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PChome, Yahoo and AliPay eyes Taiwan's online payment market; who will win?

Online shopping is nothing new to Taiwanese.

According to a market research report just released earlier on January 13, Taiwanese shop an average of 2.37 times online per month. The research also revealed that the top 5 favorite shopping websites in Taiwan are PChome Shopping (45%), Ruten (37%), Yahoo Bid (32%), Yahoo Buy (29%) as well as Momo Shop (17%).

Among the five on the list, Ruten is the bidding platform jointly founded by PChome and eBay, while Yahoo Bid, which part of the Yahoo family in Taiwan, is a competitor to Ruten. The parents companies of both, PChome and Yahoo are taking steps to build their own online payment platforms, after regulations concerning third-party payments were officially finalized in April last year.

 PChome joins forces with Acer to improve its service

On the 8th of January,Taiwanese PC company, Acer Inc., also the world’s fourth largest PC maker in 2012, announced an investment of 70 million NTD (about 2.35 million USD) to focus on the development of PChome’s latest online payment platform, PChomePay. The investment was done in exchange for 15% equity of PChomePay .

 PC with Acer- Inside Taiwan

(Source: Inside Taiwan)

As part of the cooperation, Acer would devote its cloud service experience called BYOC (Build Your Own Cloud) to assist PChomePay in the construction of payment gateway and security system.

After a significant loss in profit and as well as the loss of various senior executives the previous year, Acer has its original founder, Stan Shih, returned to the company. Stan now bears a huge responsibility to transform the company from hardware-only to hardware, software and services focused.

Could the Acer and PChomePay duo make a killer combo?

How PChomePay works

Currently, PChomePay serves as a third-party payment platform exclusively for Ruten. Both buyers and sellers are required to register first before they can make and receive payments via the platform. Once buyers place a successful bid, PChomePay would automatically generate a set of virtual account number for buyers to make online transfers, which will be delivered to seller accounts simultaneously.

Through PChomePay, sellers can receive their payments 7 days after the payments are made for ordinary transactions. For those who own over 500 positive credit reviews, payments can be done directly to the account the next day following the original payment date, as opposed to the 1 week delay. If buyers do not receive the agreed items, they can activate an option called “delay payment”, which would delay their payments to sellers, prompting sellers to provide proof of shipment until buyers get their bids.

This is similar to how China’s AliPay works.

 Ruten

The Late Payment Option offered by PChomePay. (Source: PChomePay)

The three forms of payments currently offered by PChomePay include: ATM transfer, balance payment and credit cards. The latter two are new to users in Taiwan: sellers can use their PChomePay account balance to make purchases, and users can now make credit cards payments on bidding platforms.

How feasible is the platform?

PChomePay, similar to other platforms such as PayPal and China’s AliPay, aims to increase efficiency and security of online transactions. But do users feel that things are made easier through their platform?

As mentioned earlier, sellers can only retrieve their funds a week after the initial payment was made by the buyer, a lock-up period that is considered too long by many.

On top of that, PChomePay currently only operates with one bank for its ATM transfers, meaning that users would have to pay transaction fees if they do not own any bank account from this specific bank – a significant setback for the new system compared to how it worked before – where users could choose whatever bank accounts to make payments and avoid fees as much as possible.

Third, if buyers do not pay the exact amount, for instance, in the case of negotiated discounts or repetitive payments, these transactions will either be cancelled or users would need to contact PChomepay’s client service for further assistance, which, as customers often imagine, could be too time consuming.

 Yahoo Billing tries to acquire users; and China’s Alipay is gunning for market share too

Based on the market report, PChome’s Ruten outcompetes Yahoo Bid slightly by 5% in terms of Taiwan’s bidding market share.

Compared to PChomePay, Yahoo Bid has a similar platform called Yahoo Billing, which provides several similar features including payment gateways.

Unlike PChomePay, Yahoo Billing has 6 listed partner banks, which allows more customers to make free ATM transfers. It has been operating as an additional payment option for users, and it requires no registration process.

  yahoo

How Yahoo Billing works. (Source: Yahoo Billing)

However, starting from February 2014, every Yahoo Bid user will be required to use Yahoo Billing as the only payment gateway for their online transactions.

Is this a move aiming to acquire its users and lock them into its payment infrastructure, seeing that its main competitor – Alipay, which be entering the Taiwan this year? Alipay was founded in 2004, almost 10 years ahead of PChomePay and currently owns more than half of the market share in China’s e-commence market.

Alipay club

(Source: AliPay)

Alipay currently provides some exclusive features including value storage and credit card installments that PChomePay and Yahoo Billing do not offer. It also charges lesser fees and delivers payments faster.

 Chart

Soon after the news of Alipay’s entry to the Taiwan market, the two local players have shown sign of aggression in terms of user acquisitions as well as infrastructure development.

We are definitely looking at an impending war among the three payments platform in Taiwan

Also read: 6 hours delivery for online orders? Now it only takes 5 in Taipei

 

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