Hua Nan targets online shoppers

Hua Nan Commercial Bank (華南銀行), a banking arm of the nation's fourth-largest financial holding company in terms of total assets, yesterday launched an Internet-based micro-payment mechanism to tap into the fast growing online shopping market.

Under a strategic partnership with Taipei-based Citron Network Inc (呈祺資訊), Hua Nan said the new e-wallet service -- called PayVA, a shortened word for "Pay Virtual Account" -- will allow users to conduct immediate transactions using a simple procedure.

"Online shopping is getting popular and has strong development potential in the future," said York Lai (賴明佑), executive vice president of Hua Nan. "But virtual consumption still has an abundance of problems that can cause enormous concerns among users who make online transactions."

Many customers are worried about the security of credit card information, which Lai cited as just one of the problems that could reduce confidence in online purchases.

Other common problems include online stores' fears of receiving fake card information and high handling fees, Lai said. Meanwhile, those under 20 -- the main online customer base -- are not qualified to apply for credit cards or bank ATM cards, and therefore face difficulties making purchases online, he added.

To address these problems, Lai said PayVA allows customers to apply for an online account with their e-mail address and nickname. Members can use a 14-digit account number for actual or virtual transactions without the need to reveal confidential information.

"It certainly enhances their privacy while shopping on the Internet," Lai said.

With an investment of NT$60 million in developing the PayVA service, the bank expects to lure 400,000 members within a year, with 4 million transactions conducted. It expects to entice another 1 million members by September 2006, giving it an economic scale that would help secure profits, said Hua Nan's e-commerce division chief Jenyu Wu (吳振玉).

Hua Nan is not the first bank to exploit the online transaction market. E.Sun Bank (玉山銀行) introduced a similar mechanism, eCoin, in early 2002 and has signed up 200,000 members and 240 online stores.

Both banks say they will repay customers for confirmed fraudulent transactions. To ensure online security, Hua Nan said transactions must not exceed a value of NT$10,000 per account per day, while E.Sun stipulates that the debit amount for each account must be kept under NT$10,000.

Still, a lack of integrated services may hinder the development of online payment mechanisms in Taiwan, a market observer said.

"The introduction of different e-wallets means online stores cannot effectively approach their potential buyers. Government support to push integration is the key," said Pan Jou-juan (潘兆娟), secretary-general of the non-profit Secure Online Shopping Association (消費者電子商務協會).

In South Korea and Japan all online payments are collected by telecommunications operators, which has boosted the popularity of Internet-based transactions, Pan said.

In the first eight months of this year, the average value of online transactions per Internet user in Taiwan had reached NT$9,854, jumping fourfold from the same period in 2001, according to statistics provided by the Market Intelligence Center (市場情報中心).