CHAPT ER 4
Online Banking and Payment Services
T
he explosion in Internet usage is impressive—almost one in five people now use the Internet worldwide. Observers around the globe hail it as an important development to improve the lives of the poor, strengthen good governance, and enhance human rights. This has put substantial pressure on governments to keep it free from unnecessary supervision. The American government even has in place a moratorium on taxes on access charges to promote its continued expansion.1 Coinciding with the expansion of Internet usage is the adoption of online banking and payment services such as Internet banking and Internet payments. While online banking goes through a bank and therefore merely extends existing service, Internet payments do not. The latter are facilitated by nonbank financial intermediaries that generally do not make loans or deposits. Figure 4.1. Internet Boom across Regions 1990–2005 (users per thousand people)
Source: Author’s analysis of data provided by the International Telecommunications Union (1990 to 2005) (www.itu.int) and the World Resources Institute (www.wri.org). Note: 2005 data for the Middle East and North Africa was unavailable at the time of publication.
Both of these services are growing quickly around the world. Although the ratio of users in the population is higher in developed countries, there is still a significant market in developing countries. Full statistics on global use of both of these services 19