January 19, 2010 09:23
It takes tremendous patience and computer skills for foreigners to purchase products on Korean Internet shopping sites. First of all, accessing one of those sites triggers an avalanche of pop-up messages seeking permission to install an array of security-related programs, from keyboard hacking defenses to network firewalls. Without allowing those programs to be remotely installed, it is impossible to move on to the next stage. Then comes the tedious process of registration, which requires verification by submitting a resident registration number, home address and answers to questions such as customers' wedding anniversary.
And once registration is completed and the actual purchase is about to be made, there is a digital certification process for financial transactions. "To tell you the truth, the process requires a lot of patience even for Koreans," said one IT specialist. "Even if a foreigner can read Korean well, it will probably be close to impossible for them to buy products this way."
◆ Regulations and Membership Quotas
Korea's Internet commerce grew explosively after 2000. The market is currently scaled at W12 trillion (US$1=W1,125). But regulations have been unable to keep up with the rapid growth. A key example is the so-called real-name verification system for financial transactions on the Web, which was recently abolished.
The measure, created in 2002, was designed to prevent online scams using stolen identities and keep a log of the resident registration numbers of customers for tax purposes. Resident registration numbers were the easiest way to sort various records of transactions.
Another reason behind the cumbersome regulations is intense competition between online businesses for new subscribers. They have religiously collected information about their clients because it can translate into increased revenues. Portals such as Naver and Daum have amassed information about tens of millions of people who have subscribed to their e-mail and other services. Most shopping sites also collected information about millions of customers. But it has been used only for telemarketing purposes and not much else. That means shopping sites have made customers go through complicated registration processes without any useful purpose.
◆ Paying the Price
The reason why foreign shopping sites have simple transaction processes is because tight security measures were set in place in the process of establishing electronic commerce networks. Customers do not have to install separate security programs. eBay employs 500 computer systems workers, 100 of whom handle Internet security. Also, eBay allocates 10 percent of its annual IT investment to improving online security.
But only a handful of Korean companies including Samsung Electronics have a separate department in charge of online security, and investment in the area account for less than 1 percent of total spending on IT systems. The reason is the prevailing view that online security does not generate revenues. Instead, most Korean business sites force customers to install a host of security programs and blame them for any problems that occur in the transaction process. In some cases, computers get infected with viruses while downloading security programs.
"Korea is the only country in the world where customers are required to install so many useless security programs and have to receive digital certificates for financial transactions," said Choi Woon-ho, an expert in Internet security. "But unless businesses start spending more to improve online security, cyber transactions will remain complicated."
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