e-Payment

Credit card is the preferred payment for business-to-consumer e-Commerce. In this respect, China is lag behind Hong Kong in terms of credit card penetration. Although companies in China take the lead to develop online payment services, the problem of integration becomes an unsolved one. Hong Kong sticks to the worldwide trend of e-payment mechanism.

China

In China, more than 200 branches of the 20 banks have set up their websites or homepage, at least 50 branches provide online payment services. They issued 200 million debit or credit cards. The uniform network of all banks will be carried out completely at end of 2003. However, Chinese consumers prefer generally to transact in cash, the rate of use of debit cards and credit cards is low in practice (Gao, 2003).

As the use of credit cards is still not common in China, business-to-consumer (B2C) e-Commerce has not developed as rapidly as in other developed countries. Most B2C transactions are conducted in the form of order online and payment offline. They rely heavily on alternative payment mechanisms like cash on delivery, wire transfer and opening of accounts with the seller's house bank.

The lack of integration is a problem for the use of debit cards. Cross-province or cross-bank payments cannot be done. This problem was addressed by the Chinese government's initiative, Golden Card Project, in 1993. The People's Bank of China is working to incorporate banks and domestic credit card companies into one network, the Golden Card network, and has so far linked 10,000 ATMs, 100,000 point-of-sale centers and some 100 million bank cards across 16 cities and provinces. It is expected that most Chinese banks will be part of a national network capable of conducting real-time transactions between different banks.

The launch of ChinaPay.com in June 2000 was a milestone in the establishment of a nationwide payment network. ChinaPay.com is the joint effort of Shanghai Bank Card Network Service Center and Shanghai Huateng Software System Co., Ltd. Through its "1LinkPay" system, ChinaPay.com brings together the Golden Card national bank card network and payment gateway technology developed for China's banking and business environment to offer online payment services to businesses and consumers. In Beijing, Cyber Beijing offers online payment for customers of almost all the banks in Beijing. To tackle the online security issues, the People's Bank of China and 13 domestic commercial banks have started the establishment of a Certificate Authority Center (CAC), which will issue security certificates to online traders (Nelson & Leigh, n.d.).