Can Amazon Bypass "ActiveX-based Payment Requirement"?

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Monday, January 13th, 2014
SEOUL, KOREA - It is almost certain Amazon.com, the largest online retailer in the world, will open a Korean operation within this year.
 
As part of this move, the U.S. company has recently appointed Yeom Dong-hoon, former Google Korea president, as head of Amazon Korea. For most Koreans shoppers and retail operators alike, however, attention is on whether Amazon will be able to overcome the archaic regulatory hurdle regarding online payment and indeed make online shopping more convenient.
 
By far the biggest problem for Korean online shoppers is the the complicated and endless process of installing security patches before paying for what they are buying. Most of them give up and instead opt to buy things on mobile sites which are easier to access and pay. 
 
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That's because all Korean retail sites require their customers to go through the cumbersome process of installing the ActiveX software. The reason for this requirement, according to the retailers, is that credit card companies demand it. Last year when Internet bookseller Aladdin introduced a simplified payment solution while fully complying with the ActiveX requirement, however, the credit card companies denied the online bookstore the privilege to use their payment systems, arguing that the solution is vulnerable to external attacks because credit card's expiration dates are stored on the servers of payment settlement service companies.
 
In truth, however, hackers attack mostly merchant-level point-of-sale systems rather than highly secure credit card company websites, which invalidates the argument that storing credit card numbers on e-commerce sites is dangerous. If credit card companies keep refusing to allow credit card numbers to be saved on servers of intermediaries, there is no possibility of Amazon-like one-click payment service to take roots in Korea.
 
Han Chang-min, secretary-general of Offnet, said, "The fact that the news of Amazon coming to Korea was received warmly by online consumers last year must be taken as a warning sign that most online retailers would go out of business when Amazon lands here."

 

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