YET INDUSTRY insiders are not the only ones who are suddenly gung-ho over e-commerce in this country. Even the EIU has predicted e-commerce to grow dramatically in the next three to five years, the rapid increase in Internet use being its main driver.

In 2006, there were already 14 million Internet users, or 16 percent of the country's total population, according to Yahoo! This was expected to grow to 20 million by last year. (International Data Corporation already put the number of Internet users at 19.2 million by mid-2005. It is expected to grow to 24 million this year, says AC Nielsen.)

Internet users include all those who access the Net regularly, whether at work, home, in school, and in Internet cafés. Contributing to the growth of Netizens is the rise in the number of mobile-phone subscribers, numbering 47 million at the end of 2006, already more than half of the country's total population.

Broadband Internet use by businesses is also increasing as gleaned from the 22,500 connections in 2005, as reported by the Commission on Information and Communications Technology (CICT), up from 10,500 connections in 2004. By 2009, Siemens estimates broadband subscribers to reach one million.

	KABAN, Yehey!'s online payment solution.

Another important factor fueling the renewed optimism in Pinoy e-commerce is PayPal’s entry into the country, along with the improved alternative modes of online payments that creative Filipinos came up with while waiting for the global leader to come in.

One of the reasons why e-commerce has not been able to take off is due to the lack of a reliable system to process online payments. When it started, for instance, Island Rose had to use a U.S.-based merchant account to accept credit-card payments.

Owing to the prevalence of fraudulent transactions traced to the Philippines, PayPal became available to Pinoy Net users only in October 2006, and even then obliged them to sign up for an account using U.S.-accredited credit cards. Then last September, PayPal finally opened its Philippine office. Today local users are allowed not just to load up their accounts through their credit cards, but also to receive funds and withdraw these into their local bank accounts.

Fortunately, in PayPal’s absence, payment schemes that ranged from the use of banks' ATM (asynchronous teller machine) facilities to remittance services, to mobile-phone payment platforms thrived. These alternatives also took into account the small credit-card market in the country. Thus, in lieu of credit cards, overseas buyers pay for products via remittance services offered by YesPinoy, Xoom, MoneyGram, and Western Union. Or if the amounts involved are small, they issue payments through their mobile-phone credits like PayFree, Globe Telecom's G-Cash, and Smart Padala.

Lifestyle portal Yehey! even launched its initial e-commerce service, PayPlus+, in 2001 in partnership with BancNet, and later with MegaLink. Payplus+, explains Yehey! e-commerce manager Jonas de los Reyes, was a payment solution in consideration of the 18 million Filipinos who have ATM cards as compared to about six million who own credit cards. Last year, it was rebranded as Kaban, a one-stop payment solution enabling online entrepreneurs to accept payments through ATM, credit card, and e-cash.

Kaban has since become the payment system of choice of 13 online merchants, offering a diverse array of products and services from pastries (Goldilocks with its Padala Program) to shoes (Melissa Philippines), to training for call-center applicants (Powers Inc.). Medicard Philipines, a health-maintenance organization, allows membership applications online via Kaban. So does Outbound Asia, a staging and multimedia production house, for online registration for the events it manages. SMEs like Qube PC, a Quezon City computer shop, also provide Kaban in its menu of payment options.

OF COURSE, there have been systems developed for users of credit cards — which is, after all, the universal payment mode for e-transactions. Among the local crop are Union Bank's The Port, Mozcom's PayEasy, and Equitable-PCI Bank's Equitable Card Network. Other regional and global third-party providers now servicing online merchants locally are AsiaPay, CCNow, Website Wizard, YesPayments, Your One Stop Shopping Network (YOSSN), Payment Processing Corporation, and Asia Pacific E-Serv Corporation.

But it’s still a relatively tiny market, says ex-banker Mary Anne Tolentino, board chairman of the Philippine Internet Commerce Society, a nonprofit group of small entrepreneurs and big corporations. She adds that the state of the country’s credit infrastructure is a major problem.

	MOZCOM's PayEasy.

“To do business internationally,” she also says, “you need a credit card. But the market of credit-card companies in the Philippines are people who are employed, not SMEs.” For the credit card-holder base to expand, Tolentino says a centralized credit bureau like those in the United States, Europe, and Singapore should be set up. This would gather consumer-credit information from banks, credit-card companies, and government lending institutions. Without reliable credit information, financial institutions have been hesitant to extend credit to small borrowers like SMEs. (Such a centralized credit information system is the subject of a proposed bill authored by Senator Edgardo Angara.)

All these mean that significant amounts of investment are needed to get into e-commerce. As Toral writes in her website, a “fully blown e-commerce website with a full blown e-payment, staffing, marketing tools, logistics program, and risk management in place can easily cost $20,000 as first-year investment.”

This, she adds, is on top of back-end software applications like spreadsheet programs for their accounting, sales, and resource planning needs. But Toral says e-financing programs are now available to facilitate participation of SMEs in e-commerce. The Department of Trade and Industry's SME-FIT program, for one, provides credit lines to accredited IT companies for use in financing hardware, software, website, and customized application development to be made available to SMEs in easy payment terms.

SMEs wanting to ride the e-commerce train would also do well to take heed of the learning curve that the likes of Island Rose and Divisoria.com have gone through. For Divisoria.com's Romano, there's a better chance of success for those who can offer any or all of the following: convenience, availability, and price.

“In terms of convenience, Cebu Pacific made headway by offering an online ticketing system,” he says. “As for availability, why do Filipinos shop with Amazon even with the added cost of shipping? Because they offer books that are not available locally.”

As for price, the 42-year-old marketer cites the case of local professional photographers who shop in Ebay or B&H Photo because the items there are still much cheaper even with added shipping charges.