The Network of Banks and the Private Regulation of E-commerce

The internet is a huge marketplace in which small- and medium-scale international transactions can take place at minimal costs. However, the take-up of e-commerce was lower than expected. One important reason was the lack of a legal order for the online marketplace. For most of us who want to buy or sell online, there is an insecure feeling that we are dealing with anonymous internet traders who may be from another country. This feeling discourages us from transacting on the internet because of the high cost of international litigation if the transaction happens to be cross-bordered. In this article, I argue that the global network of banks can offer a private regulatory mechanism to enforce online transactions, therefore developing institutional trust for the development of e-commerce, especially regarding small- and medium-scale cross-border transactions.