speed of transaction processing, cause unsatisfactory psychology to customers and ultimately affect the services of both Merchants and banks. - The installation or configuration of POS equipment is not simple and must be done by bank staff or equipment suppliers that can not be performed manually by the Merchants's employees. - When a fault occurs or the bank wants to perform maintenance of the equipment, the bank's technician must go to the merchant to bring back the equipment for maintenance, repair and installation at the Merchants later on. Consequently, maintenance costs require human resources, time and money of the bank, while disrupting payment services at Merchants. - It is difficult to expand new POS features and services (for example, the ability to connect POS machines to merchants' sales systems ...). - Not suitable for small business units, as the sales volume may not cover the costs. Thus, it makes it difficult for banks to expand the POS card payment service to all types of merchants. In recent years, with the explosive growth of mobile devices, the emergence and popularity of new payment platforms (such as electronic wallets) and the development and completion of e-commerce infrastructure thanks to the application of information technology, POS systems have gradually changed and developed in the direction of: Turn mobile phones into a new payment means next to payment 10