Internet shopping malls owned or branded by banks are cropping up nearly all over the world, but the phenomenon is largely bypassing U.S. banks.

Activity is picking up in Latin America, for example, with Visa International in the center of the action. VisaNet do Brasil, a venture of the card association and the country's largest merchant processor, launched a virtual mall expected to generate $300 million of sales its first year.

Three Visa member banks-Banco Bradesco, Banco do Brasil, and Banco Real- were part of the mall project.

Visa also has big plans for Colombia, where Banco Santander; Avianca, the country's largest airline; and seven Internet merchants have formed a mall, said Day Jimenez, senior vice president of emerging technologies and chip support for Visa's Latin America and Caribbean region.

Visa aims eventually to involve all its 33 member banks in Colombia.

Bancomer in Mexico, with the help of Visa and Liverpool, the country's largest department store, went on-line with a virtual mall last December, Mr. Jimenez said.

In Europe, most of Spain's top banks have Internet shopping malls. The most robust business is being done by Banesto, which has about 100 shops offering goods through its Web site and an additional 300 or so taking advantage of other Internet services the bank offers to merchants.

In the United Kingdom, Barclays Bank has been running a shopping mall, Barclaysquare, since 1995. It has 16 retailers and gets two million visits a year.

Other banks running malls include Bank of Ireland, Merita Bank in Finland, and Standard Chartered Bank in Singapore.

Though U.S. banks are seen as innovators in various modes of electronic service delivery, the Internet shopping mall is not one of them.

The only two U.S. banking companies with noticeable ventures in this area are First Union Corp. and Norwest Corp.

"I think it is safe to say that on-line shopping malls have taken off internationally rather than in the" United States, said Octavio Marenzi, research director of Meridien Research, Newton, Mass.

A vast opportunity may lurk in the seven million U.S. small businesses. The small-business sector operates 700,000 Web sites, and only 10% of these can handle Internet orders and payments, according to International Data Corp.

"There is huge potential to commerce-enable the 99% of businesses that are not doing electronic commerce," said Scott Sedlik, director of brand marketing at iCat Corp., a five-year-old company in Seattle that sells software for building and running on-line malls.

"This is a very profitable area that most banks have not yet gotten into, although they can leverage existing relationships with their merchants," Mr. Sedlik said.

He said he sees two potential revenue streams for banks. One is for banks to charge a monthly hosting fee, from $50 to $350 per merchant. They also are well positioned to process payments.

But to date not much money is to be made, Mr. Marenzi said. Virtual mall operations could divert attention from banks' core retail business, he said.

"There is no reason why a bank needs to run a shopping mall. It can provide services and do transaction processing without setting up a mall."

Norwest's mall, Norwest Plaza, has grown to 140 merchants from one when it was started in November 1995. Randy Remington, Internet business and technology services manager for Norwest Card Services in Des Moines, would not reveal revenue or sales figures.

"Our objective," he said, "is to meet the electronic commerce needs of merchants on the site and retail customers who purchase from the site."

Part of the difficulty of Web malls is determining how to attract merchants with "value added" versus what they can accomplish on their own Web sites.

A mall should offer "navigational and searching capabilities," said Bill Burnham, equity research analyst at Deutsche Bank Securities.

One example, he said, is the collaboration between Visa and the Yahoo search engine on an Internet shopping guide.

With most mall hosts trying to recreate the conventional shopping mall concept in virtual space, he said, "banks in the mall business have been disappointed with the results."

At Bank of Ireland's Shop Ireland, "there is a significant amount of browsing but not a lot of actual purchasing," said Conor O'Toole, head of the Dublin bank's Internet business.

The bank's goal when it launched its mall in November 1996 was to test customer and merchant behavior. It began with a pilot program with four merchants and 100 cardholders and will soon move to six merchants.

"The theory is that revenue is generated on two fronts," said Mr. O'Toole. "Fees for membership in the mall and a merchant service charge on each transaction."

Banesto sees other benefits. Of nearly 400 shops using its merchant services, 18% were new customers, said Luis Alvarez, head of electronic banking.

Banesto also offers Virtual Cash, a secure debit card for Internet purchases. Sixty percent of the 6,000 Virtual Cash users that Banesto has signed up since November are new to the bank, Mr. Alvarez said.

The group effort of the Brazilian banks has the lofty aim of generating annual sales of $600 million, said Mr. Jimenez of Visa.

"Revenues to the banks will occur in the same way as transactions in the physical world," he said. "The Internet is just a different channel."

Mr. Sedlik of iCat agreed that there is "very little going on that is bank-driven in the U.S. Yet there are a lot of creative ways for banks to get into this space."

He said iCat, which has marketing agreements with payment service providers such as Verifone Inc. and International Business Machines Corp., is in negotiations with some large U.S. banks and bank card associations to build cobranded shopping malls for which iCat would maintain the software.

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