For paper-cluttered mainland companies, online settlement of purchase transactions remains a pipedream, held back by an archaic legal and financial system where on-time delivery of goods does not necessarily mean timely payments. More than 20 banks on the mainland provide online banking services, but few of them have made substantial progress in business-to-business (B2B) online settlement and payment. For this sector to bloom, analysts say the country urgently needs laws to help monitor corporate credit behaviour and penalise delayed payments. 'Sellers often worry what will happen if the goods are shipped out but no payment is received, a situation that happens in China often, where the credit environment is still poor,' said Peking University professor Wang Yiming, who helped develop China Merchants Bank's online banking system. Most businesses are reluctant to abandon the proven paper-based transaction method to embrace online payment and settlement. 'In China, few companies have letters of credits and there's a lot of headache over invoices, official seals and documentations between departments,' said Duncan Clark, a managing director at BDA, a banking technology consultancy. 'It will be impossible for companies to widely accept online transaction settlement within the next five years.' Some banks have tried the technological shift - to no avail. Even at China Merchants Bank, a six-year pioneer in online banking on the mainland, the value of payment transactions settled online stood at 48.56 million yuan (HK$45.47 million) during the first eight months - a mere 14.8 per cent of the bank's total transactions. Last year, China Merchants had 34,000 online corporate customers, the bank said. 'Banks try to explore as many financial service methods as possible - online payment and settlement is just one of them,' a bank spokesman said. 'But in practice, there are too many obstacles to the adoption of online payment and settlement, which is cost-effective, faster and efficient.' Without giving specific figures, the bank official said the switch to online banking among its corporate customers was slowing down, despite healthy growth in the past three years. 'The large companies that are qualified and willing to adopt online banking have started to use it. Those left behind won't become well-equipped enough to implement the system in the near future,' the spokesman said. Most major banks on the mainland offer some form of online banking to their customers, usually covering such services as account checking, payroll, fund transfer and remittance, and customs clearance. China Merchants and the Industrial and Commercial Bank of China have taken a leap of faith by initiating a B2B trading settlement platform on their websites.