APPROVING THE SCHEME FOR DEVELOPMENT OF NON-CASH PAYMENTS IN VIETNAM DURING 2016 - 2020

Article 1. Approving the scheme for development of non-cash payments in Vietnam during 2016 – 2020 with the following contents:

1. Overall objectives

a) Create a remarkable improvement of non-cash payments in the economy; gradually changes the payment habits; reduce social expenses related to cash; reduce the ratio of cash transactions to GDP and cash transaction to total transactions.

b) Ensure security, safety and effectiveness of payment systems, non-cash payment services and devices; create an effective mechanism for protecting users of non-cash payment services.

c) Promote electronic payment services; reduce the use of cash in transactions between individuals, enterprises and the government.

d) Improve the supervisory roles of regulatory authorities; make payment activities and personal income more transparent to fight corruption and economic crimes.

2. Specific objectives

a) By the end of 2020, the ratio of cash transaction to total transactions is expected to fall below 10%.

b) Develop payment via point-of-sale terminals; increase the quantity and value of card transactions via point-of-sale terminal. By 2020, the quantity of point-of-sale terminals is expected to reach 300,000 throughout the market with approximately 200 million transactions per year.

c) Promote electronic payment in electronic commerce; accomplish the objectives of the Master plan for development of electronic commerce over the period 2016 – 2020 (100% of supermarkets, shopping malls and distribution centers have point-of-sale terminals and allow buyers to use non-cash payment facilities; 70% of electricity, water, telecommunications and media service providers accept non-cash payments from users; 50% of individuals and households in big cities use non-cash payment facilities in regular shopping.

d) Focus on development of new payment facilities in rural areas and remote areas to contribute to financial inclusion; improve the accessibility to payment services; increase the ratio of bank account holders aged 15 and above to at least 70% by the end of 2020.

1. Complete the legal framework and policies

a) Review the laws related to non-cash payment (the Law on the State bank of Vietnam, the Law on credit institutions, the Law against money laundering); study into promulgation of a new law on payment system in order to ensure uniform management of payment systems of Vietnam’s economy on the basis of international practice and standards.

b) Study into amendments to the laws on non-cash payment and cash payment, including regulations on new non-cash payment services and facilities, payment intermediary services, e-money, electronic commerce activities; promulgate regulations on responsibilities of service providers, service users and third parties.

c) Promulgate legislative documents to effectively manage, supervise new payment systems and facilities and reduce risks thereof:

- Review the mechanism for management of payment activities of organizations other than banks and other organizations providing cross-border services, international card companies.

- Promulgate regulations on multilateral netting; regulations on netting, settlement, irrevocability and preventative measures against insolvency of payment systems, including the in-progress Automated Clearing House (ACH).

- Promulgate regulations on Interbank Payment System, ACH, system for payment for Government bond transactions at the State bank of Vietnam; regulations on processing of interbank foreign currency transactions at the State bank of Vietnam.

- Promulgate regulations on/related to development and application of a Standard for domestic smart cards and implementation of the plan for conversion from magnetic cards to smart cards in Vietnam.

d) Consider amending regulations on use of non-cash payment facilities to disburse loans from branches of foreign banks and credit institutions to customers; contribute to promotion of non-cash payment and supervision of use of loans.

dd) Promulgate regulations on payment authorization and permission for non-bank organizations to provide new payment services in order to improve accessibility to payment services in rural areas and remote areas.

e) Establish some mechanism and policies to promote electronic payment:

- Consider implementing certain administrative measures combined with economic measures to develop electronic payments:

+ Consider promulgating certain policies to promote electronic payment of taxes, in electronic commerce, payment of fees and charges, administrative procedures; payment for regular services such as electricity and water supply, telephone, internet, cable television; apply new electronic payment technologies; encourage retailers to accept and use electronic payment facilities and assist customers in paying electronically without differentiation between cash payment and electronic payment.

+ Promulgate policies on charges for payment services to encourage non-cash payment; impose fees for transfer, deposit and withdrawal at branches of foreign banks and credit institution towards increasing cash payment fees and decreasing non-cash payment fees; reduce fees for interbank transactions; specify fee imposition methods of payment system operators; ensure that the fees are reasonable and the competition is fair to avoid monopoly.

+ Consider promulgating certain policies to promote non-cash payment and improve control of payment and invoicing to avoid tax loss; promulgate legislative documents on legitimacy of electronic documents, instructions on use and storage of electronic documents.

- Review and amend legislative documents on opening and use checking accounts; consider requiring businesses to open their checking accounts at providers of payment services to serve their transactions.

- Promulgate regulations on non-cash payment for real estate and property of high value (automobiles, motorcycles, ships, etc.).

g) Reviewing and amending regulations and policies on security, safety, regulations against money laundering, violations against regulations of law on electronic payment, especially frauds related to payment by cards, ATM, POS, Internet, cell phones, contactless payment and high-tech payment; update and apply advanced measures for ensuring security and safety of important electronic payment systems and high-tech payment services; develop policies on risk management and sanctions against electronic payment-related offences.

2. Upgrade and expand the IBPS to meet the needs of the economy and serve international economic integration.

a) High value payment system

- Restructure the IBPS towards concentrated processing at a single national payment center; process interbank settlement via a single account at the State bank of Vietnam.

- Upgrade foreign currency interbank payment in and government bond settlement functions; move them from commercial banks to the State bank of Vietnam for settlement with money at the central bank to minimize risks

- Upgrade and expand the IBPS to better serve payment to state budget; complete connectivity between the IBPS and the payment system of State Treasury.

- Settle domestic card transactions and retailing transaction of the card switching system and the clearing system, cross-border low-value payments and money transfer via the IBPS of the State bank of Vietnam.

- Promulgate regulations and procedures for management of financial risks, operating risks and legal risks to the IBPS.

- Prepare for bilateral or multilateral connection with payment systems of ASEAN.

b) Low value payment system

- Modernize the low value payment system; improve the service quality; increase processing speed and reduce processing time.

- Invest in upgrade and integration of both high value payment system and low value payment system to cut costs and ensure effectiveness of the IBPS.

- Identify the scope of low value interbank transaction clearing system via the IBPS of the State bank of Vietnam and the ACH.

c) Operational restructuring

Implement the roadmap for conversion of the IBPS towards specialization and professionalization of public service provision by an independent unit under the management of the State bank of Vietnam to ensure autonomy, effectiveness and innovation.

3. Develop retail payment services.

a) Enhancement of card payment

- Improve both quantity and quality of the POS network; develop the network of shared POS and mPOS; promote card payment in online transactions; apply card payment at health facilities, schools, etc.

- Study into application of new and modern payment technologies with reasonable costs, fast speed, convenience and high quality.

- Promote development of multifunction cards, non-physical cards and contactless cards (to pay road user fees, fuel, bus tickets, taxi, social insurance, tuition fees, etc.)

- Consider implementing certain administrative measures combined with economic measures to develop card payment at retailing outlets; raise the fines for overcharged fees at retailing outlets.

b) Development of the ACH.

- The ACH provides clearing services via various facilities and channels for various users such as enterprises, individuals, authorities, etc; processes credit and debit transactions, new payment facilities, settles electronic commerce transaction and tax payment.

- The ACH works 24/7 to serve its customers in real time; connects retailing systems in the region and all over the world.

- The State bank of Vietnam shall strictly manage the ACH system; ensure safe, effective and continuous operation to serve the market in accordance with international practice.

- The State bank shall ratify regulations and charters of important retail payment systems, which specify their functions, objectives and characteristics; the mechanism for risk management and dispute settlement; instructions on operation and actions against violations; responsibilities of system members; management measures; basic information of messages; continuous operation mechanism; fees.

c) Improvement of internal payment system of banks.

Develop and improve the internal payment systems and core banking systems of commercial bank; ensure continuous and automated connectivity with the ACH and IBPS of the State bank of Vietnam; keep investing in infrastructure; develop electronic payment methods such as e-banking, payment via the Internet, cell phones, contactless payment; accept contactless payment, contactless payment and near field communication (NFC) payment on cell phones, cloud computing-based payment, digital payment; apply new security system; ensure quick, safe, convenient and economic payment.

d) Development of electronic payment serving electronic commerce.

- Improve connectivity between the electronic payment infrastructure of the banking system and that of other units to better meet the need for electronic payment in electronic commerce, at retailing outlets, invoice settlement and payment for online services.

- Encourage the use of electronic devices to pay for goods/services on various electronic payment channels.

- Implement measures to improve electronic commerce service quality, establish a foundation for development of electronic payment services.

- Encourage authorities, the people and enterprise to use services of the ACH to pay for periodic fees and charges and make regular payments in electronic commerce.

dd) Development and arrangement of ATM network

- Study into and carry out rearrangement of the ATM network of Vietnam to ensure effectiveness operation and better meet the need of the market.

- Supervise providers of payment services maintaining and improving ATM service quality, enhancing security in ATM transactions, improving customer care and protection.

- Keep investing in and expanding the ATM network; consider using new machines similar to ATM to for the sake of convenience of users with reasonable cost.

e) Development of non-cash payment in rural area

- Enhance development and application of payment and money transfer facilities that are modern, easy to use and suitable for rural areas (mobile payment, digital payment, etc.) in order to promote non-cash payment in rural areas and remote areas, including those without bank accounts using the existing network of credit institution, post offices, providers of payment services and other non-bank organizations in association with development and implementation of financial inclusion in Vietnam.

- Consider applying Know Your Customer (KYC) process in a manner that is suitable for rural areas to promote the use of retail payment services.

4. Enhancement of electronic payment in the public sector

- Improve information exchange between finance authorities (State Treasuries, General Department of Taxation, the General Department of Customs) with the banking system to coordinate electronic collection of state revenues, especially electronic tax collection to facilitate tax administration and collection, enable the government, enterprises and the people to use various electronic payment services for tax payment and tax collection.

- Install POS, mPOS, electronic payment facilities at administrative units to collect fees and charges for administrative procedures, public services, healthcare, education, traffic services and other public services.

- Develop and use electronic payment services and products serving public spending by agencies and unit funded by state budget.

- Increase the ratio of payment of social welfare and pension via electronic payment facilities together with expansion of cash collection (post offices, agents) and use of new, modern, convenient and economic payment facilities.

- Keep expanding wire transfer of salaries; take measures to encourage officials and workers to use non-cash payment facilities (ATM transfer, POS, other modern payment services).

5. Innovation of securities clearing and settlement system

- Reassign the Government bond settlement task from commercial banks to the State bank of Vietnam; reorganize the Government bond settlement system via direct connection between the clearing system of Vietnam Securities Depository and the IBPS of the State bank of Vietnam to follow the delivery versus payment (DvP) process.

- Establish a system to manage financial instruments deposited by members (including the retail clearing system, securities clearing and settlement system, interbank monetary market) to enable members to cut costs, effectively and flexibly use the payment sources.

- Propose a model for settlement of other securities (listed shares and bonds) to minimize risks; consider reassign the securities settlement task from commercial banks to the State bank of Vietnam.

6. Innovation of payment system on the interbank monetary and foreign exchange market

- Study, evaluate the settlement process of the existing interbank monetary market to take measures for improving effectiveness of the market, including legal frameworks, supervision of repo and securities lending.

- Evaluate the existing interbank foreign exchange payment system; decide on a model for clearing and settlement of interbank foreign exchange transaction at the State bank of Vietnam to follow the payment versus payment process according to the best international practice in order to minimize risks to the finance market.

7. Enhancement of management and supervision of international payment and money transfer

- Study and evaluate the existing international money transfer mechanism in Vietnam as recommended by World Bank (WB), Bank for International Settlements (BIS), including review and development of a uniform mechanism for consumer protection and dispute settlement.

- Study into solutions for development of infrastructure for remittance; enhance the application of electronic payment facilities to remittance to improve convenience and reduce costs incurred by recipients.

- Consider promulgating regulations on management of international money transfer services to ensure fair competition between service providers (among banks, between banks and other money transfer organizations).

- The State bank of Vietnam shall supervise money transfer service providers in Vietnam, including international money transfer organizations, agents, commercial banks, microfinance institutions and other organizations that are likely to join this market in the future.

8. Supervision and application of standards to payment systems according to international criteria and standards

a) Intensify management and supervision; ensure security, safety and reliability of payment systems.

- Organize implementation of the Strategy for supervision of payment system in Vietnam by 2020; intensify supervision of payment systems according to international principles.

- Intensify management and supervision of payment systems that are important to the economy, such as the IBPS, card switching system, ACH, interbank foreign exchange system, securities payment system; cross-border and international payment activities; new payment services and payment facilities.

- Promote application of new standards for supervision of finance market infrastructure and payment systems that are important to the economy, cross-border and international payment activities, new payment services and payment facilities.

- Enhance provision of training for officials in charge of payment monitoring; improve the monitoring capacity of the State bank of Vietnam regarding important payment systems, new payment services and facilities.

b) Study into and apply international standards:

- Study and apply ISO 20022 to certain important payment system in Vietnam (IBPS, ACH, etc.) as soon as new systems are upgraded to improve connectivity of payment systems and electronic data exchange between relevant organizations; facilitate connection to other payment systems in the region and all over the world; minimize cost and operating risks.

- Complete the standards for smart cards; update new card payment technologies and implement the plan for conversion from magnetic cards to smart cards in Vietnam; accomplish uniform management and technical orientation of card payment activities; ensure security and safety of card payment; facilitate connection with other payment systems; develop value added services on the card.

- Promote connectivity and standardization in the payment sector; apply the best international practice and standards to certain payment facilities and systems. Study and apply newest payment security solutions to improve effectiveness and speed of payment systems in Vietnam; enhance implementation of security measures for retail payment systems in Vietnam.

9. Enhancement of propagation, provision of guidance and protection of consumers in non-cash payment

a) Enhance propagation, provision of guidance on non-cash payment

- Cooperate with local mass media agencies; utilize banking communication facilities to enhance propagation, dissemination of knowledge, provision of training and guidance on non-cash payment for the people and enterprises in a practical and effective manner.

- Enhance provision of training for employers of providers of payment services in instructing customers to user non-cash payment services and facilities.

- Include basic knowledge about non-cash payment, especially non-cash payment facilities, in the curricula of business, finance, banking training institutions.

- Cooperate with relevant organizations in developing and implementing suitable programs for provision of finance knowledge and skills for relevant organizations and individuals, especially old people and rural people; launch marketing programs, share experience, risk management programs, etc. to facilitate non-cash payment.

- Encourage non-cash payment by ranking and awarding retailers; encourage providers of payment services, suppliers of goods/services to do sales promotion such as discount, lottery, lot drawing, etc.

- Develop a common database with understandable, accurate and up-to-date information to be used in propagation.

- Use social networks (Facebook, fanpages, etc.) post offices, entertainment centers, etc. in rural areas and mountainous areas to disseminate knowledge and provide instructions on non-cash payment.

b) Protect consumers in non-cash payment

- Analyze risks and weaknesses in consumer protection, especially low earners in rural areas.

- Improve monitoring and cooperation mongo relevant authorities; apply best international practice regarding protection of non-cash payment service users; consider promulgating regulations on protection of non-cash payment service users.

- Establish channels to receive and process information online for the people to report criminal activities, frauds, identification of risks, how to avoid and deal with non-cash payment-related frauds.

- Launch programs for disseminate of knowledge about frauds, frauds, identification of risks, how to avoid and deal with non-cash payment-related frauds.

- Promulgate regulations on sanctions against offences such as transferring money to serve illegal activities.

- Promulgate regulations on fair competition and anti-monopoly regarding domestic and international card payment systems, including fee policies.

10. Intensification of cooperation in non-cash payment

a) Intensify cooperation among Ministries, regulatory bodies, and local governments in promotion of non-cash payment

- Improve effectiveness of the Technology and Payment Council as a forum for cooperation, discussion and promote development of national payment infrastructure, electronic payment facilities and services.

- Promulgate and implement bilateral or multilateral agreements between relevant Ministries and authorities to boost development of electronic payment, especially in collection of state revenues; formulate and promulgate schemes, policies and programs for promotion of electronic payment at enterprises and retailer to promote electronic commerce.

- Promulgate and implement agreements on cooperation in monitoring between the State bank of Vietnam and the State Securities Commission to effectively monitor securities clearing and settlement systems.

- Formulate technical assistance projects and financial inclusion programs; programs/plans for promotion of financial inclusion activities, including improvement of accessibility to payment services in rural areas.

b) Accelerate integration in terms of payment.

- Seek and encourage international integration in terms of payment according to appropriate roadmaps; participate in activities of financial institutions, regional and international payment forums; focus on implementation of concluded agreements related to payment.

- Effectively use resources n the form of financial assistance, technical assistance, policy consultancy, training from bilateral and multilateral parties to improve the quality of human resources, development payment infrastructure and technologies.

- Study new payment facilities and models of the world to effectively apply them in Vietnam.

- Establish and strengthen bilateral dialogue about payment with strategic partners and other important partners; consider participate in international organizations and forums about financial inclusion and payment.

- Participate in discussion about international payment laws and standards, especially BIS; keep expanding integration of payment systems; gradually approach common standards and international practice.

- Enhance international cooperation in promulgation of bilateral or multilateral agreements between Vietnam and other nations to develop, manage and monitor domestic and cross-border payment activities.

The Scheme is funded by state budget; concessional loans, aid from domestic and international organizations; funding from providers of payment services and other lawful funding sources. Ministries, central and local authorities shall pay for implementation of the scheme according to annual state budget estimates.

1. The State bank of Vietnam shall take charge and cooperate with relevant Ministries and authorities in organizing and monitoring the implementation of the Scheme; annually report and propose solutions to the Prime Minister; submit a terminal report at the end of 2020; take responsibility for accomplishment of its objectives.

2. Ministries, regulatory bodies, and local governments, within the ambit of their competence, shall:

- Take responsibility for prompt and effective implementation of the Scheme; include non-cash payment contents to their socio-economic development projects/plans/programs.

- Perform their tasks specified in this Decision.

- Submit annual reports by December 15 to the State bank of Vietnam.

Article 2. This Decision comes into force from the day on which it is signed.

Article 3. The Governor of the State bank of Vietnam, Ministries, Heads of ministerial agencies, Heads of Governmental agencies, President of the People’s Committees of provinces are responsible for the implementation of this Decision./.