The number of cards issued by commercial banks has been increasing rapidly. However, experts have pointed out that the figures do not truly reflect the real situation, because of the high percentage of “dead cards”.

While commercial banks have still been racing to issue more new cards, a big amount of issued cards have become dead cards, because they have not been used by shareholders.

 

According to the State Bank of Vietnam, by June 2011, commercial banks had issued nearly 34 million of payment cards, including ATM cards and credit cards. Of this amount, ATM cards amount to 93 percent of total cards, or 32 million cards.

 

The number is believed to continue increasing, because banks still continue issuing more cards and lure more clients.

 

The proportion of dead cards could be up to 50 percent

 

Minh, an officer of a state agency in District 1 in HCM City said that there are four cards issued by four different commercial banks in his wallet, but he only uses one of them.

 

“When I was a student, commercial banks offered free cards, so my friends and I all had cards. After I finish school, I went to work for a company, which used card services of another bank. As I have changed jobs three times, I now have four ATM cards,” he explained.

 

University students have also said that banks’ officers come directly to schools to offer free cards, therefore, every student has his own card, but they only use them rarely.

 

“We just used the cards to withdraw money from our accounts and then we have put the cards in mothballs,” a student said.

 

Nguyen Thi Thu Ha, Chair of the Vietnam Card Association, admitted that there are the clients, who never make any transactions with the cards since the day of the card opening to the expire dates.

 

The existence of dead cards has become more and more popular, since banks are still racing to issue more and more cards. The problem is that bank officers, told by the banks to obtain as many clients as possible, just try to issue more cards, while they do not care if the clients really need cards.

 

Agribank has been well known as the bank with the highest number of issued cards. By the end of 2010, the bank had had 5.7 million cards. Meanwhile, Vietinbank had 5.6 million, Dong A 5.1 million and Vietcombank 4.7 million.

 

The total turnover of domestic cards of the banks is about 500 trillion dong, 83 percent of which comes from the transactions of withdrawing cash.

 

A leader of the Vietnam Card Association has estimated that the proportion of dead cars could be up to 50 percent. The figure would be 30 percent at the banks with high numbers of cards issued and cardholders, who use cards regularly.

 

Trinh Thuong Thuc, Head of the Card Service Division of Vietcombank HCM City, also said that though Vietcombank has the high percentage of active cardholders, it still has a certain proportion of dead cards. He said that the idle cards have caused big waste to banks.

 

Issuing more cards, what for?

 

Analysts say that banks have been trying to issue more and more cards, because they consider the card issuance as a channel to advertise their brands. Therefore, in many cases, they do not pay much attention to the card use efficiency, especially ATM cards.

 

Also, this is considered as a channel of mobilizing capital at low costs (banks now ask cardholders to keep the minimum balance of 50,000-100,000 dong in their accounts). Though the required balance for each account is not big, but the total sum of money gathered from several millions of accounts would be big. This has prompted banks to focus on issuing more and more cards instead of associated quality.

 

Finance experts say that in order to ease the percentage of dead cards, every bank should focus on upgrading their quality of services instead of trying to increase the issued cards in quantities.

 

“The banks which can provide diversified facilities, will be able to retain clients,” said Doan Quoc Long, Deputy General Director of OCB Bank.

 

Vietnamnet/ NLD