v
ABSTRACT ii
GLOSSARY OF TERMS AND ABBREVIATIONS iv
TABLE OF CONTENTS v
LIST OF TABLES AND FIGURES vii
CHAPTER I: OVERVIEW OF BANKCARD 1
1.1. General introduction about bankcard 1
In Vietnam, the first card was accepted in 1990. It was the starting point for card’s products and
services in Vietnam. Nowadays, bankcard presents all over the world in diversified forms to meet
every demand of cardholders. Banks and financial institutions always try to improve bankcard to
reach a friendly and convenient payment method for customers 2
Figure 1 - Types of bankcards 3
1.2. Cards’ activities in commercial banks 5
Figure 2 - Participants in bankcard transactions 5
Figure 3 - Procedure of issuing bankcard 7
Figure 4 - Procedure of acquiring cards 8
CHAPTER II. THE ROLE OF MARKETING ACTIVITIES 9
TO BANKCARD AND ACTUAL STATE OF AGRIBANK CARDS 9
2.1. Introduction of Vietnam Bank for Agriculture and Rural Development (Agribank) - Thanh Xuan
branch 9
Figure 5 – Education of staff 10
Figure 6 - Organization Chart 11
2.2. Marketing activities at Agribank Thanh Xuan 12
Figure 7 - Services and Marketing Department 12
Table 1 - Total profit of services (VND million) 14
2.3. Bankcard activities in the branch 15
Figure 8 - Types of Agribank Card 16
Table 2 - Result of issuing cards 18
Table 3 - Devices of acquiring card of Agribank 19
Diagram - Quantity of ATM, EDC 20
CHAPTER III 23
SOLUTIONS TO DEVELOP AGRIBANK CARDS 23
vi
AT AGRIBANK THANH XUAN 23
3.1. Advantages and disadvantages in developing bankcards 23
3.2. Marketing mix solutions to develop Agribank card 24
CONCLUSION 29
CONCLUSION 30
Bibliography
List of Tables and Figures
Figure 1 - Types of bankcards Error: Reference source not found
Figure 2 - Participants in bankcard transactions Error: Reference source not
found
Figure 3 - Procedure of issuing bankcard Error: Reference source not found
Figure 4 - Procedure of acquiring cards Error: Reference source not found
Figure 5 – Education of staff Error: Reference source not found
Figure 6 - Organization Chart Error: Reference source not found
Figure 7 - Services and Marketing Department Error: Reference source not
found
Table 1 - Total profit of services (VND million) Error: Reference source not
found
vii
Figure 8 - Types of Agribank Card Error: Reference source not found
Table 2 - Result of issuing cards Error: Reference source not found
Table 3 - Devices of acquiring card of Agribank Error: Reference source not
found
Diagram - Quantity of ATM, EDC Error: Reference source not found
1
CHAPTER I: OVERVIEW OF BANKCARD
1.1. General introduction about bankcard
1.1.1. History of bankcard
Bankcard history began when individual retail merchants extended credit to their
customers, allowing them to charge purchases to an account held by the merchant.
In 1730, Christopher Thompson, a furniture merchant, created the first
advertisement for credit by offering furniture that could be paid off weekly. However,
1950 marked the real beginning of the credit card most of us are familiar with today.
Diner’s Club, Inc. introduced the first credit card that could be used at a variety of
stores and businesses. Advantages of this card immediately took notice of many
people.
In 1960, Bank of American introduced its own bankcard, the BankAmericard. In
1966, fourteen United States banks formed Interbank, a new association with the
ability to exchange information on credit card transactions. The following year, 1967,
four California banks changed their named from the California Bankcard Association
to the Western States Bankcard Association (WSBA). The new WSBA licensed
Interbank to use the MasterCharge name and logo. In the late 1960s, numerous
financial institutions became MasterCharge (Interbank) members to compete with
BankAmericard. Eventually, financial institutions interested in issuing cards in the
U.S. became members of either BankAmericard or MasterCharge. In 1977,
BankAmericard became Visa USA/ Visa International. In 1979, MasterCharge
changed its name to MasterCard to reflect its expanded services. At the present time,
the leaders in the bankcard systems are Visa, Master Card, Amex and JCB.
Payment by bankcard quickly becomes popularity in other countries. In 1960, the
first plastic card was used in Japan marked the beginning of bankcard in Asia. The
first plastic card of Barcaly Bank issued in 1966 also highlighted a new period of
development of bankcard in Europe.
2
In Vietnam, the first card was accepted in 1990. It was the starting point for card’s
products and services in Vietnam. Nowadays, bankcard presents all over the world in
diversified forms to meet every demand of cardholders. Banks and financial
institutions always try to improve bankcard to reach a friendly and convenient
payment method for customers.
1.1.2. Concept and classification
Everyday millions of people all around the globe are using bankcards for making
credit card payments for their purchases. However, the fact that not every cardholders
know concept of a bankcard
* Concept:
In simple terms: A bankcard can be described as a plastic card issued by a bank or a
financial institution which the cardholder can gain access to the financial resources of
the bank as a line of credit.
* Classification:
There are many types of cards that can be used as alternative forms of payment.
Financial institutions issue some and bank issues others. Many allow the balance to
be paid in full each month. Some take the payment directly from the cardholder’s
bank account while others require that the cardholder send payment to the issuer.
Herein, I list some popular ways to divide bankcards.
3
Figure 1 - Types of bankcards
* Payment method:
- Debit card: A plastic card used to initiate a debit transaction. In general, these
transactions are used primarily to purchase goods and services and to obtain cash, for
which the cardholder's asset account is debited by the issuer
Debit card consist of two basic types:
+ On-line debit card: An online-debit card deducts funds from the bank account
immediately, as soon as the card is used. There is no delay for processing the
transaction
+ Off-line debit card: An off-line debit card does not deduct funds from the
checking account immediately. Transactions are processed like a regular credit card
and the funds are not deducted for 24-72 hours.
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4
Most issuers of debit cards are moving to this type of card rather than on-line debit
card
- Credit card: A plastic card bearing an account number assigned to a cardholder
with a credit limit that can be used to purchase goods and services and to obtain cash
disbursements on credit, for which a cardholder is subsequently billed by an issuer for
repayment of the credit extended at once or on an installment
basis
- Cash card: Cash cards are similar to pre-paid phone cards. The card is worth a
certain amount of cash and the retailer must use a special cash card reader to debit the
card. Each purchase is deducted from the value left on the card until the pre-paid
amount is spent. These cards are just like cash – if lost or stolen, there is no way to
retrieve the money on the card.
* Technical feature:
- Magnetic stripe card: The magnetic stripe on the bankcard plastic was encoded;
this stripe contains information pertinent to the cardholder account
- Smart card: The smart card, also known as the chip card, contains a computer
chip embedded in the plastic. When read by a special terminal designed to interact
with the embedded chip, the card can perform a number of functions or access data
stored in the chip. These cards can be used as cash cards or as credit cards with a
preset credit limit.
* Issuer:
- Bankcards: Banks, financial institutions around the world distribute cards. A
cardholder borrows money against a credit line and repays those funds with interest if
the balance is carried over from month to month.
These cards are used all around the world, such as: Visa USA, MasterCard…
- Travel and entertainment cards: travel and entertainment corporations distribute
their own cards so they are not considered bankcards since they are not issued by a
financial institution. These cards are widely used by business for their travel and
entertainment expenses, such as American Express (AMEX), Dinners Club…
* Area of using card:
5
- Domestic card: Card is used in domestic only with legal tender of that nation.
- International card: Card is used around the world, used strong currencies in
transactions.
1.2. Cards’ activities in commercial banks
1.2.1. Entities join card activities
Figure 2 - Participants in bankcard transactions
The figure shows 5 entities joining a bankcard transaction.
* International card organizations: (ICO)
For example MasterCard or Visa International/Visa USA, they are worldwide
payment service organization composed of member institutions. They set and enforce
rules and regulations governing operational procedures, interchange procedures, and
graphic design approval of their cards…
These organizations do not have a direct relationship with cardholders and
merchants.
Any bank has international card must be a member of an ICO
* The issuing members: The cardholder’s financial institution (usually called the
issuing member or issuer) is a licensed member of an ICO. The issuer directly issues
the card to the approved cardholder. The issuer may also benefit from services of a
third party processor and/or association in processing information and payments.
* The acquiring members:
The issuing
members
International
card
organization
The acquiring
members
Merchant
Cardholders
6
The acquiring members, or acquirer, solicits screens and accepts merchants into its
bankcard program. The acquirer is also a member of an ICO, and holds a written
agreement with the merchant to:
- accept the merchant sales drafts
- provide the merchant with credit card authorization terminals, instructions, and
contracted support services
- handle and process the credit card transactions
The acquirer usually charges the merchant a merchant discount for handling the
transactions. The acquirer is licensed by an ICO agrees to follow the operating rules
and regulations of the two associations.
In fact, many banks and financial institutions are both issuers and acquirers. As
issuers, they maintain the cardholder relationship. As acquirers, they maintain the
merchant relationship.
* Cardholders:
The customer to whom a card has been issued or the individual authorized to use
the card .
The cardholder uses the bankcard either to purchase goods and services from a
merchant, or to obtain a cash advance from a member for which the cardholder
receives a monthly bill from the issuer.
* Merchants:
The merchant can be virtually any company which meets the qualification
standards of an ICO and an acquirer.
The ICO usually requires that the merchant must be financially responsible and has
a good repute. The merchant has a written agreement with the acquirer to accept the
bankcards as a payment and to abide by the terms of the agreement.
1.2.2. Transaction process
* Issuing:
7
Figure 3 - Procedure of issuing bankcard
+ Customers
- Customers fulfill and sign on the application and credit card agreement
- Required documents: photograph 3x4 or 4x6, Copies of Identity card, copies of
passport, visa or residence permit…
- Types of guarantee for card payment.
+ Issuing banks
- Checking customer’s application, then decide to approve or not
- Approving
- Sending their requests of opening a new card to the card centre
- Receiving new card and personal identity number (PIN) from the card centre
- Handing new card and PIN over customers
- Guiding the customer to use card
+ The Card centre
- In responsibility of receiving information of customers from issuing banks
- Produce a new card
- Deliver cards to issuing banks
Customer
Application
Approval
Guide of using
Handing card
and PIN over
Receiving new
card and
PIN from centre
Registration of
issuing
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