Customers withdraw money at ATMs. The upcoming merger of Banknetvn and Smartlink is expected to help banks save resources by rationalising their payment networks. — Photo vnexpress.net

HA NOI (Biz Hub) — Prime Minister Nguyen Tan Dung issued a decision on December 22, which permits the merger of Viet Nam National Financial Switching JSC (Banknetvn) and Smartlink Card Services JSC (Smartlink).

The companies planned to sign a contract to merge on December 30 and finalise procedures for the new institution to become operational by the first quarter of next year, reported VnExpress online.

The Vietnamese market currently only has these two card alliances. The merger will allow both companies to form a unique centre, which will serve the operations of the entire domestic retail banking system.

The country's current regulations forbid economic merger cases where the combined market share of the related parties exceeds 50 per cent of the overall market. However, activities that foster socio-economic development and technological advancement, as defined by the prime minister, are exempt from the restriction.

Dung's decision has granted the same exception, called "monopoly exemption", to Banknetvn and Smartlink. He gave them an initial exemption period of five years, which will be extended in accordance with the companies' adherence to the law.

According to VnExpress, the largest shareholder of the unified organisation will be the State Bank of Viet Nam (SBV), which aims to fortify the retail banking infrastructure for non-cash payments in the country.

The unification is expected to help banks save resources and cut costs for infrastructure investment by rationalising the automated teller machines (ATMs) and point of sale (POS) systems nationwide. It will also enable more convenient payment services for customers internationally.

Dung asked the organisation to report its situation to the Ministry of Industry and Trade every five years.

Banknetvn and Smartlink agreed on their merger in November 2012, when their charter capital reportedly reached approximately VND130 billion (US$6.19 million) and VND50 billion 9$2.38 million), respectively.

Banknetvn was founded in 2004 and now has 28 member banks. Meanwhile, Smartlink was established in 2007 and currently links more than 50 banks and financial institutions as well as aviation and telecommunications businesses.

Another card alliance, VNBC, was formed later. This was initially led by DongA Bank after its establishment, but the alliance later merged with Banknetvn.

The SBV disclosed that Vietnamese consumers have been using 76.13 million bank cards as of October 2014. The number is up by 15 per cent compared with the data from December 2013.

The country recorded more than 15,800 ATMs by October, which is an increase of 3.6 per cent against last year. Nearly 160,000 POS devices were listed in the same month, which is up by 23.1 per cent against last year's data. — VNS