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Online payment slowly comes of age in
Asia
By Tony Sitathan
SINGAPORE - Since the World Wide Web and
electronic mail became indispensable tools of
communication almost overnight, electronic commerce,
considered the stepchild of the web, has been slowly
growing in importance over the years. E-commerce now is
considered one of the building blocks and the vital part
of the equation that has been missing from the
commercial viability of the information superhighway.
Its effects are more far-reaching than indicated
by Clifford Stoll's book Silicon Snake Oil,
second thoughts on the information highway, which was an
attempt to shatter the perceived myth of the benefits of
the Internet both for private and public uses. It tries
to answer such questions as, When do the networks really
educate, or are they simply diversions from learning? Is
electronic mail useful, or might it be so much
electronic noise? Why do online services promise so
much, yet deliver so little? The list goes
on.
But Stoll did not predict that online payment
would exceed US$200 billion by 2003, with a predicted
rise to more than $500 billion by 2006, making it one of
the fastest-growing financial services over the 'Net.
According to reports from International Data Corp (IDC),
e-commerce in the Asia-Pacific region alone is forecast
to reach $32.5 billion this year.
John Koh, the
managing director of Newday Consulting, a boutique
consulting agency in Singapore, says more Asian
consumers are switching to the online experience,
especially in bill payments and electronic banking.
However, many are still cautious about it. "Asia is
certainly lagging behind the United States or Europe
when it comes to trusting the Internet to broker your
financial transactions," he said.
Koh is
confident, however, that over time more consumer items
and certain industries such as the travel and the
banking sectors will gravitate toward the online
community, since it has already been a proven method of
booking travel or doing e-banking. "In Japan for
instance, Japanese customers are not afraid to purchase
online. They are quick adopters of Internet technology.
Also a lot of website content holders realize that they
have to offer highly customized Japanese content before
they attract Japanese customers," he said.
In
the past, many businesses flourished over the Internet
until the bubble burst, recalls Manish Sharma. He was
one of two partners who started a flower shop online
selling orchids from his basement in Singapore. "I
recall at that time, online payment was just starting
out. But we received more orders from the United States
and Europe compared to Asia. Maybe the orchid was seen
more as a novelty item to the West compared to the
East," he said. He ran the online orchid business for a
year and a half before calling it quits. "Maybe I would
have run things differently now than in 1997. Also the
Asian consumer now is a lot more savvy using the
connected PC [personal computer] purchasing over the
Internet."
But Manish is still a creature of
habit. "Although I am now a sales director in a
high-technology company, and understand the security
issues of making e-payments over the Internet, I am
still comfortable cutting checks and making payments by
the conventional means. Call it a practical approach to
banking."
Not all online vendors and e-shops
over the 'Net are taking things lying down. Priceline,
headquartered in Hong Kong and started in 2001, operates
a Name Your Own Price Internet travel service for
airline tickets and hotel rooms. Ronica Wang, executive
vice president and chief marketing officer for the
Asia-Pacific region, calls the firm's value proposition
unique in that it offers consumers significant savings
of 20-30 percent off typical market prices by helping
airlines and hotels sell off their excess inventories
that otherwise would have gone unsold. "Priceline acts
as a matchmaker where consumers Name Your Own Price for
air tickets and hotel rooms while the travel suppliers
set their own prices for the excess unsold inventories.
By selling off empty airline seats and empty hotel
rooms, Priceline generates incremental travel and
therefore boosts the travel industry as a whole," she
said.
"One way to measure our effectiveness is
through the response of our customers, and this has been
excellent. In the first month that we launched Priceline
in both Singapore and Hong Kong, Priceline became the
most visited travel website, and by the end of our first
year of business, Priceline achieved the No 1 travel
website brand awareness against some of the most
established brands," said Wang.
An advanced
tracking study by global top-10 market research company
Millward Brown found that 71 percent of Singaporeans and
75 percent of people in Hong Kong have heard of
Priceline. And it was rated as best bargain booker on
the web by Yahoo! Internet Life magazine.
While
there are successful online companies and vendors
offering their unique set of services or product
offerings, the advances made on the technology side of
things have also made online payments a viable
alternative. TrustAsia is considered one of the
principal providers of digital trust services, Internet
security and secured payments. It also offers public key
infrastructure (PKI) and online payment services that
process multilingual, multi-currency multi-payments.
Hongkong Post and TrustAsia Payment Services
(TAPS), a subsidiary of TrustAsia Group, recently
announced plans to develop e-payment applications and
services to ride on the project of embedding the
Hongkong Post e-Cert on to the Hong Kong smart ID cards.
This initiative of e-Cert-enabled payment services is
catered for different market segments and set for launch
this year.
Another company that has made some
recent news is AsiaPay, based in Hong Kong. It has
launched something called PayDollar, considered the
first innovative product that enables an e-mail-based
payment settlement solution. It provides an easy
person-to-person (P2P) payment method with any local
bank account or MasterCard account under a secured and
private transaction. It cuts back on the use of paper
checks and shortens the time taken for transactions to
happen. Crediting into a person's account is almost
instantaneous. "It further enhances our standard of
living from the traditional hassles of writing and
posting checks, queuing in banks or at ATM [automatic
teller] machines or even anonymous phone banking. It is
an online money transfer just by one click," said Joseph
Chan, general manager of AsiaPay.
According to a
study done by Asia Foundation nearly two years ago that
still holds true today, online consumers and small and
medium enterprises are still fearful of embracing the
full extent of online payments. There are still not
enough measures to protect online customers from fraud.
E-commerce laws are still backward while the legal
community grapples with the legality of online contracts
and transactions. Changes to banking laws are seen as
necessary in some countries to ensure that credit-card
transactions and foreign-currency transactions are
affordable and enforceable.
In Indonesia, where
online transactions have been relatively slow to be
adopted, telecommunications bandwidth issues and
credit-card fraud have been significant barriers to the
early adoption of e-commerce. S Andjar, formerly the
information-technology back-end manager for the World
Health Organization in Jakarta, said one of the greatest
fears of online merchants is not being able to collect
payments once a transaction has been done. "In Indonesia
the level of credit-card fraud is astounding. Now nine
out of 10 online merchants do not honor credit-card
purchases originating from credit cards issued from
Indonesian banks or of Indonesian origin," he said. That
speaks volumes for the online purchasing habits in the
most populous country in Southeast Asia.
(Copyright 2003 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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