The lack of mature online payment processes in China has been identified frequently as the cause of relatively low adoption rate of e-commerce in China.

“Payment process for e-commerce in China is at early stage. I haven’t seen any mature product that work,” said James Zheng, CFO of eBay Eachnet, a leading online auction market in China. And according to him, this is one of the factors limiting the growth of his company.

Without a painless and trust-worthy payment process to handle cash flow, people have to go through a lot of hassle to settle what they buy online.

For example, Eric Dong, a 25 year-old IT programmer in Shanghai, said, he would meet the seller in person and pay cash for what he bid online. Not only it takes him half a day to do it, he is limiting himself to trade with those living in the same city.

Other people have used the remittance services in the Post offices, or wire transfer in the bank, to pay for big-ticket items like cosmetic, electronics, etc. (Usually several hundreds to a thousand RMB.) For small purchase, (less than RMB100), it is not uncommon that some will just send the cash in an envelope.

The one-click away convenient that people in Hong Kong and other developed countries enjoy is simply not there.

Mr Dong said, he would like to see service, like Paypal, to be available in China. “I think using email to transfer money is convenient and safe.”

Credit card is not uncommon among the young and educated living in the big cities. Mr Dong has his own credit card and has used it to purchase online. But he would not trust his number with a small online shop, or worse another individual. That makes service like Paypal valuable.

But the trouble is Paypal is not yet in China. According to Mr Zheng, Paypal is looking into the opportunities in China as part of its global expansion. Earlier, the company has post eight local positions on eBay EachNet for business analysis and business development. But “there is no concrete plan yet”.

According to Mr Zheng, the main reason for Paypal’s hesitation will be the regulation constraints and people’s way of doing business in China.

While Paypal is bitting its nail, other players are jumping onto the potentially lucrative wagon with their own ideas about what will work in China.

Pay88, a service launched in March, by Cqbbs, an IT company based in Chongqing, China, targets small and medium online shops for payment solution. Its idea is simple. Online customers are directed to their own bank’s online pages to settle the bills. For example, if the person has an account with China Merchant Bank, he is re-direct to China Merchant Bank home page to enter his account number, password, dollar amount, etc.

So far, the company is working directly with 14 national and regional banks, including, Industrial and Commercial Bank of China, China Construction Bank, China Merchant Bank and Shanghai Pudong Development Banks. For the rest of the banks, the company relies on China Unionpay, a national payment network, which deals with point-of-sale (POS) machines and automatic teller machines (ATM) on the mainland.

The company’s CEO, Zui Weidong, expected in two years they are able to establish a national online payment platform that works with every bank in every region.

Currently, the company has 10 people working on the project. It has signed up 100 small and medium online shops as clients, with 20-30 of which using the service already. Most of the shops are selling gaming cards for online games. Mr Zui expected by year-end, total transaction volume handled by Pay88 would reach RMB 3 million. The company charges about 2 per cent as commission. Average size of payment is RMB100.

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