e-Payment

For regulating the e-banking business, the People's Bank of China issued the Interim Measures for the Administration of Online Banking Business on July 9, 2001; and the Notice of the People's Republic of China on Relevant Provisions Concerning Implementation of the Interim Measures for Administration of Online Banking Business in April 2002, for providing the detail enforcement rules. In addition to detail approval procedure and the documents for application, detailed rules governing the maintenance of security in the conduct of online operations are included (Gao, 2003).

From the case of Alibaba, it's obvious that e-payment mechanism in China still remains unsolved. Alibaba, a pioneer in China's B2B marketplace, has rooted in China as its founder, Jack Ma, launched the site in April 1999 and operated from his home town of Hangzhou. Having previously produced a simple on-line listing of Chinese suppliers, Ma used his experience to launch an on-line marketplace that provide a way for suppliers and potential buyers to hook up on the Web. Today, the site mainly links buyers and sellers from 192 countries; listing across 27 different industries and trade in 33 different categories ranging from toys to agriculture and industrial equipment. Although the site provides some information services, such as credit checks and shipping quotations, it does have very limited online transaction capabilities. Indeed, Alibaba has been criticized as an online meeting space rather than a real marketplace due to the challenges of e-payment in China. As a solution, Alibaba.com launched an on-line payment center for China users after two years of operation in 2001. It's a groundbreaking setup catering to large-sum electronic transactions in China, and, like most B2B payment transactions, it does not involve credit cards. On the other hand, Alibaba.com has only minimal SSL protection for credit card payments of products it sells directly to consumers. For these transactions, Alibaba.com uses HSBC's payment system. Yet, Alibaba don't have SET protection for their B2C transactions but since their B2C business is only marginal so they can afford the risk. Jospeh Tsai, CFO of Alibaba.com remarks "What is frustrating is that HSBC is really a conservative bank that we need to ask for permission every time we sell a new product on our website. The bank is constantly worried that we cannot deliver what we promise our customers".