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I think the reason that they're so expensive is paperwork. They're not as automated as some of the rest of the system.

• roc 15y ago
  And why do you think they haven't been automated?
  • wiredfool 15y ago
    My impression from the banks I've worked with is that a wire is a one transaction per file affair, and that a single wire is as much effort as a 10k item ACH file.
    • roc 15y ago
      My point is just that if there were profit in processing transactions as wire transfers, they'd have been streamlined/automated/replaced with a more-modern equivalent long ago.
      • wiredfool 15y ago
        There is. The banks mark up their costs. Wires were $7 at my bank 12 years ago, they're up to $25 now. Sounds like profit to me. There are a ton of alternatives out there for transferring money. Wires are just one Fed product that happen to have a specific speed/security/limit/regulatory system. Off the top of my head, if you want to move money, there's at least: ach, wire, image clearing, paper check clearing, image exchange, the atm network(s), the debit card network(s), the credit card network(s). That's leaving out paypal, western union, dwolla, and whoever else has started a money transfer business. Almost every single one of those has different guarantees about timing, reversability, regulations, and transaction limits. Wires happen to be a ca. 2 hour difficult to reverse (but possible) from /to banks connected to the FED. They're more expensive, probably on the order of $1 + staff overhead. ACH is a roughly overnight to/from any bank connected to the fed, pretty easily reversible for 3-90 days. They're ~$.01/transaction at scale, and you can batch huge numbers of them into one file, so they scale. That's where most bill pay and direct deposits go, as well as a ton of other stuff.