I. CREDIT CARD AND MERCHANT ACCOUNT

1. Credit card

In order to avoid possible risks of bringing with a large amount of cash,

especially for those often go for business abroad, or who have relatives and

children studying or having disease treatment in foreign countries, etc., you are

kindly advised to use credit card.  Besides, using credit card, you can also easily

manage expenditures of yourself and your relatives.  In general, using credit card

for payment is now seemed as an indispensable tendency and a symbol of

civilization.  But, Viet Nam is considered a “cash” economy; cash is still the

King. While transaction by credit card has become popular in many countries, it

is quite strangle to most of Vietnamese.

In fact, credit card was created by John C. Biggins who specialized in the credit

of goods at Franklin National Bank in New York.  It was issued and used at the

first time in America in 1946.  Actually, that bank also issued modern credit card

in 1951.

“Credit card issued by banks for the customers (if they demand) is a modern

means of payment to pay the suppliers who have accounts at the b¹nk money for

goods and services.”

Benefit and convenience of using credit card:

-         Credit card can be used to buy goods and services at more than 20

million places, to pay for newspaper subscriptions, tuition fees, hospital

fees, etc., and to withdraw cash at some million cash payment places and

from ATM in Viet Nam and other countries in the world as well.

-         You can use credit card to book hotels, tours, order goods by

telephone or mail and pay for Internet services.

-         You can use credit card anywhere in the world with any currencies.

-         You are allowed to “expense first and pay later” during a non- interest

favorable time of 10-45 days.  This means that you can improve fund

utilization efficiency since you can spend while your money is still

deposited at the bank for interest.

-         You only have to pay in advance 20% of the balance at the end of the

period with short-term interest rate for the unpaid balance.  If you pay the

whole balance, you are exempt for interest of balance arose during the card

period.

-         Besides, you can also request your bank to issue a sub-card for your

relative to use or for your children to cover expenses when they study

overseas

-         Your company might request the bank to issue corporate cards for

members of Broad of management, operating managers or staffs.

2. Merchant account

“Merchant account": a merchant account is a relationship and trust you have with

a bank that has agreed to allow you to charge people’s credit cards. The bank is

responsible for debiting the funds from the customer and depositing it into your

account. There is usually a processor that is involved that processes the credit

cards for the bank and lets them know the funds are available. When you are given

a merchant account from a commercial bank, they are relying on you to uphold

your promise to your customers by delivering the products and / or services to

them in a timely manner. Merchant providers are taking a risk to allow you to

take credit cards under their name.

“Merchant provider”: This is a company that will offer you a merchant account.

They will usually have a relationship with their sponsored payment processor to

give you a merchant account. If they don’t own their own gateway system, they

usually resell another company’s system that will do the processing while the

bank does the charging and depositing.

“Merchant bank”: A bank that works with businesses to give them the ability to

offer merchant accounts. They take care of charging the customer.

You have two choices to choose from in regards of a merchant account: You can

have the power of owning your own or you can use a third party’s account for a

fee. Each method is explained below in great detail along with the advantages and

disadvantages of each. You need to decide which method is better for your

business after reading the material. Regardless of your business, we recommend

getting your own merchant account as you have more power, control, flexibility,

and better pricing structure.

Your own merchant account

Having your own merchant account is the way to go regardless of what type of

business you have. Generally, most providers will have a partnership with their

sponsored bank or they might own it. Depending on what type of merchant

account, most providers are resellers for real time gateway system such as

Authorize. Net. They will usually then set you up with the payment processor to

process and deposit your funds into a bank account.

Advantages:

-Lower credit card percentage fee (4 or 5 times cheaper)

-Fees refundable on returns

-Less expensive on low and high volume sites

-Much shorter waits time for money

-Ability to use own ordering system

-Able to sell any kind of products / services

-Don’t has to go through a third party account

Disadvantages:

-Small startup fee

-A few monthly fees involved (depending on the provider)

Third party merchant account

There are many companies available online that allow you to accept credit cards

using their merchant account. This service allows you to charge customer’ credit

cards without owning a merchant account or having to pay the fees involved for

owning one. Most services in this nature require you to sell only tangible items

and their rates for the service range about 9%- 11% of each sale. Some company

may charge a setup fee to get started with them. We do not suggest this type of

method, as there are not any advantages.

Disadvantages:

-Higher percentage fee (4 or 5 times higher than having your own account)

-Overall higher cost

-Much longer waits to access your money

-Limited to only tangible items

-Complexity of going through another company

-Increased chance of being down by using another company’s services

-Must use their shopping card system

II. KINDS OF CREDIT CARD

There are 5 kinds of popular international credit card at present:

-         MasterCard

-         Visa Card

-         Amex Card

-         JCB Card

-         Diners Club Card

1. Master Card

Master Card began in the late 1940s when several U.S banks started giving their

customers specially – issued paper that could be used like cash in local stores.

In 1951, the Franklin National Bank in New York formalized the practice by

introducing the first real credit card.

Over the next decade, several franchises evolved where a single bank in each

major city would accept cards as payment with certain merchants they had chosen

to work with. On August 16.1966, one of these groups formed the Interbank card

association (ICA) which later became MasterCard International.

MasterCard and its global network of banks brings you a new generation of

tailored electronic payment, purchasing, and expense management solutions to

help reduce costs, track expenditures and gain efficiencies.

Today, there are more than 30 MasterCard offices around the world and the total

number of MasterCard acceptance locations was up nearly 17 percent (according

to the report of ICA in 2001- www. Mastercard.com). That is the reason why we

say, “ No cards are more widely accepted than MasterCard”

2. Visa card

Visa’s history traces back to 1958, when Bank of America launched its blue

white and gold American Bankcard. The name Visa was introduced in 1976 and

since then has grown into the premier payment brand. While much has changed

in the last three decades, consumers, businesses, and merchants around the world

still identify the Visa brand with acceptance, convenience, Flexibility, and

security.

Jointly owned by more than 21,000 member financial institutions around the

world, Visa card is private, for profit association dedicated to serving its

member, cardholders and merchant. Through its member financial institutions,

Visa card offers the world’s most established and widely accepted payment

solutions for both consumers and businesses. The reach and popularity of Visa-

branded cards is almost universal – there are more than one billion cards,

accepted nearly 24 million physical locations in more than 130 countries.

In brief, Visa card is “ the way the world pay”. Visa card’s payment solutions

connect people and business all over the world. The most trusted and recognized

payment brand, Visa card helps bring together buyers and sellers everywhere by

making commerce convenient and secure.

3. JCB Card

Since being established in 1961, JCB card has maintained the position as a leader

in the Japanese card industry by providing superior service in response to the

rigorous service requirements of Japanese consumers. In 1981, JCB began

international development program with the firm commitment of offering the

same quality service and the same convenience to JCB card members overseas.

A JCB card issuance program was launched in Hong Kong in 1985 and from the

early 1990s, it has attracted more and more of the world’s most reputable

financial institutions to become JCB partner. And at the moment, 38million of

the world’s most desirable card members hold JCB cards - which are accepted at

7.96 million associated merchants and supported by close ties with 3,000

financial institutions worldwide.

The JCB card is accepted at over 9 million locations in 183 countries including

most major airlines, hotels, car rental agencies and thousands of fine restaurants

and retail stores.

JCB has always aimed to be more than just a conventional payment card - a goal

that has been achieved by delivering the highest quality services in addition to the

most convenient, efficient, and reliable payment products available. From the

start, JCB card has had a customer - centered focus, which forms the core of

JCB’s service standard, “service from the Heart”. Each and every service program

is guided by this underlying policy “ to identify the customer’s needs and please

customer with service from the Heart”

4. Diners Club Card

It all began with a forgotten wallet

It’s 1949, businessman Frank Mc Namara schedules dinner at Major’s Cabin

Grill, a New York City restaurant. Dinner over, Frank realized he has left his

wallet in his other suit. His wife rescued him and paid. He resolved never to face

this embarrassment again.

February 1950, Mc Namara and his partner Ralph Schneider returned to major’s

Cabin Grill. When the bill came, Mc Namara presented a small cardboard card, a

Diners Club card, and signed for the purchase.

Diners Club Card: the card is used to identify the traveler as a state employee to

pay for travel related expenses such as hotel and rental car charges and to obtain

cash advance for authorized travel expenses that can’t be paid for with the card.

The Diners Club card is widely accepted both in the United States and abroad.

For examples, Diners Club card is accepted by every major airlines, lodging

chain, and car rental agency. It is also accepted at many restaurants and major gas

and convenient stations

5. Amex Card

Yale - American Express Corporate, issues Amex card. It is available to all-

traveling faculty and M&P employees who are benefit – eligible at no charge to

the individual or department.

The Yale Corporate Amex card costs nothing to you; however, you are

responsible for payment, with Yale reimbursing. Although the card is meant to be

used exclusively for business expenses, in an emergency, it can be used

personally and Yale would not be responsible for that particular expense.

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 [ INTRODUCTION ]    [ PART I ] [ PART II ] [ PART III ] [ CONCLUSION ]