Vo Van Duc, Chairman of the People’s Committee in Ward 9, District 3 in HCM City, said that payments via bank accounts to 600 retired persons in the ward began for August pay. This is considered the preparatory step for the salary payments to state employees, which, according to the Prime Minister’s instruction, would begin early the next year.

Market large, but competition fierce

The People’s Committee of ward 9, district 3 in HCM City now has 50 employees, and the average monthly salary is VND1.5mil ($93.75). Vietcombank HCM City branch may well understand that the payment to the staffs of the People’s Committee would be not worthwhile compared to the payment by enterprises via Vietcombank’s system. However, it still took Vietcombank HCM City Branch two months to persuade the People’s Committee to allow the bank to provide the services.

The head of the card centre of a state-owned bank said that the decision by the Prime Minister on paying salary to state employees via banks had helped create a large, but very-difficult-to-swallow market. He said that he had had to meet a lot of officials from HCM City People’s Committees in the last few months to persuade them to use the bank’s services.

“We had to meet officials at different levels, the heads of administrative and personnel departments, accounting departments. We had to call them, meet them directly to discuss the issues, and when they agreed to use our services, we still had to meet their leaders again to get the final approval,” the official said.

Meanwhile, state officials complain that they still do not know the detailed regulations relating to salary payment via bank account. Mr Duc from ward 9, district 3 People’s Committee said that he did not know who would pay banks the salary payment fees.

Out of reach of small banks

Not only Mr Duc is worried about who will pay bank service fees, this is the worry of many other administrative agencies. Therefore, banks are now trying to obtain potential clients by offering free service packages: no card issuance fees, no money transfer fees, and no annual fees. This proves to be a move beyond the capacities of small banks.

The leader of a bank said that banks could get big profit from the services of payment salaries to enterprises’ staffs. In general, banks collect VND100,000 for card issuance fee, VND2-4,000 for every money remittance, and a VND50,000 annual fee. All kinds of fees are now being paid by enterprises which use labourers.

“We know that the services for state administrative agencies will not bring profit. What we aim at is to heighten our prestige,” a banker said.

As such, in order to develop the card market, banks have decided to use the profit gained from the services provided for enterprises, to offset the losses incurred from the services provided for administrative agencies. Banks are ready not only to provide free services, but also try to design attractive products in order to persuade the agencies to use their services. For example, banks may allow the salary receivers to overdraft a sum of money equal to the salary of 3-5 months.

However, according to Trinh Thuong Thuc, Head of Vietcombank HCM City branch’s Card Division, the preferences offered by banks will not play the decisive role. “The most important thing is the quality of services, which include the ATM network,” he said, adding that clients would also consider the convenience of the services and other associated services they might enjoy when cooperating with banks to make suitable choices.

Meanwhile, Tran The Nam, Director of ATM Centre of ACB, said that the most important goal for banks was to help clients get familiar with bank services.

Source: Tuoi tre.