Companies grow up quickly in the dotcom age. Few more so than VCHEQ.COM, a 3 month old Singaporean based e-business. In early April VCHEQ.com launched a global payment service, which will enable banks to link to businesses and business-to-business portals for e-payment. In its third month VCHEQ.COM has secured the support of three international investors, J.P. Morgan & Co. of the U.S., Allianze AG of Germany, and the Government of Singapore Investment Corp.
ôWe are doing what FedEx did for postal delivery," claims Ben Lim, VCHEQ.COMÆs CEO. ôWe have developed the necessary infrastructure for businesses to transfer and track funds, and for banks to respond to the rapid growth of e-commerceö.
The benefits are two-fold. ôCorporations will know the status of their payments in real time which will improve their ability to manage their cash flow, and banks will be able to plug into a B2B portal with a minimum of expense,ö says Lim.
As Lee Yung Sheng, VCHEQ.COMÆs chief operating officer analogizes: ôWhy build and install your own telephone line when you can utilize the existing specialized resources and economies of scale of a global telephone service?ö
Whilst plenty of attention has been paid to the front end of e-trading, it is e-payment, the final link in the e-trade process that has become the proverbial thorn among the roses of e-commerce.
ôAt the end of the day, it is the ability to receive and pay funds that is important,ö says Lim. ôBut most payments today are still being done outside of the internet."
Why? There are several reasons for this. Until recently, security has been a legitimate cause for concern. Credit card fraud in the B2C market heightened the need for a secure payment system, and banks and financial institutions were cautious in their approach towards the blooming B2B market, preferring to play the waiting game. The anonymity afforded by the internet has only served to heighten fears about security between merchants and the banks transacting between those merchants.
Also, payment methods used in the B2C market are not appropriate for the larger, more complex B2B market. Credit cards, corporate purchasing, and debit cards are not a financially sound solution when millions of dollars are exchanging hands, given the transaction fees. Lastly, banks and corporations had invested considerable resources in complex non-internet based payment systems, such as S.W.I.F.T.
Leap of faith
And so not all banks are ready to take the leap of faith just yet. David Rea, head of eDelivery at Standard Chartered in Singapore is cautious. ôOne doesnÆt jump into a new capability just because the capability exists, you want to ensure that the market is big enough to ensure that there will be returns from your investment. And until recently, the B2B e-commerce marketplace just wasnÆt big enough.
"Corporations want choice in their payment options, partial payments, and discounts, and such transactions require a trusted intermediary. IÆm a not sure if any company has solved those problems yet. Plus, in some countries, local business practices and tax laws require documents such as VAT certificates to support the transaction. None of this paperwork is going to go away just because there is a cheaper way to move money from A to B.ö
Standard Chartered prefers to work on its own solutions, and expects to launch its own e-payment process in the coming months.
Who will VCHEQ.COM appeal to? Banks who want to have the e-payment capabilities now, and are willing to outsource. And given the recent interest in the B2B market, many banks do want that capability now.
ôThe response has been positive from banks and corporations alike,ö says Peter Gangsted, director of Allianz Capital and board member of VCHEQ.COM. Banks that have been around since VCHEQ was a mere twinkle in LimÆs eye are signing up for pilots in the region. Among others, UOB in Singapore has jumped aboard, along with two Korean banks, although Lim declined to name the rest. VCHEQ.COM expects to make its first payment by the end of this year.
