ATM investment brings "huge" profits, not losses as announced

The reason why banks complain that their investment in ATMs is ineffective is because of their poor business performance, not because of large investments, cardholders not using or leaving little money in the card.

Figures recently released by the State Bank of Vietnam (SBV) and the Vietnam Card Association show that by the end of June, the entire system had about 37.7 million personal payment accounts using ATM cards, with over 90% being domestic payment cards and the total amount of money in them being nearly 70,000 billion VND. This amount only enjoys a non-term interest rate of 2% per year.

Just calculating with the savings deposit rate of 9%/year as commercial banks are currently mobilizing, each year card account holders have suffered a huge loss of up to 4,900 billion VND.

Waiting to withdraw money at the ATM.

This huge profit is benefited by none other than the card-issuing banks. The amount of money that the banks benefit from is divided equally among the 13,920 existing ATMs, with each ATM earning an average of over 350 million VND in profit per year. Not to mention that the owners of the above ATM cards have made nearly 130 million payment transactions, with a total transaction value of nearly 200,000 billion VND, earning the banks a considerable amount of fees from inter-network transactions. Therefore, this is not only an effective channel for mobilizing and circulating cash for banks.

According to Dr. Tran Du Lich, an economic expert, while the credit growth of the entire system only reached 1.4% compared to the expected target at the beginning of the year of 15 - 17%; the capital disbursement rate of banks remained sluggish in the first 8 months of the year, the fact that banks promote consumer lending products via ATMs will both support the economy and limit risks has proven effective.

But despite being allowed to collect inter-network fees of VND3,300 for cash withdrawals, VND1,650 for checking information and printing statements, and an annual card maintenance fee, ATM card issuing banks still claim losses to request to collect intra-network fees next year.

According to the calculation of a finance and banking expert, each machine costs about 17,000 - 20,000 USD, plus the cost of renting the installation space, security cameras... an ATM booth only needs an investment of about 500 million VND. Even with a fast depreciation rate of 5 years, each year the depreciation cost of an ATM booth is about 100 million VND. The remaining 250 million VND, after deducting other operating costs, the owning bank will still have a significant profit.

So, the reason why banks complain that investing in ATMs is ineffective is because of the bank's poor business performance, not because of large investments, cardholders not using or leaving little money in the card.

In fact, while many issuing banks complained about losses with ATM services, with 8.4 million cards, Agribank achieved card usage turnover of over 122,000 billion VND; the total amount of payment at ATMs and "card swiping" points reached 128,634 billion VND. Such a large turnover, compared to the investment and maintenance costs of 2,100 ATMs of Agribank or 1,829 machines of Vietin Bank and 1,700 machines of Vietcombank... has brought about considerable efficiency.

Immediately after the State Bank of Vietnam allowed banks to set up fees to prepare for collecting ATM network fees, banks rushed to return to this business segment with a series of new services for cardholders to prepare to "grab" revenue from network transactions at the level of 1-2 thousand VND/transaction as some banks expected.

In addition to the simultaneous cooperation with airlines, railways, and road transport to implement ticket payment services, Techcombank Visa cardholders who spend 300,000 VND each time shopping at Fivimart supermarket on weekends will receive a scratch card worth 50,000 VND for the next shopping at Fivimart. Customers using ACB-Citimart Visa cards are also the same, in addition to receiving a 5% discount on shopping bills, they also receive a discount of up to 10% on the 8th of every month at Citimart.

With VIB Bank, just by opening a card account here, customers can withdraw money for free at all ATM systems of banks nationwide within 6 months. From the 7th month onwards, if the cardholder keeps 500,000 VND or more in the account, they will continue to be exempted from withdrawal fees. Citibank cardholders can also withdraw cash for free from 2,600 ATMs of Eximbank and Techcombank nationwide...

The fact that banks are massively promoting to cardholders while always complaining about losses is extremely contradictory. Therefore, before deciding to allow banks to charge fees for domestic transactions with ATM cards and at what level... the State Bank needs to consider and calculate to avoid causing more disadvantages to card users. Furthermore, to increase the exploitation of the ATM system, encourage people to increase the use of non-cash payment methods in the future.

According to CAND-M