IBM is setting up the first highly secure Internet payment system for an unidentified Hong Kong bank. The system, to be ready next month, will allow the bank to receive and process credit card orders via messages that are protected by the Secure Electronic Transaction (SET) protocol. 'It's a very large bank,' said Cindy Cheng, IBM's Greater China manager for e-business Solutions, though she declined to comment further. Citibank has a Singapore-based SET-enabled gateway which serves Hongkong Telecom IMS' cybermall. Each SET transaction is three-way, involving the customer, the merchant, and the bank. Credit card data and a digital certificate used for authentication are stored on the customer's computer in his Web browser program. When he makes an order at an SET-enabled Internet shop, the server passes the encrypted payment information to the bank, which processes the credit card information and then sends an approval back to the merchant. IBM is already active locally in Internet retailing from the merchant side. Its Net.commerce software, used by on-line shopkeepers to handle sales orders, has been adopted by a number of local on-line malls, including Aeon World, IMS' Shopping Lane, ELM NetShopping, and Future Commerce. Net.commerce is just part of a range of products and services under the umbrella of 'e-business' that IBM is aggressively pushing. More than simply on-line retailing, IBM is trying to convince companies that business-to-business commerce like electronic data interchange and communications services can be done more easily and cheaply through the Internet. 'Companies used to have to rent leased lines,' Ms Cheng said. 'Nowadays, the infrastructure is already in place on the Web.' To help companies handle information - what IBM calls 'knowledge management' - it is relying on its Lotus subsidiary, which later this year will release an upgrade to its best-selling Notes groupware, which lets employees share and distribute information over their company's intranet. IBM is also aggressively embracing the Java platform developed by Sun Microsystems. It has thousands of programmers writing business applications in Java. For hardware, IBM is selling low-end Web servers such as its AS/400 line, as well as mainframe computers such as its System 390. It also will introduce its own version of the network computer by the middle of this year. Big Blue is aiming this e-business marketing blitz - over US$200 million is being spent on advertising worldwide this year, according to the US magazine Advertising Age - at executives and chief executives. Ms Cheng said IBM might hold an advantage over other firms when approaching executives, many of whom were skittish about technology but trusted the IBM brand name. But it was 'also the business value proposition that we can explain to them'. Promoting IBM as the leading player in electronic commerce is why Big Blue has pushed into setting up local cybermalls. 'We don't make a lot of money - our products don't actually cost that much,' Ms Cheng said. 'It's more of a showcase for our technology, like our Nagano [Winter Olympics] Web site.' Unfortunately, the virtual malls are virtually empty, because Internet retailing has not taken off in the SAR as quickly as expected. When Aeon World - a joint venture between the credit card company, IBM and Mitsubishi - launched last April with top-name shops such as Jusco, City Super and Yaohan, officials had grand plans. 'We hope to have 50 merchants on-line by the end of the first year,' Aeon's managing director Kazuhide Kamiani was quoted as saying. Today, only four shops are open. IBM officials declined to reveal how many goods had been bought, but one former tenant, car services shop Challenger, recently closed its virtual storefront because it 'didn't make enough money', its assistant general manager Linda Poon said. 'It didn't go too well for us, as our products didn't sell so well in the cyberworld.' Another mall, ELM Netshopping, run by a subsidiary of local systems integrator Automated Systems, has only three shops on-line after nearly six months operation. Even IMS' Shopping Lane, a relative giant, only has 21 shops. Ms Cheng conceded last year was 'an experience-gaining year for the mall retailer'. She was more bullish about this year, but added that on-line retailers needed to advertise, offer special discounts or other incentives if they expected to drum up business on-line.