STUDY ON THE PROTOCOL OF ECOMMERCE FOR CHINA

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STUDY ON THE PROTOCOL OF E-COMMERCE FOR CHINA

• GAO Cong , LU Tingjie, KAN Kaili,
• School of Economics Management
• Beijing Univ. of Posts Telecommunications
  (BUPT) 164
• Beijing 100876, China

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Abstract

• This article explains small-sum payments should
  have a high priority is second-best solution to
  Chinas conditions where business services and
  management systems are comparatively immature.
  Moreover, it demonstrates that mobile payment is
  to be promising in the development of Chinas
  small-sum payment services.

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conclusion

• The conclusion is that the SET protocol does not
  fit Chinas situation, though it has been the de
  facto standard in the E-commerce in the world.

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introduction

• The payment system is the crucial infrastructure
  concerning economies.
• There are three types of electronic payments
• money (cash or credit card payments),
• notes (checks, cashier's checks, drafts),
• quasi-money (various kinds of payment cards,
  including phone cards).

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credit

• SET protocol can be considered to a small-sum
  payments oriented from credit system
• As demonstrated in the flowchart of SET (Figure
  1), it can be seen that two fundamental elements
  are required
• a credit card company independent of banks,
• well established credit records.

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Flowchart of the SET protocol
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debit

• The bankcards based on debit are widely applied
  in small-sum payments in china .
• By the end of 2000, the number of debit cards
  increased from a year ago by 54 to reach 252
  million, while the number of credit cards
  (including quasi-credit cards) only increased 5
  to reach 25 million, with only 130 thousand real
  credit cards accounting for roughly 0.05 of the
  total.

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small-sum payment

• A high priority should be placed upon small-sum
  payment is second-best solution to Chinas
  E-commerces condition .
• Asymmetric information worsens the efficiency of
  the payment system in the exchange in Chinas
  economy, where business services and management
  systems are comparatively immature.

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second-best solution

• When the special restriction of lack credit idea
  in Chinas payment system is taken into account,
  this kind of marketing efficiency remains
  restricted optimization.
• Hence, only the second-best solution can be
  sought to E-payment system applicable in Chinas
  E-commerce situation.

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bottleneck

• The credit problem of exchange in China is a
  bottleneck of Chinas economy.
• Not only introducing commercial bills as an
  electronic payment method for corporations
  becomes difficult, but also introducing credit
  cards in China as a modern payment method for
  individuals is less applicable than in many other
  countries.

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