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> What is needed to really reduce costs is a payment system that eliminates error and irregularities, or which uses AI to handle them. Perhaps some kind of...

> What is needed to really reduce costs is a payment system that eliminates error and irregularities, or which uses AI to handle them. Perhaps some kind of... clearing house, which could be automated? In the US we have a dozen startups for you to send money to your friends. In most of the world you just do a bank transfer. I pay my rent and utilities with ACH, but I know people who still don't have that option and are stuck in the dark ages of checks or credit cards with processing fees. I have accounts with multiple credit unions, and one doesn't permit online ACH transfers and another takes 3+ days to do it. I'm currently trying to consolidate those accounts but even that's a huge hassle. It's nearly 2020 and the form the payroll company my employer uses wants a voided check from me to change where my direct deposits go! I don't have checks and haven't written a personal check in probably 15 years. We keep scratching our heads looking for that magic future tech solution to our problems (AI! AI for everything!) when we actually just need to fix adoption of the freaking 45 year old standardized solutions right in front of us. Checks have always been an almost entirely American aberration and a bad solution on all sides. It took us almost 15 years after Europe to adopt chip cards, and we're still swiping in places and almost nobody requires a pin for security. NFC adoption isn't great either outside affluent areas. We're not lacking new financial solutions, we're lacking proper adoption of the solutions we already have and the rest of the world is happy to use.

Merrill 7y ago
US payments is a very complex system - there are around 4900 banks and a similarly large number of non-bank players. Managing change is really hard. Not everyone wants a change. One person's costs are another person's revenues. There are also a lot of managers managing organizations that process fraud, errors, and other irregularities. Costs don't matter if you can charge enough in fees and interest. In the case of chip cards, the US wasn't about to pay for the French smartcard patents. In general, financial technology is a patent thicket and its best to wait 20 years before implementing new ideas unless you have really positive financial case and can be sure you have the IP locked down.
- simonh 7y ago
  I find it really hard to believe that the costs of those patents would have been higher, to the US economy as a whole and thus citizens in general, than the costs of sticking to the old inefficient, manual systems for 15 to 20 years. I smell politics. I suspect there's also the old argument that standardisation takes regulation, and regulation is evil. Government should stay out of this (oh, btw, Government - can you just pay the next tranche of subsidies directly into the executive bonus account. Thanks!).
  - Merrill 7y ago
    An earlier transition to chip cards may have reduced costs to the US economy as a whole and thus citizens in general. On the other hand, it would have shrunk the size of the credit card business. It's not politics. It's simply self interest of the key players in the business.
  - nybble41 7y ago
    If government had stayed out of it then the cost of patents would not be a factor; the improved system could have been universally adopted and standardized as quickly as it could be reverse-engineered.
    - Merrill 7y ago
      Standards actually help somewhat, since standards committees generally require that participants disclose their patents that are essential to practice of the standard and pledge to license them on "fair, reasonable, and non-discriminatory" basis. Of course, there is debate on what is actually FRAND. And other parties that are not members of the standards committee may claim that they own patents essential to the standard. But government recognized standards are better than nothing.
52-6F-62 7y ago
Not sure if this is off topic but here in Canada we also have Interac E-Transfers which is what I use to pay my rent. https://en.wikipedia.org/wiki/Interac_e-Transfer https://en.wikipedia.org/wiki/Interac_e-Transfer https://en.wikipedia.org/wiki/Interac https://en.wikipedia.org/wiki/Interac It works quite well.
- parliament32 7y ago
  I've had e-transfers just disappear on me. Sent a friend a few hundred bucks I owed him. The money got debited from my account, but he never received the e-transfer email. Called my bank, they said the money was sent and there was nothing they could do. Called his bank, they said the transfer never appeared and there was nothing they could do. Eventually it got refunded into my account after like a month, but imagine if I was living paycheque-to-paycheque and I was sending off rent. Other times, I've had e-transfers delayed by a few hours. This is fine if I'm sending off rent, but what if I'm trying to buy something off craigslist? I can't exactly hang out with the seller for a few hours waiting for Interac to get their shit together. This isn't an email issue: Interac acknowledges that transfers may take "up to a day" on their site. Further, e-transfers cost money to both send and receive at most/some institutions, while cheques are free. E-transfers also can't be scheduled in advance like post-dated cheques can. Cheques may be antiquated tech but they're still very much useful for certain applications.
  - 52-6F-62 7y ago
    ETransfers expire after 30 days if they’re not accepted and are credited back. I’ve had this happen as well. I do use them to make transfers between banks because they’re virtually immediate rather than several days long pretty regularly these days without fault.
DennisP 7y ago
A couple years ago I wanted to send a little over $3K to my brother. He needed it within 24 hours to deposit for a house rental. The only way I could find to get it there that fast was to physically go to the bank and fill out a paper form for a wire transfer, with a $30 fee. I looked at some of those payment startups and their transaction limits were too low.

Merrill 7y ago

US payments is a very complex system - there are around 4900 banks and a similarly large number of non-bank players. Managing change is really hard. Not everyone wants a change. One person's costs are another person's revenues. There are also a lot of managers managing organizations that process fraud, errors, and other irregularities. Costs don't matter if you can charge enough in fees and interest. In the case of chip cards, the US wasn't about to pay for the French smartcard patents. In general, financial technology is a patent thicket and its best to wait 20 years before implementing new ideas unless you have really positive financial case and can be sure you have the IP locked down.

simonh 7y ago
I find it really hard to believe that the costs of those patents would have been higher, to the US economy as a whole and thus citizens in general, than the costs of sticking to the old inefficient, manual systems for 15 to 20 years. I smell politics. I suspect there's also the old argument that standardisation takes regulation, and regulation is evil. Government should stay out of this (oh, btw, Government - can you just pay the next tranche of subsidies directly into the executive bonus account. Thanks!).
- Merrill 7y ago
  An earlier transition to chip cards may have reduced costs to the US economy as a whole and thus citizens in general. On the other hand, it would have shrunk the size of the credit card business. It's not politics. It's simply self interest of the key players in the business.
- nybble41 7y ago
  If government had stayed out of it then the cost of patents would not be a factor; the improved system could have been universally adopted and standardized as quickly as it could be reverse-engineered.
  - Merrill 7y ago
    Standards actually help somewhat, since standards committees generally require that participants disclose their patents that are essential to practice of the standard and pledge to license them on "fair, reasonable, and non-discriminatory" basis. Of course, there is debate on what is actually FRAND. And other parties that are not members of the standards committee may claim that they own patents essential to the standard. But government recognized standards are better than nothing.

52-6F-62 7y ago

Not sure if this is off topic but here in Canada we also have Interac E-Transfers which is what I use to pay my rent. https://en.wikipedia.org/wiki/Interac_e-Transfer https://en.wikipedia.org/wiki/Interac_e-Transfer https://en.wikipedia.org/wiki/Interac https://en.wikipedia.org/wiki/Interac It works quite well.

parliament32 7y ago
I've had e-transfers just disappear on me. Sent a friend a few hundred bucks I owed him. The money got debited from my account, but he never received the e-transfer email. Called my bank, they said the money was sent and there was nothing they could do. Called his bank, they said the transfer never appeared and there was nothing they could do. Eventually it got refunded into my account after like a month, but imagine if I was living paycheque-to-paycheque and I was sending off rent. Other times, I've had e-transfers delayed by a few hours. This is fine if I'm sending off rent, but what if I'm trying to buy something off craigslist? I can't exactly hang out with the seller for a few hours waiting for Interac to get their shit together. This isn't an email issue: Interac acknowledges that transfers may take "up to a day" on their site. Further, e-transfers cost money to both send and receive at most/some institutions, while cheques are free. E-transfers also can't be scheduled in advance like post-dated cheques can. Cheques may be antiquated tech but they're still very much useful for certain applications.
- 52-6F-62 7y ago
  ETransfers expire after 30 days if they’re not accepted and are credited back. I’ve had this happen as well. I do use them to make transfers between banks because they’re virtually immediate rather than several days long pretty regularly these days without fault.

DennisP 7y ago

A couple years ago I wanted to send a little over $3K to my brother. He needed it within 24 hours to deposit for a house rental. The only way I could find to get it there that fast was to physically go to the bank and fill out a paper form for a wire transfer, with a $30 fee. I looked at some of those payment startups and their transaction limits were too low.