Press Report: Expert Calls for Cross Border Payment System for Internet

Money transfer threat to growth of Internet

David Bicknell

A US online services specialist has warned that unless banks develop new cross-border payment systems many Internet users worldwide will be unable to pay for forthcoming services.  It is widely assumed that everyone wanting to use the Internet and online services provided by companies such as Compuserve Prodigy and the new Microsoft Network have credit cards or belong to companies.

But in many developing nations and even some developed countries such as Germany only a fraction of the population use credit cards.  It is estimated that only 8% of Europeans have credit cards so paying for goods from another country involves having to wire money or use instruments such as International Money Orders.

William Seebeck managing director of Connecticut online services consultancy Grant/Seebeck International said the explosion in demand for services must persuade banks to reconsider their payment charges.

"It can cost from $20 to $50 to process a cheque from another country because banks claim the demand is not there " he said. Interest in the Internet will create an explosion of cross-border payments but there is no way of meeting that demand without wide access to the use of credit cards.

Seebeck made a presentation on electronic payment services at the International Online Show at Olympia [London] this week.  Seebeck claimed that even in the US the provision of banking services can be chaotic with no facility for US customers - unlike their UK counterparts - to cash a cheque in a bank other than their own.  He said providers of worldwide money transfer services such as Western Union have seen the Internet business opportunities better than the banks.

Seebeck believes the banks now need either to reconsider their pricing structure recognising future demand for cross-border payment or develop new systems to facilitate it.  If not then companies considering using the Internet to provide shopping services will baulk at the payment systems.  One way forward he believes would be for a consortium of leading European and US financial institutions to consider setting up an "Internet Bank" to facilitate Internet cross-border payments.  Without a credit card your international relations could be limited.

Computer Weekly, December 8, 1994