POS Terminal in Vietnam: Fees Merchants Should Compare

POS terminal in Vietnam deals look simple until the first statement arrives. A shop owner who signs with a bank for a card machine should compare four costs before signing: the merchant discount rate, the terminal rental, the settlement time and the cost of leaving the contract. Ask each bank for its price sheet in writing and put the numbers side by side.

What a POS terminal does for a shop

A POS terminal is the small card machine on the counter. It reads a customer's bank card and sends the payment request to the bank that signed you up. That bank is called the acceptance bank. It pays you, and it charges you for the service.

Many owners get offers from several banks. The offers look alike on the front page. The real differences sit in the fee table and in the contract.

Sources: State Bank of Vietnam, the central bank that regulates card activity of banks in Vietnam, https://www.sbv.gov.vn (archived 13 May 2020 on the Wayback Machine).

The merchant discount rate

The merchant discount rate, often called the MDR, is a percentage of each card sale that you pay to the bank. A shop selling a 1,000,000 dong item at a 2 percent rate pays 20,000 dong and receives 980,000 dong. The rate you pay is set in your contract, so it is the first thing to ask about.

Rates are not the same for every card. Ask whether the bank quotes one rate for domestic cards and another for international cards, and get both in writing. Ask too whether the rate changes with your monthly sales, because higher volume may give you room to negotiate.

Also ask what happens on a refund. Ask whether the bank returns the fee when you refund a sale. If it keeps the fee, that can add up over a year for shops with many returns.

Terminal rental and other fixed charges

Ask whether the terminal is lent for free or comes with a monthly rental or a one time setup fee, and ask who pays if the machine breaks or is lost.

Check for a minimum monthly volume. Ask whether the bank waives the rental only if your card sales stay above a set amount. If a quiet month drops you below it, the fee may return. Write down the paper roll cost too. It is small, but it is a real cost every week.

A fixed rental matters most for small shops. A cafe with ten card sales a day feels a flat monthly charge much more than a large store does. Convert every offer into one monthly figure for your own sales before you compare.

Sources: State Bank of Vietnam, https://www.sbv.gov.vn.

Settlement time

Settlement time is how long the bank takes to move the money into your account after a card sale. Ask whether the bank pays the next working day or later, and how weekends and public holidays count.

Slow settlement is a hidden cost for a small shop that buys stock every week. Ask for the exact time in the contract, not a verbal promise. Ask what time the daily cutoff is, because a sale after the cutoff counts as the next day.

Also ask where the money lands. If you hold your business account at the same bank, ask whether settlement is faster or cheaper. If you do not, ask whether opening an account is required.

Contract length and exit terms

A card acceptance arrangement is a written contract between the shop and the bank. Read the part on how long it runs and how you end it. Look for a minimum term, a notice period and any fee for early exit.

Ask whether the bank can change the rate during the term, and how much notice it must give you. A fair contract tells you in writing before a change takes effect. Also ask what happens to the terminal. You may need to return it in working order, and a lost or damaged machine may carry a charge.

If you do not understand a clause, ask for it to be explained and keep a copy of the signed pages. Tax and accounting staff should see the fee statements too, since the bank deducts its fee before paying you.

A simple way to compare offers

Make a table with one column for each bank and one row for each cost. Fill it in from the written price sheets, not from a sales call. Then run your own numbers.

Take last month's card sales. Multiply by each bank's rate. Add the monthly rental and any other fixed charges. The lowest total is not always the best offer, so look at settlement time and exit terms next. A slightly higher rate with next day settlement and no early exit fee can beat a lower rate with a long lock in.

Finally, ask two other shop owners in your area which bank they use and how it treats them when something goes wrong. A machine that is down on a busy Saturday costs more than a small difference in rate.

This is general information for shop owners, not legal or financial advice. Check the rules and your own contract before you sign.

Sources: State Bank of Vietnam, https://www.sbv.gov.vn.