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United Nations Conference on Trade and Development

INFORMATION ECONOMY REPORT 2007-2008 Science and technology for development: the new paradigm of ICT Prepared by the UNCTAD secretariat

UNITED NATIONS New York and Geneva, 2007


Chapter 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES A. Introduction

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CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


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CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


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CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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3. E-finance and security challenges of cyberspace $PDMRUFKDOOHQJHIRUHEDQNLQJDQGHSD\PHQWVWKDW UHTXLUHV IXUWKHU LQQRYDWLYH DSSURDFKHV VWHPV IURP the need to tame and contain the negative effects of UDSLGO\JURZLQJF\EHUFULPH9DULRXVDFWRUVLQYROYHGLQ GHYHORSLQJ QHZ VHFXULW\ V\VWHPV LQFOXGH WHFKQRORJ\ vendors, security system designers, banks and nonEDQNÀQDQFLDOVHUYLFHSURYLGHUV :KLOHDFFRUGLQJWRDQRSWLPLVWLFVFHQDULRDERXWWKHXVH RI HEDQNLQJLQWKH8QLWHG6WDWHVWKHQXPEHURI XVHUV ZLOOULVHIURPSHUFHQWRI KRXVHKROGVLQWR per cent in 2011, other sources are noting a tendency for some groups of customers to reduce or even cease their e-banking and e-payment activities because of VHFXULW\FRQFHUQV$FFRUGLQJWRDQRWKHUVRXUFHSHU

FHQW RI  XVHUV LQ WKH  DJH JURXS DUH FRQFHUQHG DERXWLGHQWLW\WKHIW The issue of security on the Internet has dominated PRUHRI WKHOLWHUDWXUHVLQFHWKHGHÀQLWLRQRI HEDQNLQJ PRYHG IURP $70V DQG WHOHSKRQHV WR WKH ,QWHUQHW 6HFXULW\ LV DOOLPSRUWDQW ZLWK RQOLQH EDQNLQJ DQG LW PLJKWGHWHUPLQHLWVVXFFHVVRUIDLOXUH,QIDFWVRPH FRQVXPHUV VWRS SD\LQJ ELOOV DQG FRQGXFWLQJ RWKHU RSHUDWLRQVRQOLQHDVWKH SHUFHLYHG ULVNLQFUHDVHV 7KH VHFXULW\ ULVN FDQ FDXVH EDQNV WR ORVH WKH JDLQV RI  ,QWHUQHW EDQNLQJ LI  SUREOHPV DUH QRW SURSHUO\ DGGUHVVHG 2QH RI  WKH ULVNV LV LGHQWLW\ WKHIW ZKLFK FDQ RFFXU LQ WZR ZD\V ´SKLVKLQJµ QDPHO\ VHQGLQJ DXWKHQWLFORRNLQJHPDLOV ZKLFK WULFN FRQVXPHUV LQWR JLYLQJSDVVZRUGGHWDLOVE\UHSO\LQJWRWKHHPDLODQG ´VSRRÀQJµ ZKLFK XVHV D IDNH ZHEVLWH WKDW PDNHV FXVWRPHUVEHOLHYHWKH\DUHXVLQJDUHDOVLWH7KHUHDUH DOVR NH\ ORJJLQJ VRIWZDUH WUDFNLQJ DQG UHPHPEHULQJ SDVVZRUGV DQG QXPHURXV RWKHU YLUXVHV DQG WURMDQV &OD\WRQ  Another worry from the security point of view is the “trust gap”, an unproven but suspected divide between those who use the Internet for other tasks and hence WUXVW RQOLQH EDQNLQJ DQG WKRVH WKDW GR QRW )R[ DQG %HLHU   7KLV PHDQV WKDW WR HQFRXUDJH ,QWHUQHW EDQNLQJ RQH PD\ ÀUVW QHHG WR HQFRXUDJH RWKHU DFWLYLWLHVRQWKH,QWHUQHW 2QFHWKHEDQNVVWDUWWRRXWVRXUFH,7UHODWHGRSHUDWLRQV WRRWKHUÀUPVWKHUHLVWKHLQFUHDVHGULVNWKDWWKHODWWHU PD\QRWEHVXIÀFLHQWO\UHJXODWHGDQGWKDWWKHWUDQVIHU of information to them and between them and the EDQNV PD\ LQFUHDVH WKH VHFXULW\ ULVN &RQVHTXHQWO\ WKHUH LV D QHHG WR GHYHORS DSSURDFKHV WR PDNH VXUH WKDW D FRPELQDWLRQ RI  HQRXJK WHFKQLFDO H[SHUWLVH VHFXULW\VXSSRUWDQGRYHUVLJKWLVLQSODFHZKHQRQHLV HQJDJLQJ LQ RXWVRXUFLQJ DQG RIIVKRULQJ LQ HÀQDQFH 0X  7KH VHFXULW\ SUREOHP VKRXOG KRZHYHU QRW EH RYHUHVWLPDWHG 0DQ\ LQQRYDWLYH VFKHPHV KDYH EHHQ GHYHORSHGWRVROYHWKHSUREOHPV 6LQJKDQG0DOKRWUD 5RPEHO ZLWKPRUHLQFOXGLQJELRPHWULFV LQ WKH SLSHOLQH $UXPXJD   )XUWKHUPRUH VRPH DXWKRUV FODLP WKDW WKH VORZHU JURZWK RI  ,QWHUQHW EDQNLQJLQWKH8QLWHG6WDWHVLVQRWOLQNHGWRVHFXULW\ concerns but to the macroeconomy and market VDWXUDWLRQ 5RPEHO  :KLOH,&7VKHOSWRLPSURYHFUHGLWULVNPDQDJHPHQWDQG hence the situation regarding information asymmetry,

INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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customers are undergoing dramatic changes that DUH PRYLQJ UDSLGO\ WRZDUGV HEDQNLQJ *LYHQ WKH UHODWLYHO\ JUHDWHU LPSRUWDQFH RI  FRPPHUFLDO EDQNLQJ LQ WKH ÀQDQFLDO VHFWRU RI  GHYHORSLQJ FRXQWULHV understanding the current trends in e-banking and eSD\PHQWVDQGGHULYLQJOHVVRQVIURPWKHPFRXOGEHRI  WKHXWPRVWLPSRUWDQFHIRUWKHIXUWKHUPRGHUQL]DWLRQ RI EDQNLQJLQWKRVHFRXQWULHV&RQVHTXHQWO\WKHUHLVD QHHGWRDQDO\VHWKHFXUUHQWWUHQGVDQGEHVWSUDFWLFHV in e-banking and e-payments, bearing in mind their DSSOLFDELOLW\LQGHYHORSLQJDQGWUDQVLWLRQHFRQRPLHV

1. The state of play in Internet banking (EDQNLQJ FRPELQHV LQIRUPDWLRQDO DQG WUDQVDFWLRQDO IDFLOLWLHV :KLOH WKH ULVNV UHODWHG WR LQIRUPDWLRQDO ZHEVLWHV DUH OLPLWHG WR LQFRUUHFW LQIRUPDWLRQ RU negative perceptions of the host bank, the risks with WUDQVDFWLRQDO IDFLOLWLHV DUH PRUH FRQVLGHUDEOH 7KRVH IDFLOLWLHV VKRXOG EH IXQFWLRQDO DQG XVHUIULHQGO\ DQG FXVWRPHUV VKRXOG EH VXUH WKDW WKHLU VHFXULW\ DQG SULYDF\ ZLOO QRW EH LQIULQJHG ,Q D ZLGHU SHUVSHFWLYH HEDQNLQJ ULVNV LQFOXGH WKH IROORZLQJ FDWHJRULHV transaction or operations risk, credit risk, funding and LQYHVWPHQWUHODWHG ULVNV OHJDO DQG FRPSOLDQFH ULVNV DQG VWUDWHJLF ULVN $LQLQ /LP DQG :HH   7KXV WKHXVHRI HEDQNLQJSRVHVDGGLWLRQDORSHUDWLRQDODQG KHQFH UHSXWDWLRQ ULVN IRU H[LVWLQJ EDQNV HVSHFLDOO\ ZKHQ WKH\ EHFRPH YXOQHUDEOH WR IUDJLOH WHFKQRORJ\ FXVWRPHUFRQIXVLRQDQGKDFNHUV ))(,& %DQNV WKDW VWDUW HEDQNLQJ PD\ DOVR IDFH LQLWLDOO\ KLJK FRVWV DQGWHFKQLFDOSUREOHPVEXWWKRVHWKDWZDLWPD\ORVH FXVWRPHUV WR WKRVH ZKR FDSWXUH WKH PDUNHW ÀUVW $V the experience of many pioneers in e-banking shows, SURSHUO\WDFNOLQJWKHDERYHPHQWLRQHGULVNVIURPWKH outset and managing them in the course of the further GHYHORSPHQWRI HEDQNLQJLVLPSRUWDQWIRUPD[LPL]LQJ WKHEHQHÀWVRI HEDQNLQJLQWKHORQJHUUXQ 7KH OLWHUDWXUH RQ HEDQNLQJ PDLQO\ GLVFXVVHV WKH SDWWHUQVRI HPHUJLQJYLUWXDOEDQNVDQGRI HVWDEOLVKHG EDQNVGLYHUVLI\LQJIURPDSXUHO\EUDQFKEDVHGDSSURDFK WRDWZLQRQOLQHDQGPRUHVWUHDPOLQHGEUDQFKV\VWHP WKDWPDNHVLWSRVVLEOH WR UHGXFHKLJK VWDII  FRVWVDQG RYHUKHDGV LQ D EUDQFK $NLQFL $NVR\ DQG $WLOJDQ  7KHEDQNV·VWUDWHJLHVKDYHDOVREHHQUHÁHFWLQJ FRQVXPHUV·SUHIHUHQFHVIRUDPL[RI GHOLYHU\FKDQQHOV WKHLQFUHDVLQJO\SRSXODU´FOLFNDQGPRUWDUµDSSURDFK 7KLV PRGHO LV EHFRPLQJ LQFUHDVLQJO\ WKH QRUP LQ (XURSH DQG WKH 8QLWHG 6WDWHV VLQFH FRQVXPHUV DOWKRXJKLQFUHDVLQJO\DWWUDFWHGE\HEDQNLQJFRQWLQXH WRYDOXHSHUVRQDOLQWHUDFWLRQDQGDUHFRQFHUQHGDERXW VHFXULW\ULVNVRQWKH,QWHUQHW 1RYDPHWULH 

INFORMATION ECONOMY REPORT 2007-2008


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CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

It combines face-to-face interaction and other DGYDQWDJHV RI  WUDGLWLRQDO EDQNLQJ ZLWK WKH  DYDLODELOLW\ DQG ORZ QRQGLVWDQFH GHÀQHG FRVWV DVVRFLDWHGZLWK,QWHUQHWEDQNLQJ$GHODDU%RXZPDQ DQG 6WHLQIHOG   ORRNHG DW D 'XWFK FRRSHUDWLYH banking network and found that, since costs are much ORZHU RQ WKH ,QWHUQHW WKH EDQNV KDG EHJXQ RIIHULQJ WKHPRVWH[SHQVLYHVHUYLFHVH[FOXVLYHO\RQWKHZHE)RU RWKHU VHUYLFHV FXVWRPHUV FDQ FRPSOHWH IRUPV RQOLQH DQGWKHQÀQLVKWKHWUDQVDFWLRQLQDEUDQFK7KHUHLV KRZHYHU D ULVN WKDW VXFK ´FOLFN DQG PRUWDUµ PRGHOV ZLOOQRWEHVXVWDLQDEOHRUZLOOFRQWULEXWHWRLQFUHDVLQJ WKH GLJLWDO GLYLGH VLQFH ZKLOH HGXFDWHG DQG DIÁXHQW FXVWRPHUVZLOOEHQHÀ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set-up costs it is not hard to see the attraction of ebanking ($GHODDU %RXZPDQ DQG 6WHLQIHOG   'DQGDSDQL   6LPSVRQ   XVHG GDWD IURP  IRU D VDPSOH RI  $PHULFDQ EDQNV DQG EDQNV LQ HPHUJLQJPDUNHWVWRDVVHVVWKHGLIIHUHQWFRVWSURÀOHV DQGULVNVLQHEDQNLQJDQGLQWUDGLWLRQDOEDQNLQJ+H IRXQG WKDW EDQNV LQ WKH 8QLWHG 6WDWHV ZKLFK KDYH reached an advanced stage in the use of e-banking KDYHORZHURYHUKHDGFRVWVDQGDUHFRQVLGHUHGWRKDYH DORZHUEDQNLQJULVNDWWDFKHGWRWKHPZKHQFRPSDUHG with banks in emerging markets, which do not use eEDQNLQJ+HQFHEDQNLQJULVNDQGRYHUKHDGFRVWVFRXOG EHUHGXFHGWKURXJKJUHDWHUXVHRI HEDQNLQJ 7KHSURÀWDELOLW\RI ,QWHUQHWRQO\EDQNVKDVKRZHYHU EHHQ TXHVWLRQHG DQG VWDWLVWLFDO WHVWV ZHUH XVHG WR FRPSDUH LW ZLWK WKDW RI  HVWDEOLVKHG EDQNV ,Q RQH PRGHO SURÀW HIÀFLHQF\ IRU ,QWHUQHWRQO\ EDQNV ZDV KLJKHUZKHUHDVLQDQRWKHULWZDVORZHUVXJJHVWVWKDW DW OHDVW LQ WKH VKRUW UXQ ,QWHUQHWRQO\ EDQNV DUH QRW QHFHVVDULO\YLDEOHDQGDUHPRUHOLNHO\WREHVXVWDLQDEOH DV RQH RI  WKH FKDQQHOV LQ D PXOWLFKDQQHO EDQNLQJ VHUYLFHVGHOLYHU\PRGHO &\UHH'HOFRXUHDQG'LFNHQV   ,Q WKH FDVH RI  ,WDO\ VWXGLHV KDYH VKRZQ WKDW WKHUH LV D VWURQJ SRVLWLYH OLQN EHWZHHQ SURÀWDELOLW\ DQG,QWHUQHWEDQNLQJDFWLYLWLHV +DVDQ ,QWHUQHW EDQNVPD\DOVRKDYHDUHYHQXHVWUXFWXUHGLIIHUHQWIURP WKDWRI WUDGLWLRQDOEDQNVUHO\LQJOHVVRQLQWHUHVWLQFRPH

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INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


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CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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D. E-banking and e-payments for development 1. E-banking and e-payments in developing and transition economies 6LQFHEDQNV LQ GHYHORSLQJFRXQWULHVDQG LQ FRXQWULHV with economies in transition did not have an abundance RI WUDGLWLRQDOSURSULHWDU\WHFKQRORJLHVDQGKHQFHOHVV DWWDFKHG WR SDUWLFXODU EDQNLQJ WHFKQLTXHV WKH\ ZHUH DOVRLQPDQ\FDVHVPRUHRSHQWRLQWURGXFLQJWKHPRVW UHFHQW,QWHUQHWEDVHGWHFKQRORJLHV7KHIDFWWKDWWKH\ ZHUHOHVVEXUGHQHGZLWKWUDGLWLRQLQVRPHFDVHVPDGH LW SRVVLEOH LQWURGXFH QHZ WHFKQRORJLHV PRUH UDSLGO\ DQG DOVR DGDSW WR WKHP PRUH UDSLGO\ +RZHYHU WKDW UHTXLUHV PRUH YLJRURXV WUDLQLQJ DQG UHWUDLQLQJ RI  HPSOR\HHV7KLVLVZK\LWLVLPSRUWDQWWRXQGHUVWDQG KRZWKHÀQDQFLDOLQVWLWXWLRQVLQWKRVHFRXQWULHVZHUH PDQDJLQJWRVWULNHDEDODQFHEHWZHHQWKHRSSRUWXQLW\ WREHPRUH LQQRYDWLYHDQG WKHFKDOOHQJHWRVHUYLFHD SRSXODWLRQ ZLWK D ORZHU SHU FDSLWD LQFRPH DQG ODUJH VKDUHRI WKH´XQEDQNHGµ,QSDUWLFXODULWLVLQWHUHVWLQJ to identify how using ICTs and providing e-banking DQG HSD\PHQW VHUYLFHV FRXOG LPSURYH WKH DFFHVV WR ÀQDQFH RI  60(V DQG PLFURHQWHUSULVHV ZKLFK

Box 5.1 Alternative payments systems19 The largest alternative Internet payment provider with a strong position in the Internet auction market is PayPal (which belongs to e-Bay). Customers hold accounts with PayPal and send by e-mail payment or withdrawal-related instructions. They fund those accounts either directly from their bank account through ACH transfer or by using cards or cheque deposits (BIS, 2004). PayPal has doubled the number of its accounts in just two years and has now over 143 million accounts in 190 countries (of which 35 million are in Europe). PayPal is no longer just in the business-to-consumer market. Beginning in mid-2004, it began directly offering its services to small businesses as a conduit IRUEXVLQHVVWREXVLQHVVWUDQVDFWLRQVWKDWGRQRWLQYROYHDQH%D\SXUFKDVH,QIDFWQHDUO\SHUFHQWRILWVWUDI¿FLVQRWUHODWHGWR(%D\ However, most e-commerce sites do not suggest PayPal as a payment agent. Fund transfers via web telephony such as Skype and mobile SKRQHVDUHDOVR¿HOGVWKDWWKHFRPSDQ\LVH[SORULQJ3D\3DOLVQHXWUDOLQLWVEDQNLQJDUUDQJHPHQWVLWLVQRWDOLJQHGZLWKDVSHFL¿FEDQNRU consortia of other payment service providers. 2WKHUSRWHQWLDOO\HPHUJLQJSOD\HUVLQWKLV¿HOGLQFOXGH*RRJOHDQG<DKRR)RUH[DPSOH*RRJOH¶V&KHFNRXWXVHVLWVSRZHUIXODGYHUWLVLQJ engine to encourage businesses advertising in Google to also use the services of Checkout. Microsoft is also planning to launch an online micro-payments service. 7RFUHDWHWUXVWDQGEXLOGFRQ¿GHQFHLQWKLUGSDUW\VHUYLFHSURYLGHUVHVSHFLDOO\DJJUHJDWRUV&%VQHHGWRPRQLWRUWKHPIXUWKHUDQGSURYLGH clear guidelines and regulatory framework for such services.

INFORMATION ECONOMY REPORT 2007-2008


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CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

UHSUHVHQWWKHFRUHRI WKRVHHFRQRPLHV7KLVXQGHUOLQHV the importance of further research into the use of eEDQNLQJDQGHSD\PHQWVLQ60(ÀQDQFHDVZHOODVLQ PLFURÀQDQFH There are a number of features that the customer YDOXHV LQ D ÀQDQFLDO VHUYLFH 7KHVH LQFOXGH DFFHSWDELOLW\ DFFHVVLELOLW\ DIIRUGDELOLW\ DQG HDVH RI  XVH $V IDU DV EXVLQHVVHV DUH FRQFHUQHG WKH\ ORRN IRU D QXPEHU RI  RWKHU IHDWXUHV RQHV WKDW ZLOO KHOS HQVXUHWKDWWKH\SURYLGHDFRVWHIIHFWLYHVHUYLFH7KH\ LQFOXGH IXQFWLRQDOLW\ VHJPHQWDWLRQ WKH DELOLW\ WR VHOO different products to different groups of customers), FRPSHWLWLYH IHHV DQG FKDUJHV LQFUHDVLQJ HIÀ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and transition economies, and in some of them its SHQHWUDWLRQH[FHHGV2(&'PHGLDQLQGLFDWRUV )RU H[DPSOH ,QWHUQHW EDQNLQJ KDV EHHQ VXUSULVLQJO\ VXFFHVVIXO LQ (VWRQLD 7KH ÀUVW EDQN WR LQWURGXFH ,QWHUQHW EDQNLQJ ZDV +DQVDEDQN LQ  7KHUH DUH VHYHUDO UHDVRQV IRU WKLV VXFFHVV )LUVW VLQFH WKH FRXQWU\KDGSUHYLRXVO\KDGDFRPPDQGHFRQRP\WKH WUDGLWLRQDOFRPPHUFLDOEDQNLQJGLGQRWH[LVWDQGKHQFH consumers did not have time to grow attached to the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² DKHDG RI  VRPH 2(&'FRXQWULHV²LQWKH1HWZRUNHG5HDGLQHVV,QGH[ RI WKH:RUOG(FRQRPLF)RUXPDQGWKH(5HDGLQHVV 5DQNLQJRI WKH(FRQRPLVW,QWHOOLJHQFH8QLW21 ,QWHUQHWEDQNLQJKDVJURZQUDSLGO\LQ%UD]LODQGKDV EHHQ WKH IDVWHVWJURZLQJ EDQNLQJ PHGLXP 'LQL]

3RUWRDQG$GDFKL ,Q7XUNH\HFRPPHUFHLVDOVR PRVW GHYHORSHG LQ WKH EDQNLQJ VHFWRU DQG GULYHQ E\ reduced costs, transaction costs on the Internet being RQO\SHUFHQWRI WKRVHDWDEUDQFK7KHÀUVWEDQNWR XVHWKH,QWHUQHWLQ7XUNH\ZDV,VEDQNLQ $NLQFL $NVR\DQG$WLOJDQ  7KH 1LJHULDQ ,QWHU%DQN6HWWOHPHQW6\VWHP 1,%66  KDV UHFHQWO\ GHYHORSHG WKH (OHFWURQLF )XQG 7UDQVIHU 6HUYLFHZKLFKIRFXVHVRQJLURDQG$&+IXQFWLRQDOLWLHV 1,%66LVFROOHFWLYHO\RZQHGE\1LJHULDQEDQNVDQGLV UHVSRQVLEOHIRUWUDQVDFWLRQVLQFOXGLQJÀQDOVHWWOHPHQW ZLWKWKH&HQWUDO%DQN/DXQFKLQJ$&+DQGDGRSWLQJ WKHHOHFWURQLFFKHTXHSUHVHQWPHQWZLWKLPDJHH[FKDQJH V\VWHPKDYHVKRUWHQHGWKHFOHDULQJF\FOHVWLOOIXUWKHUDV ZHOODVUHGXFLQJIUDXGDQGFXWWLQJFRVWV22 Despite great ambitions for Internet banking in Nigeria, these were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ÁXHQWDQG\RXQJHU DUHWKHJURXSVWKDWDUHPRVWIUHTXHQWO\EDQNLQJRQOLQH )RU WKRVH JURXSV WKDW GLG QRW EDQN RQOLQH WKH PDLQ reasons for not doing so were fears about security and ODFN RI  NQRZOHGJH $W WKH HQG RI   RQOLQH EDQN DFFRXQWVLQ6RXWK$IULFDWRSSHGWKHPLOOLRQPDUNIRU WKHÀ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

INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


226

CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

Chart 5.1 Architecture of the CTMI-UEMOA

Source: $$OWLQH2SSRUWXQLWLHVDQGFKDOOHQJHVRIH¿QDQFHLQWKH8(02$VXEUHJLRQ:HVW$IULFDQ&HQWUDO%DQN (see www.uneca.org/e-trade/).

Chart 5.2 Penetration of bank branches and mobile phones*

Sources: %HFN'HPLXUJ.XQWDQG0DUWLQH]3HULV  ,78 

%DQNEUDQFKHVDQG$70VSHUSHRSOHPRELOHSKRQHVSHUSHRSOH

INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

2. ICTs and remittances 5HPLWWDQFHVUHSUHVHQWLQJPDLQO\VPDOOVFDOHWUDQVIHUV E\PLJUDQWVH[SDWULDWHVDQGWRDOHVVHUH[WHQWFKDULWLHV DUH EHFRPLQJ DQ LQFUHDVLQJO\ LPSRUWDQW VRXUFH RI  H[WHUQDOĂ&#x20AC;QDQFLQJIRUPDQ\GHYHORSLQJDQGWUDQVLWLRQ HFRQRPLHVDQGDVVXFKPHULWFDUHIXOH[DPLQDWLRQ$VD GLVWLQFWLWHPRI EDODQFHRISD\PHQWV %23 Ă&#x20AC;QDQFLQJ WKHLUYROXPHVLQWKHFDVHRI PDQ\UHFLSLHQWFRXQWULHV DUHFRPSDUDEOHWRRWKHUVRXUFHVRI IRUHLJQH[FKDQJH VXFK DV H[SRUWV IRUHLJQ SULYDWH FDSLWDO LQĂ RZV DQG RIĂ&#x20AC;FLDO DLG +RZHYHU XQOLNH RWKHUV WKRVH Ă RZV DOVR NQRZQ DV XQUHTXLWHG RU XQLODWHUDO WUDQVIHUV LH QRW LQFXUULQJGHEWUHODWHGREOLJDWLRQV DUHDUHVXOWQHLWKHU of earnings by country residents due to exports of goods and services, nor of their borrowing or LQYHVWPHQWDWWUDFWLQJDFWLYLWLHV $FFRUGLQJ WR WKH :RUOG %DQN UHPLWWDQFHV VHQW E\ PLJUDQWVWRGHYHORSLQJFRXQWULHVUHDFKHGELOOLRQ LQ  :RUOG %DQN  S    +RZHYHU LW LV HVWLPDWHG WKDW WKH UHDO OHYHO RI  FXUUHQW UHPLWWDQFHV FRXOGEHSHUFHQWKLJKHURZLQJWRWKHPDMRUUROHRI  YDULRXV LQIRUPDO UHPLWWDQFHV QHWZRUNV &R\OH   ,QRWKHUZRUGVWKHRYHUDOOYROXPHRI DOOUHPLWWDQFHV PLJKW FRPH FORVH WR WKDW RI  )', $FFRUGLQJ WR 81&7$' )', Ă RZV WR GHYHORSLQJ HFRQRPLHV WRWDOOHGELOOLRQ 81&7$'  &RPSDUHGZLWKRWKHUW\SHVRI Ă&#x20AC;QDQFLDOĂ RZVUHPLWWDQFHVDUHWKHOHDVWF\FOLFDOVRXUFHRI %23Ă&#x20AC;QDQFLQJ 7KH\ SOD\ D VWDELOL]LQJ DQG HYHQ FRXQWHUYDLOLQJ UROH when countries, in adverse economic circumstances, VXIIHU IURP UHGXFWLRQV LQ Ă RZV RI  H[WHUQDO Ă&#x20AC;QDQFH FRPLQJIURPRWKHUVRXUFHVDQGHVSHFLDOO\IURPVKRUW WHUPSRUWIROLRFDSLWDO7KDWSRVLWLYHHIIHFWLVGXHWRWKH

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Chart 5.3 Financial flows to developing countries ($ billion)

Source: :RUOG%DQN 

Box 5.2 Defining remittances in the balance of payments ,QWKHQHZ,0)%230DQXDOLVH[SHFWHGWRWDNHLQWRFRQVLGHUDWLRQUHFRPPHQGDWLRQVE\WKH8QLWHG1DWLRQV7HFKQLFDO6XEJURXSRQWKH Movement of Natural Persons and replace the term ÂŤworker remittancesÂť by three separate terms: â&#x20AC;˘

Personal transfers (PTs), which are transfers in cash or in kind received or made by resident households from or to non-resident households. Sources of income, relationship and purpose of transfer are not taken into account.

â&#x20AC;˘

Personal remittances (PRs), which are the sum of PTs, net compensation of employees and capital transfers â&#x20AC;&#x201C; that is, they involve all household-to-household transfers and take the perspective of the recipient country.

Â&#x2021;

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Source: 0LJUDQWUHPLWWDQFHVWRUHJLRQVQHLJKERXULQJWKH(8(&%0RQWKO\%XOOHWLQ)HEUXDU\SSâ&#x20AC;&#x201C;92.

INFORMATION ECONOMY REPORT 2007-2008


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CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

intermediaries were charging the remitters passing WKURXJKWKHLUFKDQQHOVKLJKIHHV$WWKHVDPHWLPHWKH IHHVFROOHFWHGE\PDMRUIRUPDOPRQH\WUDQVIHUVHUYLFH SURYLGHUV ZHUH DOVR LQLWLDOO\ TXLWH KLJK FRQVLGHUDEO\ H[FHHGLQJ IRU H[DPSOH WKH OHYHO RI  LQWHUFKDQJH IHHV SDLG E\ PHUFKDQWV IRU FUHGLWFDUG SURFHVVLQJ +RZHYHUZLWKWKHDGYHQWRI WKH,QWHUQHWDQGIXUWKHU GLVVHPLQDWLRQ RI  HOHFWURQLF PHDQV RI  SD\PHQWV various money transfer service providers started to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

Table 5.1 The cost of transferring $50 and $200 to Armenia in 2004 Cost as % $50

$200

Anelik

1.5–3.0

1.5–3.0

HSBC

70.9

18.5

1.0

1.0

26.0

11.0

Unibank (Unistream) Western Union Source: Roberts & Banaian (2005).

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INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


234

CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008


CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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CHAPTER 5 E-BANKING AND E-PAYMENTS: IMPLICATIONS FOR DEVELOPING AND TRANSITION ECONOMIES

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INFORMATION ECONOMY REPORT 2007-2008



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