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by Stephen Lawson, Computerworld Hong Kong

(IDG) -- Ventures under consideration by Hong Kong’s Hang Seng Bank and AOL Hong Kong may represent the next salvo in a growing battle in Hong Kong to provide financial services related to online commerce.

Hang Seng and AOL representatives last Tuesday confirmed that the companies are considering a variety of joint initiatives, though they said no concrete plans are yet in place. The representatives denied a press report yesterday that Hang Seng and AOL are set to embark on an Internet commerce venture that would use mobile point-of-sale devices.

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News of the discussions between Hang Seng and AOL Hong Kong comes on the heels of the announcement that another major local bank, Hongkong and Shanghai Banking Corp (HSBC), will team up with Cable & Wireless HKT to develop an infrastructure for e-commerce. And earlier this week, two other e-commerce players -- Federal Express Pacific and Hong Kong-based First Ecom.com -- teamed up to offer payment-on-delivery systems for Asian e-commerce vendors.

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HSBC will offer services to help merchants set up online storefronts, for which HSBC will provide a secure gateway to process customers’ credit cards. The companies also will jointly develop a single chip-based card for credit, calling, and e-commerce functions. The card may also be equipped for use as an identity card and a Mondex cash card, according to a joint statement by the companies.

One analyst said banks in Hong Kong are gearing up to provide online transaction services that could become highly lucrative as Internet commerce grows in popularity.

“You’re seeing a real race here among banks,” said Matthew McGarvey, an analyst at IDC Asia-Pacific, in Hong Kong.

Technologies such as mobile card readers will be essential for online commerce to take off in Hong Kong, and eventually in mainland China, according to McGarvey. With a mobile card reader for credit cards and debit cards, a consumer can order items on the Web and pay for them by giving their card in person when the merchandise is delivered.

Federal Express and First Ecom on Monday announced they will develop an automated payment system that will combine First Ecom’s global payment processing gateway and Federal Express’s barcode tracking system. The system will be designed to make it easier for customers to pay for online purchases on delivery and help e-commerce vendors track the transactions.

"Asia in general is much more concerned with the level of security being offered on Web sites,” McGarvey said. In addition, Chinese consumers are accustomed to ways of shopping and buying that involve physical, in-person interaction, he said.

“Payment solutions that can get around this are going to be an accelerator” in the growth of Internet commerce in Asia, McGarvey said. “A lot of banks are very cognizant of that.”

Banks see a big opportunity in providing transaction services such as card verification for a fee, McGarvey said.