Shopping without a credit card?

It is widely accepted that online shopping has been slow to pick up in the country for various reasons. Apart from infrastructural issues, the low rate of credit card usage among Malaysians is another drawback. It is no secret that Malaysians are generally wary about disclosing their credit card users via the Net despite assurances from industry experts that there are sufficient security features incorporated into many shopping Web sites.

It is then pretty obvious that the other viable alternative to e-transactions will still remain orthodox --personal checks and bankers' draft. But the argument also goes that such traditional methods of payments could also wipe away the convenience of online shopping.

"It doesn't make sense really to shop online and pay using checks, especially if you're purchasing from an online merchant who is based overseas," says John Tan, a market analyst with a local financial institution.

"By the time your check is cleared and your product shipped, it would have been a better idea to shop locally," he added noting other miscellaneous bank charges would inevitably add onto the online purchase bill.

Special credit card
Tan also pointed out that one way to encourage users to utilize credit cards for online shopping purposes would be for banks to introduce a special credit card that has a low credit limit designed purely for Internet transactions.

"Such a card would be viable because a user has less to lose should fraud occur," he said.

"And since the card is only applicable for Internet transactions, the chances of it being used wrongly for other transactions would be practically nil."

However, Tan also conceded that such a concept may not see the light of day in the near future because it could be costly for the banks and credit card companies. He explained, saying a new credit facility system for Internet transactions might not be feasible if consumer demand does not measure up.

"I must admit that the idea behind a credit card is to encourage spending and not to limit it," Tan said. "But if the benefits outweigh the costs, then it might not be such a bad idea after all since it might reassure consumers about the real viability of online transactions."

The Jaring method
But there are ways for surfers to go around the prickly credit card issue over the Internet.

With local ISP Jaring, users can opt to pay for their membership and usage fees by using prepaid coupons known as Jaring Electronic Transaction (JET) coupons. Available in denominations of RM20, RM50 and RM100, these coupons can be purchased from a host of authorized outlets in the country.

What users need to do in order to make use of the purchased coupons is to key in the serial number and JET code at the Jaring Web site when prompted. This mode of payment is useful for those who do not own a credit card as well as for those who prefer not to use their credit card online.

Another Web site offering a similar facility is myweb.com.my where users can buy a prepaid card known as M-Cash. Designed specifically for users of the Philips MyWeb Internet set-top box, customers can use the prepaid M-Cash card to pay for their Jaring subscriptions. M-Cash prepaid card users can also make small item purchases at selected Web sites hosted by TecnoChannel Sdn Bhd, the operator of myweb.com.my.

But then, these alternative payment systems are just the beginning. The challenge lies in extending online payment methods to a wider Internet audience as well as getting more online merchants to accept payment in modified forms.

Regulatory poser
Alaf Mulia Sdn Bhd, an Ipoh-based company currently developing a prepaid card for Internet transactions, agrees it is not an easy task to develop an alternative system. Yet the company believes that with proper support and business strategies, a prepaid card for Internet transactions may turn out to be the best solution for Internet users wishing to purchase items online.

"Obtaining government approval for operating such a system within the country is a painful task," says company spokesman Salim Suhaimi. "It's not so much the government policies. Rather it's the bureaucratic red tape that's the biggest obstacle."

In addition, the country's rigidly regulated financial and payment infrastructure does not help. Companies which want to offer pre-paid card services for Internet transactions would have to get the Central Bank's approval--not an easy task.

Nevertheless, this is not so much of a problem as far as Salim is concerned. "With the Internet, I can still launch my services overseas and yet control the market in Malaysia," he says. "I only need to have a willing international host bank or a credit card partner to make our services work."

An online mall in the works?
The company's Netpetticash Internet prepaid payment system is now nearing completion. And the company hopes to launch its services by making the Netpetticash prepaid cards available sometime in the third quarter of this year.

By providing the prepaid cards in different currencies, the company hopes to enter other markets where online shopping is still at a nascent stage. "The other prepaid cards are less universal in concept and certainly not user anonymous. Netpetticash will tie them all up into one bundle thus making it simpler for everybody who intends to shop online," explains Salim.

Alaf Mulia also plans to create an online mall that will provide links to merchants supporting the system. At the moment, the company has not approached any merchants and Salim agrees that the success of the system will very much depend on the number of merchants who will sign up to accept this mode of payment.

"We are currently making arrangements for a full scale promotional effort to introduce the system to the local merchants," he assured. "Incentives such as a limited period of free usage of the system will also be introduced in due time."