This follows a recent memorandum of understanding between CashThrough.com and Singapore Telecom (SingTel). The technology company will be co-branding electronic cash cards with SingTel for use in SingTel's foray into the B2C market. The telco is setting up a virtual shopping mall and CashThrough.com will provide the online payment mechanism, where consumers can use the prepaid cards. If successful, the pilot will expand to cover payment of phone bills and other government utilities via the internet and WAP (wireless application protocol). According to Simon Chan, chairman and CEO of CashThrough.com, SingTel, is applying to the Monetary Authority of Singapore for a deposit taking license for the purpose of issuing the debit cards and expects to launch in March 2001.
Just how will these prepaid debit cards work, and how do they differ from credit cards as a payment method for consumers? Here is how it works between an online merchant and the consumer:
You finally find the widget you want on Unusualwidgets.com. Rather than use a credit card, you opt to make the payment via your 'virtual' cash card. The co-branded card is prepaid and rechargeable, and issued by an affiliated bank and CashThrough.com. With the purchase of a card, (from an affiliated bank, an authorized outlet, or over the internet), you instantly have an account with the affiliated bank, which can be debited or credited.
Unusualwidgets.com is a participating merchant of CashThrough.com. You click on the cash card payment option, which triggers a payment box on your computer screen. You then enter your account number, and a personal identification number (PIN), and send the details through. The bank and CashThrough.com then verify the PIN and account number, and if accepted, the funds are instantly deposited into the Unusualwidgets.com account.
Essentially, CashThrough.com provides a platform for cardholders to purchase online by way of direct debit. However, Michael Kong, chief technology officer and executive producer of CashThrough.com, says the account is set up automatically on the consumer's behalf, which is the advantage over the usual direct debit method. Also, unlike a smart card, the CashThrough.com card has no magnetic strip or chip imbedded and therefore requires no physical hardware like terminals to make or receive a payment. The advantage over credit cards, according to CEO Chan, is that there are no entry criteria.
"The debit card is open to anyone who wants to make or receive an instant payment," he says. Furthermore, the company aims to keep the transaction fee charged to the merchant on a par with, if not lower than, the average 3% credit card fee.
The alliance with Huateng opens up the Chinese market for CashThrough.com. Huateng has been involved in the People's Bank of China "Golden Card Project", a national bank card switching network which enables the interoperability of cards and accounts between all the Chinese Banks.
Chan says that they will initially target China Unicom on the mainland and in Hong Kong, companies like Hutchison and New World are on the list. The reason for this, explains Chan, is that telecommunications companies are also internet service providers (ISPs) which e-marketplaces use. The CashThrough.com cash card will be an additional service that the ISP can provide.
So far, the company says that it is still in talks with banks in Singapore, Hong Kong and China to issue and allow the set-up of accounts.