15 ms·

Bank transfers as a payment method (2021)

111 points by shsachdev 3y ago

AtNightWeCode 3y ago
Why Americans love credit cards so much is a mystery. In Europe debit cards have been the way to go for a long time. Most countries in Europe also have direct payments through mobile apps.
- linsomniac 3y ago
  Credit cards provide protections that debit cards do not, in particular related to skimming-adjacent losses. Europeans: Realize that chip-based transactions are relatively new in the USA, and we still have places that do not have chip-enabled POS (primarily I've seen it lacking at car washes, but it was only in the last couple years that my gas station started, allegedly, doing chip -- it still takes the whole card AND asks you to remove it quickly).
- kelnos 3y ago
  I really don't get why this is so hard for some people to understand. It's simple: when I pay with a credit card, the money is still in my possession. If the merchant screws up or there is fraud, I can dispute the charge and get resolution without any money leaving my bank account. On top of that, I get cash back and other benefits/rewards from using a credit card (like extended warranties and insurance on the things I purchase). Yes, these things make purchase prices go up for everyone, but if you don't play the "game", you're leaving money on the table. Most merchants do not pass credit card fees on to card-using customers (so you don't save by using debit or cash), though that practice has increased over time. Certainly if/when that becomes the norm, I'll have to decide if the benefits of using a credit card are worth the cost.
  - AtNightWeCode 3y ago
    "I can dispute the charge and get resolution without any money leaving my bank account." Really? In what cases can an average credit card user challenge a payment that has not already occurred? If there is a fraud usually it is quick to get money back if debit cards were used.
    - astrange 3y ago
      In all cases. What's the problem?
    - supertrope 3y ago
      In the United States checking/debit consumer protection is weaker. The legal minimum banks have to do depends on how quickly you notice a suspicious transaction. If you report it within two days your liability is capped at $50. If more than two days have passed your liability is $500. If more than 60 days have passed since the statement was sent fraud loss liability is unlimited. When you go to file a fraud claim the bank must provide a provisional credit for the amount of the transaction but they may reverse this if they decide it was not fraud. It depends on what state you're in, if you used a branded (Visa/MC) debit card, the bank, the representative's interpretation of all the applicable rules, your prior chargeback history, etc. https://www.consumerfinance.gov/rules-policy/regulations/1005/6/#7ae2562961d72df6ca35db9818a90553ee87215eec5e8e9b1b9521e1 https://www.consumerfinance.gov/rules-policy/regulations/100... With credit cards the legal maximum is $50. And the fraudulent transactions are drawn on a line of credit (soft money) not the contents of your bank account (hard money). The United States has a powerful oligopoly of payment network operators who lobby to maintain high interchange revenue. This de facto shifts the cost of credit cards onto those who don't have them. Instead of annual membership fees for the actual users, merchants pay about 2% of card transaction volume instead of 0.3% in the EU.
    - Symbiote 3y ago
      As an example, I bought a ticket using a British credit card to a music festival. The festival went bankrupt so never happened. I claimed the cost of the ticket back from the credit card company. Recovering money from the bankrupt festival is then their problem.
      - AtNightWeCode 3y ago
        I forgot that credit cards comes with insurance in some places. Most apparent is that you can't even rent a car in some parts of US without a credit card. In EU that type of insurance may be included in the legally obligated housing insurance.
  - supertrope 3y ago
    Because they live outside the United States. In some other countries all bank card transactions include the level of fraud protection that is only reserved for credit card users in the US.
- raincom 3y ago
  Buying things that are not needed with the money one doesn't have = credit cards. That's the beauty of credit cards. It increases the spending in economy. With debit cards, one has to spend within their means.
  - pepa65 3y ago
    And I think CC users (and more in general, the US populace) are more used to having debt. If you use a debit card, nothing needs to be paid back or remembered. With a credit card, you have to make sure that every month you clear your debt, otherwise you're starting to incur juicy fees -- this is what banks hope for! If you do clear your debts faithfully, you're having free very short terms loans every month..! But, being human, circumstances can happen where a monthly debt repayment does not happen, and then: kaching! But many people do not pay everything back every month, and this is a good money maker for banks.
- refurb 3y ago
  Why on earth would I use my money (and the risk of fraud) when I could use the banks money, interest free for a month? And if I have a dispute with a business, I can have the credit card company reverse the charge for me? If it's debit, that money is gone. I would never use debit if I could use a credit card. The US system is far superior for consumers.
  - pepa65 3y ago
    Only if you faithfully clear your debts every month. Are there any account types that do this automatically?? (Unlikely, I would think...)
    - refurb 3y ago
      Yes, you can set up auto-pay to automatically pay your bill in full every month.
    - Symbiote 3y ago
      Britain has/had a credit card culture in some ways similar to the USA, and the direct debit system explained in the article is usually used to pay the balance in full every month. I think that's the same for credit cards in most of Europe. (They exist even if they aren't popular.)
  - Denvercoder9 3y ago
    > The US system is far superior for consumers. Consumers are also forced to pay for it, though. The transaction fee in the US is routinely 2-3%, while in the EU it's capped at 0.3%. Because of borderline anti-competitive behaviour from VISA and Mastercard, that fee is also not charged separately to creditcard-using consumers but integrated in the price, so everyone pays for it.
CaliforniaKarl 3y ago
(2021)
metadat 3y ago
In case you missed the other articles and discussions from this site, they are numerous and occasionally highly informative: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=bitsaboutmoney.com&sort=byPopularity&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
- mcc1ane 3y ago
  https://news.ycombinator.com/from?site=bitsaboutmoney.com https://news.ycombinator.com/from?site=bitsaboutmoney.com ?
  - metadat 3y ago
    Initially I considered posting that link, but there are a lot of submissions which never caught on which made it a bit annoying to wade through. Nevertheless, thanks for your addition! Edit: I just noticed the site has been renamed, so some prior submissions are under https://news.ycombinator.com/from?site=kalzumeus.com https://news.ycombinator.com/from?site=kalzumeus.com
- mousetree 3y ago
  Am I the online one who finds them a bit verbose and meandering?
  - metadat 3y ago
    Agreed, not always easy to read, but I found a few particularly enlightening: The Branch Banking Model https://bam.kalzumeus.com/archive/branch-banking/ https://bam.kalzumeus.com/archive/branch-banking/ https://news.ycombinator.com/item?id=32679233 https://news.ycombinator.com/item?id=32679233 ^ I no longer despise local bank branches, it's a tough business. Money Laundering and AML Compliance" https://www.bitsaboutmoney.com/archive/money-laundering-and-aml-compliance/ https://www.bitsaboutmoney.com/archive/money-laundering-and-... https://news.ycombinator.com/item?id=34743896 https://news.ycombinator.com/item?id=34743896
  - astrange 3y ago
judge2020 3y ago
The article is probably right about FedNow likely not drastically improving things immediately, but maybe people will build good products on top of it over the coming years. The launch is for late July https://www.frbservices.org/news/press-releases/062923-organizations-certified-ready-fednow https://www.frbservices.org/news/press-releases/062923-organ...
- candiddevmike 3y ago
  Why can't it be setup in a way where people don't have to build good products on top of it? Why leave room for rent seeking?
  - pgeorgi 3y ago
    Because socialism! (only partially sarcastic: having more-or-less public utilities, which the Fed is and is not, provide full services that "the market" can't make money with^W^W^Woptimize is anathema to some circles)
  - Analemma_ 3y ago
    FedNow is infrastructure for settling payments between banks. It's replacing ACH, which is really old and slow to settle. In computing terms, think of FedNow as something like TCP: it's very low in the OSI hierarchy and not meant to be used directly by users. The hope is that it will enable nicer applications to be built on top of it, things which are not really possible to build on top of ACH, but it is not a payment application in and of itself.
    - raincom 3y ago
      Well, there is Real Time Payments, as it is called RTP by The Clearing House. (RTP is almost like FedNow.) However, The Clearing House is owned by a small number of banks. That's why only big banks use RTP. I heard about 50 banks use RTP, when 10000 financial institutions exist in US. This is also one of the reasons why majority of credit unions don't offer Zelle, as the latter is owned by top banks. The bigger culprit is private entities controlling infrastructure, and these entities want their tax.
hlieberman 3y ago
Notably, Canada has a system that works like UPI from India and is very widely used: https://en.wikipedia.org/wiki/Interac_e-Transfer https://en.wikipedia.org/wiki/Interac_e-Transfer
- anothermoron 3y ago
  Wow, as a Canadian I always thought that Interact was international.
  - biscuitech 3y ago
    Same, until I went to the US where nothing is standardized and somehow there's private companies worth billions that cover this precise use case. It's actually mind blowing. The single banking system of Canada is a massive win in this regards
    - tdhoot 3y ago
      Interac is also a for-profit corporation. It's just owned by an association of banks. Zelle would be the equivalent in the US.
AlexandrB 3y ago
Would be interesting to know how Canada's Interac e-transfers[1] compare to the Indian or Japanese systems. Probably the biggest inconvenience of Canada's system it the need to use an email address as the destination. [1] https://en.wikipedia.org/wiki/Interac_e-Transfer https://en.wikipedia.org/wiki/Interac_e-Transfer
- hugocbp 3y ago
  I can compare it to Brazilian Pix. I use both extensively. INTERAC is like the beta version of Pix (which is basically the same as the Indian system in the article). Pix works via email, CPF (a person's "SIN" number, which isn't secret in Brazil), randomly generated key, telephone number, QR codes. INTERAC is mostly email. Pix works immediately. Some transactions take 1 second or less to credit on the other bank (you can see that when you are trying to send money to yourself, when the destination bank gives you a notification that it received the money before the UI of the sending bank has even acknowledged that the operation is completed). INTERAC sometime takes several minutes, up to 30 minutes sometimes in my experience. Personally I think INTERAC is about 70% of the way there, but I would chose PIX every time simply because it seems like a much better iteration. With Pix, you get credited and debited immediately. With INTERAC, I've noticed that sometimes you can be debited immediately and the credit takes longer, and vice versa. Sometimes for several minutes, your money can "double" (appear in second account without disappearing from the first one) or "disappear" (leave the first account but not get credited on the second one). This last point might not seem like much, but it gets in the way of using for a lot of things that would need to be immediate (paying for a Taxi, or a supermarket purchase). Since Pix is instantaneous, it is used heavily for those kind of payments where you don't want to wait.
- Scoundreller 3y ago
  I've never done it, but you can also use a phone number which sends a text message link.
  - toomuchtodo 3y ago
    “Aliases” is the term of art when determining if an instant payment systems supports using a phone number, emails, etc for mapping to an underlying account.
jrm4 3y ago
As someone who's not entirely opposed to crypto, this was an interesting read. Mostly in terms of the following: I sort of assumed that one of the factors (among many, for sure) limiting widespread adoption of crypto was that the thing we (in the US) already have was probably pretty smooth? And reading this, seems like it really ain't. Interesting that crypto hasn't made inroads here. I mostly get why, incumbents don't like change, but still.
- dist-epoch 3y ago
  > Interesting that crypto hasn't made inroads here A funny thing happened, 10 years ago crypto transfers were free, and bank transfers cost $15 or more. Today the opposite is true, many bank transfers are free, but sending crypto costs about $10.
  - earnesti 3y ago
    I use Bitcoin a lot and I typically pay 10 cents for LN payment, and 50 cents for onchain. There have been very short periods when fees have peaked and you had to pay 10 bucks if you wanted it instantly.
  - tornato7 3y ago
    That's not really true of crypto if you consider any chain but Bitcoin and Ethereum. You can send USDC on Arbitrum (an Ethereum L2) for <$0.10, or Polygon for <$0.01. Also, as the article points out, international transfers are still painful. Paying $10 to transfer money internationally is probably still a very good deal for most people.
    - jrm4 3y ago
      I don't know why this is downvoted; I understand that there's a lot to dislike about crypto, but "international transfers" is no longer even a question. A lot of people today literally use crypto for that.
      - kelnos 3y ago
RcouF1uZ4gsC 3y ago
For me as a consumer in the USA, one of the biggest advantages for credit cards over bank transfers is where the money is in case of dispute. With credit cards, I still have the money in my possession, the dispute process is about the credit card company trying to get paid. With a bank transfer, the money is gone from me, and the dispute process is about me trying to get my money back. Even with the same policies on paper, this one fact makes me prefer to pay with credit cards wherever possible.
- toomuchtodo 3y ago
  And you’ll still have that option, you’ll just likely pay for the privilege with the 3% fee pushed back onto customers who opt to use credit card rails. Think of it as a dispute insurance premium for less than high confidence transactions. An early example of this is T-Mobile’s recent decision to remove their autopay discount if you use a credit card instead of a deposit account (their CC interchange fees are material at their scale). Instant settlements at low or no cost give merchants options to squeeze out their payment costs.
  - deleted 3y ago
    [deleted]
nzach 3y ago
In Brazil we have Pix[0] that seems pretty similar to India's UPI. [0] - https://en.wikipedia.org/wiki/Pix_(payment_system) https://en.wikipedia.org/wiki/Pix_(payment_system)
spaniard89277 3y ago
I'm sorry SEPA is pull based? IDK in other countries but in Spain is pretty common to use it for push and pull operations. I certainly do, and everyone I know. The only nuisance is that requires an IBAN number and most Banks require a security ritual which is pretty boring. I didn't know that there's high fraud in SEPA either. Whoever tries to charge me, I can block em and contact my bank to make em know I didn't allow such charge, and in my case, when that happened (only once in my life) they handled everything and I got my money back.
- raverbashing 3y ago
  Yeah I think the pull based is not that common (usually for standing orders, and most of the time it's intra-country, through it works cross) but the push mode is also very popular
  - gorbypark 3y ago
    Having recently-ish moved to Spain, I think both push and pull are fairly common. Both my health insurance premiums and phone/ISP bills are just taken from my account each month. Sometimes larger transaction (buying a mattress for example) seem to SEPA push based, but I don’t do a lot of one off transfers (using SEPA). It does seem like Bizum has taken over for person to person transactions, though. Even some companies are accepting Bizum for online payments, and I’ve seen some small shops posting a QR code for their Bizum at the checkout counter.
- dementik 3y ago
  I think article means SEPA Direct Debit.
- Denvercoder9 3y ago
  > most Banks require a security ritual which is pretty boring This varies significantly by country and bank. At my bank I can authorize transactions (up to a preconfigured amount) just with my fingerprint, and it takes like 5 seconds.
dyates 3y ago
As a South African, it's weird seeing this presented as a strange/futuristic idea. I pay most of my bills through bank transfers and it's the standard way for two people with bank accounts to send money to each other. As long as you know someone's bank and account number, you can send them money. All local online retailers, investment brokers, etc, support bank transfers, with some[1] even providing discounts for paying via bank transfer instead of credit card. I've even paid this way at a brick and mortar place that didn't have a card machine. [1] https://www.evetech.co.za/ https://www.evetech.co.za/
- RandallBrown 3y ago
  > As long as you know someone's bank and account number, you can send them money. This works in the US just fine as well, although you probably need to go to a bank to do it. I've also been given the option to pay plenty of bills through bank transfers but usually choose not to if I can use my credit card for the same price.
  - nomel 3y ago
    > This works in the US just fine as well, although you probably need to go to a bank to do it. Venmo and the like exist because that's not "fine". If you have the same bank, there's a good chance you can do it online, or with some crappy third party app. If you have different banks, there's a very slim chance they use the same crappy third party app, leaving you driving in person to initiate a digital transaction that usually takes between a few days to a week to clear.
- robertlagrant 3y ago
  SA banking regulations are meant to be extremely sensible[0]. It's possible that the US has very strange ones that not only enable some awful things, but also disable good ones. [0] Source: worked for African Bank for a bit, years ago
- kasey_junk 3y ago
  The comparison between SA bank transactions and UPI is pretty superficial. Precisely because the sender needs to know banking details about the receiver and to confirm the transaction on the receiver side you need access to the receivers bank data. UPI does not require either of those! It’s pretty great, and what modern bank transfers will look like. SA bank transfers, like non-US bank transfers, are newer, cheaper and faster than their US counterparts, but aren’t fundamentally different in the mechanics and the edge cases. More in the regulations and market forces on banks. That’s not to say they aren’t good! They certainly are in comparison to US bank transfers. But UPI does compare closer to sci fi.
godelski 3y ago
I've always wondered why big banks don't implement a lot more technologies, and I guess this gets to some of it. But it does seem like banks would have the incentives to kill services like Venmo and Stripe overnight. Like why are there not clear and straightforward banking APIs that let me create virtual cards and why doesn't my app let me just transfer money directly to my friend's bank account (I get global being a bit more difficult, but country wide is similar regulations, right?). I feel like there's just so much that I don't know that I don't even have the ability to reasonably answer these questions and I'm pretty sure there's reasons the above companies exist and it isn't simply static friction of big banks.
- anaganisk 3y ago
  India has done this for more than a decade at this point with IMPS and NEFT, and recently UPI. And I'm sure several other countries have them too, but for some reason the US chooses to remain backwards in this case.
  - kelnos 3y ago
    It's funny how so many non-Americans call our payments system "backwards", but I generally prefer it to bank-transfer-based payments: 1. When I pay with a credit card, I haven't actually spent any money. That money is still in my bank account, and I have the chance to dispute the transaction if it's fraudulent, without putting my own money on the line first. I've heard a few horror stories where a merchant/service has mis-charged a debit card or ACH transfer, and the time it took to get the money back caused stress around things like making rent payments. It frankly doesn't matter to me how common or uncommon such a thing is; it's literally impossible when paying for a credit card. (Yes, I do have to trust that the credit card issuer themselves won't make an error when debiting my bank account when the bill is due, but I prefer only having to trust one party not to make mistakes, than some larger number.) 2. While everyone is of course paying for this through higher prices in stores, I'm reasonably savvy about using credit cards that give me cash back or rewards points or something, and tailoring what card I use to benefit a particular transaction (for example, one card might give 3% back on grocery purchases, while another might give me 3x points on travel expenses). Ultimately I end up paying a bit less for everything than if I were to use cash or a debit card (or a bank transfer). Certainly some merchants have credit card surcharges, or discounts for paying cash/debit, but I find that those are a tiny percentage of my transactions, and I can always use cash or debit in those instances. It's hard to say how much (if at all) prices would actually be lower if credit cards (and their associated fees) didn't exist; handling cash isn't free either for businesses (counting/reconciliation, storage areas, security for transport to a bank, etc.). The main issue with our useless bank-transfer payments system is person-to-person payments. But these days, with Venmo, Cash App, and Zelle, that issue rarely comes up (and all of these are free for the sender if you use bank debit rather than a credit card). I can't remember the last time I had to give money to a friend that involved using cash. The big downside of all of these (similar to cash, I guess) is that there's very little fraud protection. If you send someone money, and they screw you over, you might not have much recourse. I very much consider our banking system backwards in many ways, but I find our payments system to be just fine, and, in some ways, quite good. And our banking system is backwards in part due to lack of demand.
_zamorano_ 3y ago
In Spain, to send money without commercial purposes, Bizum is everywhere. No cost, no need of IBAN, SEPA, or any other information. Just a phone number, that might be in your contact list or not, the desired amount, and is done. Some business use it too but of course, its application is very limited due to not charging a fee to end users.
fsniper 3y ago
In Turkey there is EFT, electronic funds transfer. Works with IBAN's. It's fast and mostly free on business hours (depending on originating bank). You can order EFT outside business hours next work day. This is more expensive most of the time. Recently Turkey also built a newer and faster transfer network FAST. This one has improvements over EFT for limited amounts of transfer and it's nearly instant any time of the day. You can use your email address, mobile number, or IBAN for transfers. It defaults to EFT of you are trying to transfer over the limit. Europe's SEPA or International SWIFT are archeic compared to these networks. Even using Bank-Exchange-Crypto-Exchange-Bank transfers can be considered better UX
emmelaich 3y ago
(2021)
tough 3y ago
Mollie in the netherlands offers an stripe like api for SEPA bank transfers, sadly they don't offer localised accounts for every country in europe yet also only 50 cents comission, no %. Big for big item sales
smcf 3y ago
Didn't get a mention in the article but Singapore's PayNow is magical. Direct bank-to-bank transfers that operate instantly 24/7, and for free. QR code-based so it's not uncommon to pay at retail outlets with this method; some shops will only accept PayNow or cash, because they're free. You can also pay directly to someone's NRIC (national ID number) or mobile number so you don't have to tack in their bank details or get a QR code from them. Honestly the only thing that isn't perfect about this system is that there's no hyperlink standard. If you want to pay a PayNow QR code on your phone, you have to screenshot the QR code and then share it to your banking app. Would be nice if you could just tap the QR code. Other than that it's hard for me to imagine a better payment system.
- 255kb 3y ago
  We have the same here in Luxembourg (name is Payconiq). It starts being accepted a bit everywhere. We scan the QR code with our banking app and it sends the money instantly. Some providers (telcos, electricity, etc.) started putting QR code on their invoice. Very convenient. Otherwise we pay nearly everything by bank transfer.
- ix-ix 3y ago
  Canada has that too, it's great!
  - jayaura 3y ago
    Did you mean interac? If not, could you provide more context please?
    - Waterluvian 3y ago
      Probably Interac E-Transfer, yeah. I can’t think of any other. I use it all the time. Free. You send it to an email address, and then the recipient accesses it through their bank account with the password you gave them. Max $3000. Can sometimes take 10 mins to appear so it’s not great if you’re standing there trying to buy an CX990 elliptical from someone…
ProAm 3y ago
"The Wheel of Time turns, and Ages come and pass, leaving memories that become legend. Legend fades to myth, and even myth is long forgotten when the Age that gave it birth comes again. In one Age, called the Third Age by some, an Age yet to come, an Age long past, a wind rose above the great mountainous island of Tremalking. The wind was not the beginning. There are neither beginnings nor endings to the Wheel of Time. But it was a beginning."
laurencerowe 3y ago
> The Single Europe Payment Area (SEPA) offers free, instant transactions between European banks. They’re pull based; a user communicates their banking information to a business, which debits the user’s account, rather than the business communicating their banking information to the user in order to send them money. I think this is something of a simplification since SEPA encompasses multiple types of payment. While Direct Debits are pull based you can also make push based payments from your bank, usually for free. It's completely normal and safe in Europe to share your bank account number (IBAN) with others so that they can send you money through online banking. This is how I paid my rent (you can setup a recurring payment, kinda like bill pay but instant and without the risk of a physical check potentially being delayed in the mail); settled up with friends for shared expenses; and got paid for freelance consulting (I'd put my IBAN on the invoice.)
- mschuster91 3y ago
  > It's completely normal and safe in Europe to share your bank account number (IBAN) with others so that they can send you money through online banking. This is how I paid my rent (you can setup a recurring payment, kinda like bill pay but instant and without the risk of a physical check potentially being delayed in the mail); settled up with friends for shared expenses; and got paid for freelance consulting (I'd put my IBAN on the invoice.) Just because everyone does it this doesn't mean it's safe to do. If some trolls manage to get hold of your IBAN and the account isn't protected from direct debit, you will get fucked by idiots ordering pizza and dildos.
  - laurencerowe 3y ago
    > Just because everyone does it this doesn't mean it's safe to do. If some trolls manage to get hold of your IBAN and the account isn't protected from direct debit, you will get fucked by idiots ordering pizza and dildos. I don't know anyone who this has ever happened to. Only vetted companies are allowed to perform Direct Debits, e.g. utilities who know your physical address. In the UK (still a member of SEPA even post Brexit) the Direct Debit Guarantee [1] makes it easy to reverse any errant Direct Debits through your bank. The pizza or dildo company likely won't accept Direct Debits and will require a debit or credit card for the transaction instead. [1] https://www.directdebit.co.uk/direct-debit-explained/direct-debit-guarantee/ https://www.directdebit.co.uk/direct-debit-explained/direct-...
crystaln 3y ago
One major issue nobody has mentioned: privacy. Do we really want every payment we make in database where it can be passed around and used to analyze, market, and persecute us? I was a big fan of MobileCoin the privacy token in Signal because as far is I can tell it’s the best solution out there. They have gotten much traction largely because the feds and banks haven’t let them, however I hope some day some how I can buy groceries without my location and purchase details being sold to every data broker in the world.
- Analemma_ 3y ago
  > I hope some day some how I can buy groceries without my location and purchase details being sold to every data broker in the world. Nothing about which type of payment system you use can possibly help with this— doesn't matter if it's cash, credit card, crypto, or something else— because regardless of how you choose to pay, the grocery store knows which items you bought and where, and (laws permitting) can sell that data to whomever they want. And the credit card companies already don't have that data: they just see a single dollar amount, not an itemized receipt.
TRiG_Ireland 3y ago
He says that SEPA has a pull model. But when someone gives me their IBAN, and I go to my bank's website (or phone app), type in that IBAN and tell it to send X amount of money, that feels like a push model to me. (I can also include a payment reference, which will probably have to be manually checked, much as he describes for the Japanese model.) I've used this method for paying back friends for minor loans, or suchlike, and also for paying my rent. And once for buying physical goods from a website: they gave me an invoice with a payment reference number and an IBAN, and I sent the amount requested to that IBAN with the reference number supplied, after which they shipped the goods. Maybe SEPA has both push and pull models, and this article neglected to mention the push one? (I do have direct debits on my account, for a few charities, which are a pull transaction. And standing orders, which I think are also a push transaction.)
- Denvercoder9 3y ago
  You're right, SEPA does have both push (SEPA Credit Transfer, aka SCT) and pull (SEPA Direct Debit, aka SDD) models.
dang 3y ago
Discussed at the time: Bank transfers as a payment method - https://news.ycombinator.com/item?id=29357215 https://news.ycombinator.com/item?id=29357215 - Nov 2021 (323 comments)
cpursley 3y ago
Most Americans don’t realize how atrocious the US banking system is when it comes to technology and transfers. It’s embarrassingly bad. Shameful, even.
- kelnos 3y ago
  I agree, but I also am not sure how much it matters. I think the US banking system would get better if it had to, but it doesn't, because we have credit cards, Venmo, Cash App, Zelle, etc. It does certainly suck for lower-income folks or people with bad credit who don't have great access to these things. There are also a lot of unbanked people in the US, but that's in some ways a separate issue. Yes, things like wire transfers are annoying (and stressful), but most people do them only very rarely (like when buying a house). ACH is slow and a dumb protocol, but that's often a "set it and forget it" thing when you set up autopay for your electric utility or credit card or whatever, or set up direct deposit for a new employer. Meanwhile, I can do 80% of the money-moving things I need to do with my phone, 19% with a little piece of plastic I always have on me, and the remaining 1% (or less, really) is mostly cash, with some teeny tiny fraction being wire transfers. I expect my situation isn't entirely typical (as I live in a large city and do a lot of my transactions on the internet). I'm sure many Americans use cash a lot more than I do (either out of necessity or desire), but it's... really not that bad?
- refurb 3y ago
  I don't know. I was helping a Canadian friend with their bank account and TD's website looks like it's from the 90's. And getting an SMS message when your credit card is charged? Yeah, it used to be a separate website (why?) but no longer offered. It looked absolutely archaic compared to my US bank.
  - cpursley 3y ago
    Now compare your US bank to Asian or others outside the West. Actually, just check screenshots in the App Store for foreign non-Western banks.
    - 3y ago
cubefox 3y ago
(2021) This piece mentions FedNow, an instantaneous 24/7 bank transfer system for the US, whose launch happens to be imminent. Details: https://www.clevelandfed.org/collections/speeches/2023/sp-20230712-update-on-the-federal-reserves-instant-payments-service https://www.clevelandfed.org/collections/speeches/2023/sp-20... However, unlike UPI in India, neither banks nor businesses are required to support FedNow, so adoption will likely be slow, especially because the traditional (and more expensive) credit card based payment system is already firmly established. There is also another upcoming system called RTP, which is very similar to FedNow, but is governed not by the Fed, but privately by the The Clearing House, an association of large US banks. The piece above mentions that both implement ISO 20022, which could allow future interoperability.
ggm 3y ago
Australian banking regulator appears to think there is a natural floor cost of interbank payment settlement, which I am going to call "rent" and basically said as long as it doesn't exceed some metric for CPI related costs, it's fine to charge it no matter what the impact on transactions. This is a loaded comment, because I think it's bullshit. The cost to process any payment of any size under the $10,000 AML threshold is constant, and functionally zero. As consumers, we've become a profit centre, and there is between $600m and $1b of "cost" which is being met by a % value of transaction fee, irrespective of the real costs of operation. It's regulated theft. Tax office loves it because the black economy is shrinking, small traders are wearing processing costs, intermediaries like stripe are hoovering up data, alongside p2p and inter account direct debit and payment models. Credit unions and banks have an uneasy alliance with "key" and "associated" status to inter bank clearing data networks. The direct payment scheme we have (osko/payid: typically Australia they couldn't decide a single branding) is seconds to complete sometimes and competes with other forms of transaction clearing for cost and time. We still have chequebook process clearing times. We still have "not on weekend" and "3 business day" rules. It's totally Bizarre. When they spun credit and debit card fees out from each other I asked some questions of the finance regulators and they said "works for us, cheaper overall" but I think they left this $600m+ profit component in on bogus logic: Tl;Dr real costs of settlement per transaction do not relate to how costs are met. Banking is highly profitable and is a protected industry under a benign regulator.
- paulusthe 3y ago
  > This is a loaded comment, because I think it's bullshit. The cost to process any payment of any size under the $10,000 AML threshold is constant, and functionally zero. Your argument fails here, because you are wrong here. The cost is not zero, because what the bank does for interbank payments is subject to the same regulations and procedures as everything else a bank does. Banks charge money for transfers because there's regulatory overhead and shared liability. What happens if they've missed you're a money launderer for the cartel and have to pay a $2bn fine because they processed your transaction for nearly nothing, instead of doing proper checks and stopping it? Sorry, but you're just plainly wrong here. Very populist and very wrong
kumarvvr 3y ago
UPI in India works, in principle, like this. I use it to pay for anything from 10 cents to 1500 USD. Its awesome, free and has enabled a banking revolution in India. Small vendors now prefer UPI to cash, as small change is a hassle. In India, even beggars are using it.
- crooked-v 3y ago
  Also, for more context, many, many daily transactions in India are in amounts under 1 USD. For obvious reasons this makes eating credit card fees deeply impractical for many businesses and entrepreneurs.
  - kumarvvr 3y ago
    Yup. An average Chai (Tea) costs about 30 cents. A Samosa costs about 15 cents Most street foods cost under 50 cents. Water bottles cost about 35 cents. I strongly believe that every government should provide this sort of inter-bank and intra-bank transaction services as a public utility, for free. The benefits of UPI cannot be overstated. We also have UPI lite now. We can add about 20 USD to a UPI Lite account. Maximum transaction value is 2 USD. Daily transaction limit is 20 USD and the advantage of UPI Lite is that once you load your account with the money, the transaction completed without bank intervention, meaning lower chance of failure. Also, it does not need authentication (apart from your phone security). I have been using this only recently and its an even more hassle free method of paying for almost 95% of my daily spends. Now I don't have to enter the UPI PIN to authorize a transaction. Its a great way to give pocket money to kids.
stevetron 3y ago
I still have trouble with money and finance not being on the gold standard. And the stock market just seems like gambling to me, which I don't partake in (gambling or stock market). probably why I'll always be poor.
- smokelegend 3y ago
  No risk, no reward...
buzer 3y ago
There are lots of things that many countries do better than US in regards to banking. One thing that I don't often see mentioned are invoices. In Finland you can get many of them delivered as standardized e-invoice to your bank. This then allows you to setup automatic payment for them on your side (pay on the due date, set maximum value that will be approved automatically if the amount is not static). For consumer protection if the due date falls on weekend/bank holiday, the due date in reality is the first normal day. It's also the day when you need to make the payment, it doesn't need to arrive on seller's account on that date (though these days it normally will).
AdeptusAquinas 3y ago
Isn't this just EFTPOS? I've been paying with that since I first got a eftpos card thirty years ago in NZ
miki123211 3y ago
Poland has a really interesting system (Blik), based internally on fast interbank wire-transfers I believe. Each banking app that supports this system can give you a six-digit code valid for two minutes. You can enter this code in a supported store or ATM, either online or in-person, you get a popup in the app with the amount to be paid, the merchant and a description of what you're paying for, you click "confirm" and the transaction goes through. This system is great because it enables secure payments on devices you don't trust. Because the codes are single-use and transactions require an extra confirmation step in the app, it's perfectly fine to give a code to your child who wants to buy something online, text it to a family member who is at an ATM, or give it to a friend who has free shipping due to a loyalty program and wants to order something for you. This system can also do transfers and transfer-requests to a phone number. In some banks, you can even generate "Blik checks", 9-digit codes that are valid for 24 hours, cover a pre-set amount and don't require a confirmation, which you can give out to someone. These checks have been used to efficiently send money to unbanked Ukrainian refugees when the war started, as they could simply be redeemed at any supporting ATM.

111 points by shsachdev 3y ago

Why Americans love credit cards so much is a mystery. In Europe debit cards have been the way to go for a long time. Most countries in Europe also have direct payments through mobile apps.

linsomniac 3y ago
Credit cards provide protections that debit cards do not, in particular related to skimming-adjacent losses. Europeans: Realize that chip-based transactions are relatively new in the USA, and we still have places that do not have chip-enabled POS (primarily I've seen it lacking at car washes, but it was only in the last couple years that my gas station started, allegedly, doing chip -- it still takes the whole card AND asks you to remove it quickly).
kelnos 3y ago
I really don't get why this is so hard for some people to understand. It's simple: when I pay with a credit card, the money is still in my possession. If the merchant screws up or there is fraud, I can dispute the charge and get resolution without any money leaving my bank account. On top of that, I get cash back and other benefits/rewards from using a credit card (like extended warranties and insurance on the things I purchase). Yes, these things make purchase prices go up for everyone, but if you don't play the "game", you're leaving money on the table. Most merchants do not pass credit card fees on to card-using customers (so you don't save by using debit or cash), though that practice has increased over time. Certainly if/when that becomes the norm, I'll have to decide if the benefits of using a credit card are worth the cost.
- AtNightWeCode 3y ago
  "I can dispute the charge and get resolution without any money leaving my bank account." Really? In what cases can an average credit card user challenge a payment that has not already occurred? If there is a fraud usually it is quick to get money back if debit cards were used.
  - astrange 3y ago
    In all cases. What's the problem?
  - supertrope 3y ago
    In the United States checking/debit consumer protection is weaker. The legal minimum banks have to do depends on how quickly you notice a suspicious transaction. If you report it within two days your liability is capped at $50. If more than two days have passed your liability is $500. If more than 60 days have passed since the statement was sent fraud loss liability is unlimited. When you go to file a fraud claim the bank must provide a provisional credit for the amount of the transaction but they may reverse this if they decide it was not fraud. It depends on what state you're in, if you used a branded (Visa/MC) debit card, the bank, the representative's interpretation of all the applicable rules, your prior chargeback history, etc. https://www.consumerfinance.gov/rules-policy/regulations/1005/6/#7ae2562961d72df6ca35db9818a90553ee87215eec5e8e9b1b9521e1 https://www.consumerfinance.gov/rules-policy/regulations/100... With credit cards the legal maximum is $50. And the fraudulent transactions are drawn on a line of credit (soft money) not the contents of your bank account (hard money). The United States has a powerful oligopoly of payment network operators who lobby to maintain high interchange revenue. This de facto shifts the cost of credit cards onto those who don't have them. Instead of annual membership fees for the actual users, merchants pay about 2% of card transaction volume instead of 0.3% in the EU.
  - Symbiote 3y ago
    As an example, I bought a ticket using a British credit card to a music festival. The festival went bankrupt so never happened. I claimed the cost of the ticket back from the credit card company. Recovering money from the bankrupt festival is then their problem.
    - AtNightWeCode 3y ago
      I forgot that credit cards comes with insurance in some places. Most apparent is that you can't even rent a car in some parts of US without a credit card. In EU that type of insurance may be included in the legally obligated housing insurance.
- supertrope 3y ago
  Because they live outside the United States. In some other countries all bank card transactions include the level of fraud protection that is only reserved for credit card users in the US.
raincom 3y ago
Buying things that are not needed with the money one doesn't have = credit cards. That's the beauty of credit cards. It increases the spending in economy. With debit cards, one has to spend within their means.
- pepa65 3y ago
  And I think CC users (and more in general, the US populace) are more used to having debt. If you use a debit card, nothing needs to be paid back or remembered. With a credit card, you have to make sure that every month you clear your debt, otherwise you're starting to incur juicy fees -- this is what banks hope for! If you do clear your debts faithfully, you're having free very short terms loans every month..! But, being human, circumstances can happen where a monthly debt repayment does not happen, and then: kaching! But many people do not pay everything back every month, and this is a good money maker for banks.
refurb 3y ago
Why on earth would I use my money (and the risk of fraud) when I could use the banks money, interest free for a month? And if I have a dispute with a business, I can have the credit card company reverse the charge for me? If it's debit, that money is gone. I would never use debit if I could use a credit card. The US system is far superior for consumers.
- pepa65 3y ago
  Only if you faithfully clear your debts every month. Are there any account types that do this automatically?? (Unlikely, I would think...)
  - refurb 3y ago
    Yes, you can set up auto-pay to automatically pay your bill in full every month.
  - Symbiote 3y ago
    Britain has/had a credit card culture in some ways similar to the USA, and the direct debit system explained in the article is usually used to pay the balance in full every month. I think that's the same for credit cards in most of Europe. (They exist even if they aren't popular.)
- Denvercoder9 3y ago
  > The US system is far superior for consumers. Consumers are also forced to pay for it, though. The transaction fee in the US is routinely 2-3%, while in the EU it's capped at 0.3%. Because of borderline anti-competitive behaviour from VISA and Mastercard, that fee is also not charged separately to creditcard-using consumers but integrated in the price, so everyone pays for it.

CaliforniaKarl 3y ago

(2021)

metadat 3y ago

In case you missed the other articles and discussions from this site, they are numerous and occasionally highly informative: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=bitsaboutmoney.com&sort=byPopularity&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

mcc1ane 3y ago
https://news.ycombinator.com/from?site=bitsaboutmoney.com https://news.ycombinator.com/from?site=bitsaboutmoney.com ?
- metadat 3y ago
  Initially I considered posting that link, but there are a lot of submissions which never caught on which made it a bit annoying to wade through. Nevertheless, thanks for your addition! Edit: I just noticed the site has been renamed, so some prior submissions are under https://news.ycombinator.com/from?site=kalzumeus.com https://news.ycombinator.com/from?site=kalzumeus.com
mousetree 3y ago
Am I the online one who finds them a bit verbose and meandering?
- metadat 3y ago
  Agreed, not always easy to read, but I found a few particularly enlightening: The Branch Banking Model https://bam.kalzumeus.com/archive/branch-banking/ https://bam.kalzumeus.com/archive/branch-banking/ https://news.ycombinator.com/item?id=32679233 https://news.ycombinator.com/item?id=32679233 ^ I no longer despise local bank branches, it's a tough business. Money Laundering and AML Compliance" https://www.bitsaboutmoney.com/archive/money-laundering-and-aml-compliance/ https://www.bitsaboutmoney.com/archive/money-laundering-and-... https://news.ycombinator.com/item?id=34743896 https://news.ycombinator.com/item?id=34743896
- astrange 3y ago

judge2020 3y ago

The article is probably right about FedNow likely not drastically improving things immediately, but maybe people will build good products on top of it over the coming years. The launch is for late July https://www.frbservices.org/news/press-releases/062923-organizations-certified-ready-fednow https://www.frbservices.org/news/press-releases/062923-organ...

candiddevmike 3y ago
Why can't it be setup in a way where people don't have to build good products on top of it? Why leave room for rent seeking?
- pgeorgi 3y ago
  Because socialism! (only partially sarcastic: having more-or-less public utilities, which the Fed is and is not, provide full services that "the market" can't make money with^W^W^Woptimize is anathema to some circles)
- Analemma_ 3y ago
  FedNow is infrastructure for settling payments between banks. It's replacing ACH, which is really old and slow to settle. In computing terms, think of FedNow as something like TCP: it's very low in the OSI hierarchy and not meant to be used directly by users. The hope is that it will enable nicer applications to be built on top of it, things which are not really possible to build on top of ACH, but it is not a payment application in and of itself.
  - raincom 3y ago
    Well, there is Real Time Payments, as it is called RTP by The Clearing House. (RTP is almost like FedNow.) However, The Clearing House is owned by a small number of banks. That's why only big banks use RTP. I heard about 50 banks use RTP, when 10000 financial institutions exist in US. This is also one of the reasons why majority of credit unions don't offer Zelle, as the latter is owned by top banks. The bigger culprit is private entities controlling infrastructure, and these entities want their tax.

hlieberman 3y ago

Notably, Canada has a system that works like UPI from India and is very widely used: https://en.wikipedia.org/wiki/Interac_e-Transfer https://en.wikipedia.org/wiki/Interac_e-Transfer

anothermoron 3y ago
Wow, as a Canadian I always thought that Interact was international.
- biscuitech 3y ago
  Same, until I went to the US where nothing is standardized and somehow there's private companies worth billions that cover this precise use case. It's actually mind blowing. The single banking system of Canada is a massive win in this regards
  - tdhoot 3y ago
    Interac is also a for-profit corporation. It's just owned by an association of banks. Zelle would be the equivalent in the US.

AlexandrB 3y ago

Would be interesting to know how Canada's Interac e-transfers[1] compare to the Indian or Japanese systems. Probably the biggest inconvenience of Canada's system it the need to use an email address as the destination. [1] https://en.wikipedia.org/wiki/Interac_e-Transfer https://en.wikipedia.org/wiki/Interac_e-Transfer

hugocbp 3y ago
I can compare it to Brazilian Pix. I use both extensively. INTERAC is like the beta version of Pix (which is basically the same as the Indian system in the article). Pix works via email, CPF (a person's "SIN" number, which isn't secret in Brazil), randomly generated key, telephone number, QR codes. INTERAC is mostly email. Pix works immediately. Some transactions take 1 second or less to credit on the other bank (you can see that when you are trying to send money to yourself, when the destination bank gives you a notification that it received the money before the UI of the sending bank has even acknowledged that the operation is completed). INTERAC sometime takes several minutes, up to 30 minutes sometimes in my experience. Personally I think INTERAC is about 70% of the way there, but I would chose PIX every time simply because it seems like a much better iteration. With Pix, you get credited and debited immediately. With INTERAC, I've noticed that sometimes you can be debited immediately and the credit takes longer, and vice versa. Sometimes for several minutes, your money can "double" (appear in second account without disappearing from the first one) or "disappear" (leave the first account but not get credited on the second one). This last point might not seem like much, but it gets in the way of using for a lot of things that would need to be immediate (paying for a Taxi, or a supermarket purchase). Since Pix is instantaneous, it is used heavily for those kind of payments where you don't want to wait.
Scoundreller 3y ago
I've never done it, but you can also use a phone number which sends a text message link.
- toomuchtodo 3y ago
  “Aliases” is the term of art when determining if an instant payment systems supports using a phone number, emails, etc for mapping to an underlying account.

jrm4 3y ago

As someone who's not entirely opposed to crypto, this was an interesting read. Mostly in terms of the following: I sort of assumed that one of the factors (among many, for sure) limiting widespread adoption of crypto was that the thing we (in the US) already have was probably pretty smooth? And reading this, seems like it really ain't. Interesting that crypto hasn't made inroads here. I mostly get why, incumbents don't like change, but still.

dist-epoch 3y ago
> Interesting that crypto hasn't made inroads here A funny thing happened, 10 years ago crypto transfers were free, and bank transfers cost $15 or more. Today the opposite is true, many bank transfers are free, but sending crypto costs about $10.
- earnesti 3y ago
  I use Bitcoin a lot and I typically pay 10 cents for LN payment, and 50 cents for onchain. There have been very short periods when fees have peaked and you had to pay 10 bucks if you wanted it instantly.
- tornato7 3y ago
  That's not really true of crypto if you consider any chain but Bitcoin and Ethereum. You can send USDC on Arbitrum (an Ethereum L2) for <$0.10, or Polygon for <$0.01. Also, as the article points out, international transfers are still painful. Paying $10 to transfer money internationally is probably still a very good deal for most people.
  - jrm4 3y ago
    I don't know why this is downvoted; I understand that there's a lot to dislike about crypto, but "international transfers" is no longer even a question. A lot of people today literally use crypto for that.
    - kelnos 3y ago

RcouF1uZ4gsC 3y ago

For me as a consumer in the USA, one of the biggest advantages for credit cards over bank transfers is where the money is in case of dispute. With credit cards, I still have the money in my possession, the dispute process is about the credit card company trying to get paid. With a bank transfer, the money is gone from me, and the dispute process is about me trying to get my money back. Even with the same policies on paper, this one fact makes me prefer to pay with credit cards wherever possible.

toomuchtodo 3y ago
And you’ll still have that option, you’ll just likely pay for the privilege with the 3% fee pushed back onto customers who opt to use credit card rails. Think of it as a dispute insurance premium for less than high confidence transactions. An early example of this is T-Mobile’s recent decision to remove their autopay discount if you use a credit card instead of a deposit account (their CC interchange fees are material at their scale). Instant settlements at low or no cost give merchants options to squeeze out their payment costs.
- deleted 3y ago
  [deleted]

nzach 3y ago

In Brazil we have Pix[0] that seems pretty similar to India's UPI. [0] - https://en.wikipedia.org/wiki/Pix_(payment_system) https://en.wikipedia.org/wiki/Pix_(payment_system)

spaniard89277 3y ago

I'm sorry SEPA is pull based? IDK in other countries but in Spain is pretty common to use it for push and pull operations. I certainly do, and everyone I know. The only nuisance is that requires an IBAN number and most Banks require a security ritual which is pretty boring. I didn't know that there's high fraud in SEPA either. Whoever tries to charge me, I can block em and contact my bank to make em know I didn't allow such charge, and in my case, when that happened (only once in my life) they handled everything and I got my money back.

raverbashing 3y ago
Yeah I think the pull based is not that common (usually for standing orders, and most of the time it's intra-country, through it works cross) but the push mode is also very popular
- gorbypark 3y ago
  Having recently-ish moved to Spain, I think both push and pull are fairly common. Both my health insurance premiums and phone/ISP bills are just taken from my account each month. Sometimes larger transaction (buying a mattress for example) seem to SEPA push based, but I don’t do a lot of one off transfers (using SEPA). It does seem like Bizum has taken over for person to person transactions, though. Even some companies are accepting Bizum for online payments, and I’ve seen some small shops posting a QR code for their Bizum at the checkout counter.
dementik 3y ago
I think article means SEPA Direct Debit.
Denvercoder9 3y ago
> most Banks require a security ritual which is pretty boring This varies significantly by country and bank. At my bank I can authorize transactions (up to a preconfigured amount) just with my fingerprint, and it takes like 5 seconds.

dyates 3y ago

As a South African, it's weird seeing this presented as a strange/futuristic idea. I pay most of my bills through bank transfers and it's the standard way for two people with bank accounts to send money to each other. As long as you know someone's bank and account number, you can send them money. All local online retailers, investment brokers, etc, support bank transfers, with some[1] even providing discounts for paying via bank transfer instead of credit card. I've even paid this way at a brick and mortar place that didn't have a card machine. [1] https://www.evetech.co.za/ https://www.evetech.co.za/

RandallBrown 3y ago
> As long as you know someone's bank and account number, you can send them money. This works in the US just fine as well, although you probably need to go to a bank to do it. I've also been given the option to pay plenty of bills through bank transfers but usually choose not to if I can use my credit card for the same price.
- nomel 3y ago
  > This works in the US just fine as well, although you probably need to go to a bank to do it. Venmo and the like exist because that's not "fine". If you have the same bank, there's a good chance you can do it online, or with some crappy third party app. If you have different banks, there's a very slim chance they use the same crappy third party app, leaving you driving in person to initiate a digital transaction that usually takes between a few days to a week to clear.
robertlagrant 3y ago
SA banking regulations are meant to be extremely sensible[0]. It's possible that the US has very strange ones that not only enable some awful things, but also disable good ones. [0] Source: worked for African Bank for a bit, years ago
kasey_junk 3y ago
The comparison between SA bank transactions and UPI is pretty superficial. Precisely because the sender needs to know banking details about the receiver and to confirm the transaction on the receiver side you need access to the receivers bank data. UPI does not require either of those! It’s pretty great, and what modern bank transfers will look like. SA bank transfers, like non-US bank transfers, are newer, cheaper and faster than their US counterparts, but aren’t fundamentally different in the mechanics and the edge cases. More in the regulations and market forces on banks. That’s not to say they aren’t good! They certainly are in comparison to US bank transfers. But UPI does compare closer to sci fi.

godelski 3y ago

I've always wondered why big banks don't implement a lot more technologies, and I guess this gets to some of it. But it does seem like banks would have the incentives to kill services like Venmo and Stripe overnight. Like why are there not clear and straightforward banking APIs that let me create virtual cards and why doesn't my app let me just transfer money directly to my friend's bank account (I get global being a bit more difficult, but country wide is similar regulations, right?). I feel like there's just so much that I don't know that I don't even have the ability to reasonably answer these questions and I'm pretty sure there's reasons the above companies exist and it isn't simply static friction of big banks.

anaganisk 3y ago
India has done this for more than a decade at this point with IMPS and NEFT, and recently UPI. And I'm sure several other countries have them too, but for some reason the US chooses to remain backwards in this case.
- kelnos 3y ago
  It's funny how so many non-Americans call our payments system "backwards", but I generally prefer it to bank-transfer-based payments: 1. When I pay with a credit card, I haven't actually spent any money. That money is still in my bank account, and I have the chance to dispute the transaction if it's fraudulent, without putting my own money on the line first. I've heard a few horror stories where a merchant/service has mis-charged a debit card or ACH transfer, and the time it took to get the money back caused stress around things like making rent payments. It frankly doesn't matter to me how common or uncommon such a thing is; it's literally impossible when paying for a credit card. (Yes, I do have to trust that the credit card issuer themselves won't make an error when debiting my bank account when the bill is due, but I prefer only having to trust one party not to make mistakes, than some larger number.) 2. While everyone is of course paying for this through higher prices in stores, I'm reasonably savvy about using credit cards that give me cash back or rewards points or something, and tailoring what card I use to benefit a particular transaction (for example, one card might give 3% back on grocery purchases, while another might give me 3x points on travel expenses). Ultimately I end up paying a bit less for everything than if I were to use cash or a debit card (or a bank transfer). Certainly some merchants have credit card surcharges, or discounts for paying cash/debit, but I find that those are a tiny percentage of my transactions, and I can always use cash or debit in those instances. It's hard to say how much (if at all) prices would actually be lower if credit cards (and their associated fees) didn't exist; handling cash isn't free either for businesses (counting/reconciliation, storage areas, security for transport to a bank, etc.). The main issue with our useless bank-transfer payments system is person-to-person payments. But these days, with Venmo, Cash App, and Zelle, that issue rarely comes up (and all of these are free for the sender if you use bank debit rather than a credit card). I can't remember the last time I had to give money to a friend that involved using cash. The big downside of all of these (similar to cash, I guess) is that there's very little fraud protection. If you send someone money, and they screw you over, you might not have much recourse. I very much consider our banking system backwards in many ways, but I find our payments system to be just fine, and, in some ways, quite good. And our banking system is backwards in part due to lack of demand.

_zamorano_ 3y ago

In Spain, to send money without commercial purposes, Bizum is everywhere. No cost, no need of IBAN, SEPA, or any other information. Just a phone number, that might be in your contact list or not, the desired amount, and is done. Some business use it too but of course, its application is very limited due to not charging a fee to end users.

fsniper 3y ago

In Turkey there is EFT, electronic funds transfer. Works with IBAN's. It's fast and mostly free on business hours (depending on originating bank). You can order EFT outside business hours next work day. This is more expensive most of the time. Recently Turkey also built a newer and faster transfer network FAST. This one has improvements over EFT for limited amounts of transfer and it's nearly instant any time of the day. You can use your email address, mobile number, or IBAN for transfers. It defaults to EFT of you are trying to transfer over the limit. Europe's SEPA or International SWIFT are archeic compared to these networks. Even using Bank-Exchange-Crypto-Exchange-Bank transfers can be considered better UX

emmelaich 3y ago

(2021)

tough 3y ago

Mollie in the netherlands offers an stripe like api for SEPA bank transfers, sadly they don't offer localised accounts for every country in europe yet also only 50 cents comission, no %. Big for big item sales

smcf 3y ago

Didn't get a mention in the article but Singapore's PayNow is magical. Direct bank-to-bank transfers that operate instantly 24/7, and for free. QR code-based so it's not uncommon to pay at retail outlets with this method; some shops will only accept PayNow or cash, because they're free. You can also pay directly to someone's NRIC (national ID number) or mobile number so you don't have to tack in their bank details or get a QR code from them. Honestly the only thing that isn't perfect about this system is that there's no hyperlink standard. If you want to pay a PayNow QR code on your phone, you have to screenshot the QR code and then share it to your banking app. Would be nice if you could just tap the QR code. Other than that it's hard for me to imagine a better payment system.

255kb 3y ago
We have the same here in Luxembourg (name is Payconiq). It starts being accepted a bit everywhere. We scan the QR code with our banking app and it sends the money instantly. Some providers (telcos, electricity, etc.) started putting QR code on their invoice. Very convenient. Otherwise we pay nearly everything by bank transfer.
ix-ix 3y ago
Canada has that too, it's great!
- jayaura 3y ago
  Did you mean interac? If not, could you provide more context please?
  - Waterluvian 3y ago
    Probably Interac E-Transfer, yeah. I can’t think of any other. I use it all the time. Free. You send it to an email address, and then the recipient accesses it through their bank account with the password you gave them. Max $3000. Can sometimes take 10 mins to appear so it’s not great if you’re standing there trying to buy an CX990 elliptical from someone…

ProAm 3y ago

"The Wheel of Time turns, and Ages come and pass, leaving memories that become legend. Legend fades to myth, and even myth is long forgotten when the Age that gave it birth comes again. In one Age, called the Third Age by some, an Age yet to come, an Age long past, a wind rose above the great mountainous island of Tremalking. The wind was not the beginning. There are neither beginnings nor endings to the Wheel of Time. But it was a beginning."

laurencerowe 3y ago

> The Single Europe Payment Area (SEPA) offers free, instant transactions between European banks. They’re pull based; a user communicates their banking information to a business, which debits the user’s account, rather than the business communicating their banking information to the user in order to send them money. I think this is something of a simplification since SEPA encompasses multiple types of payment. While Direct Debits are pull based you can also make push based payments from your bank, usually for free. It's completely normal and safe in Europe to share your bank account number (IBAN) with others so that they can send you money through online banking. This is how I paid my rent (you can setup a recurring payment, kinda like bill pay but instant and without the risk of a physical check potentially being delayed in the mail); settled up with friends for shared expenses; and got paid for freelance consulting (I'd put my IBAN on the invoice.)

mschuster91 3y ago
> It's completely normal and safe in Europe to share your bank account number (IBAN) with others so that they can send you money through online banking. This is how I paid my rent (you can setup a recurring payment, kinda like bill pay but instant and without the risk of a physical check potentially being delayed in the mail); settled up with friends for shared expenses; and got paid for freelance consulting (I'd put my IBAN on the invoice.) Just because everyone does it this doesn't mean it's safe to do. If some trolls manage to get hold of your IBAN and the account isn't protected from direct debit, you will get fucked by idiots ordering pizza and dildos.
- laurencerowe 3y ago
  > Just because everyone does it this doesn't mean it's safe to do. If some trolls manage to get hold of your IBAN and the account isn't protected from direct debit, you will get fucked by idiots ordering pizza and dildos. I don't know anyone who this has ever happened to. Only vetted companies are allowed to perform Direct Debits, e.g. utilities who know your physical address. In the UK (still a member of SEPA even post Brexit) the Direct Debit Guarantee [1] makes it easy to reverse any errant Direct Debits through your bank. The pizza or dildo company likely won't accept Direct Debits and will require a debit or credit card for the transaction instead. [1] https://www.directdebit.co.uk/direct-debit-explained/direct-debit-guarantee/ https://www.directdebit.co.uk/direct-debit-explained/direct-...

crystaln 3y ago

One major issue nobody has mentioned: privacy. Do we really want every payment we make in database where it can be passed around and used to analyze, market, and persecute us? I was a big fan of MobileCoin the privacy token in Signal because as far is I can tell it’s the best solution out there. They have gotten much traction largely because the feds and banks haven’t let them, however I hope some day some how I can buy groceries without my location and purchase details being sold to every data broker in the world.

Analemma_ 3y ago
> I hope some day some how I can buy groceries without my location and purchase details being sold to every data broker in the world. Nothing about which type of payment system you use can possibly help with this— doesn't matter if it's cash, credit card, crypto, or something else— because regardless of how you choose to pay, the grocery store knows which items you bought and where, and (laws permitting) can sell that data to whomever they want. And the credit card companies already don't have that data: they just see a single dollar amount, not an itemized receipt.

TRiG_Ireland 3y ago

He says that SEPA has a pull model. But when someone gives me their IBAN, and I go to my bank's website (or phone app), type in that IBAN and tell it to send X amount of money, that feels like a push model to me. (I can also include a payment reference, which will probably have to be manually checked, much as he describes for the Japanese model.) I've used this method for paying back friends for minor loans, or suchlike, and also for paying my rent. And once for buying physical goods from a website: they gave me an invoice with a payment reference number and an IBAN, and I sent the amount requested to that IBAN with the reference number supplied, after which they shipped the goods. Maybe SEPA has both push and pull models, and this article neglected to mention the push one? (I do have direct debits on my account, for a few charities, which are a pull transaction. And standing orders, which I think are also a push transaction.)

Denvercoder9 3y ago
You're right, SEPA does have both push (SEPA Credit Transfer, aka SCT) and pull (SEPA Direct Debit, aka SDD) models.

dang 3y ago

Discussed at the time: Bank transfers as a payment method - https://news.ycombinator.com/item?id=29357215 https://news.ycombinator.com/item?id=29357215 - Nov 2021 (323 comments)

cpursley 3y ago

Most Americans don’t realize how atrocious the US banking system is when it comes to technology and transfers. It’s embarrassingly bad. Shameful, even.

kelnos 3y ago
I agree, but I also am not sure how much it matters. I think the US banking system would get better if it had to, but it doesn't, because we have credit cards, Venmo, Cash App, Zelle, etc. It does certainly suck for lower-income folks or people with bad credit who don't have great access to these things. There are also a lot of unbanked people in the US, but that's in some ways a separate issue. Yes, things like wire transfers are annoying (and stressful), but most people do them only very rarely (like when buying a house). ACH is slow and a dumb protocol, but that's often a "set it and forget it" thing when you set up autopay for your electric utility or credit card or whatever, or set up direct deposit for a new employer. Meanwhile, I can do 80% of the money-moving things I need to do with my phone, 19% with a little piece of plastic I always have on me, and the remaining 1% (or less, really) is mostly cash, with some teeny tiny fraction being wire transfers. I expect my situation isn't entirely typical (as I live in a large city and do a lot of my transactions on the internet). I'm sure many Americans use cash a lot more than I do (either out of necessity or desire), but it's... really not that bad?
refurb 3y ago
I don't know. I was helping a Canadian friend with their bank account and TD's website looks like it's from the 90's. And getting an SMS message when your credit card is charged? Yeah, it used to be a separate website (why?) but no longer offered. It looked absolutely archaic compared to my US bank.
- cpursley 3y ago
  Now compare your US bank to Asian or others outside the West. Actually, just check screenshots in the App Store for foreign non-Western banks.
  - 3y ago

cubefox 3y ago

(2021) This piece mentions FedNow, an instantaneous 24/7 bank transfer system for the US, whose launch happens to be imminent. Details: https://www.clevelandfed.org/collections/speeches/2023/sp-20230712-update-on-the-federal-reserves-instant-payments-service https://www.clevelandfed.org/collections/speeches/2023/sp-20... However, unlike UPI in India, neither banks nor businesses are required to support FedNow, so adoption will likely be slow, especially because the traditional (and more expensive) credit card based payment system is already firmly established. There is also another upcoming system called RTP, which is very similar to FedNow, but is governed not by the Fed, but privately by the The Clearing House, an association of large US banks. The piece above mentions that both implement ISO 20022, which could allow future interoperability.

ggm 3y ago

Australian banking regulator appears to think there is a natural floor cost of interbank payment settlement, which I am going to call "rent" and basically said as long as it doesn't exceed some metric for CPI related costs, it's fine to charge it no matter what the impact on transactions. This is a loaded comment, because I think it's bullshit. The cost to process any payment of any size under the $10,000 AML threshold is constant, and functionally zero. As consumers, we've become a profit centre, and there is between $600m and $1b of "cost" which is being met by a % value of transaction fee, irrespective of the real costs of operation. It's regulated theft. Tax office loves it because the black economy is shrinking, small traders are wearing processing costs, intermediaries like stripe are hoovering up data, alongside p2p and inter account direct debit and payment models. Credit unions and banks have an uneasy alliance with "key" and "associated" status to inter bank clearing data networks. The direct payment scheme we have (osko/payid: typically Australia they couldn't decide a single branding) is seconds to complete sometimes and competes with other forms of transaction clearing for cost and time. We still have chequebook process clearing times. We still have "not on weekend" and "3 business day" rules. It's totally Bizarre. When they spun credit and debit card fees out from each other I asked some questions of the finance regulators and they said "works for us, cheaper overall" but I think they left this $600m+ profit component in on bogus logic: Tl;Dr real costs of settlement per transaction do not relate to how costs are met. Banking is highly profitable and is a protected industry under a benign regulator.

paulusthe 3y ago
> This is a loaded comment, because I think it's bullshit. The cost to process any payment of any size under the $10,000 AML threshold is constant, and functionally zero. Your argument fails here, because you are wrong here. The cost is not zero, because what the bank does for interbank payments is subject to the same regulations and procedures as everything else a bank does. Banks charge money for transfers because there's regulatory overhead and shared liability. What happens if they've missed you're a money launderer for the cartel and have to pay a $2bn fine because they processed your transaction for nearly nothing, instead of doing proper checks and stopping it? Sorry, but you're just plainly wrong here. Very populist and very wrong

kumarvvr 3y ago

UPI in India works, in principle, like this. I use it to pay for anything from 10 cents to 1500 USD. Its awesome, free and has enabled a banking revolution in India. Small vendors now prefer UPI to cash, as small change is a hassle. In India, even beggars are using it.

crooked-v 3y ago
Also, for more context, many, many daily transactions in India are in amounts under 1 USD. For obvious reasons this makes eating credit card fees deeply impractical for many businesses and entrepreneurs.
- kumarvvr 3y ago
  Yup. An average Chai (Tea) costs about 30 cents. A Samosa costs about 15 cents Most street foods cost under 50 cents. Water bottles cost about 35 cents. I strongly believe that every government should provide this sort of inter-bank and intra-bank transaction services as a public utility, for free. The benefits of UPI cannot be overstated. We also have UPI lite now. We can add about 20 USD to a UPI Lite account. Maximum transaction value is 2 USD. Daily transaction limit is 20 USD and the advantage of UPI Lite is that once you load your account with the money, the transaction completed without bank intervention, meaning lower chance of failure. Also, it does not need authentication (apart from your phone security). I have been using this only recently and its an even more hassle free method of paying for almost 95% of my daily spends. Now I don't have to enter the UPI PIN to authorize a transaction. Its a great way to give pocket money to kids.

stevetron 3y ago

I still have trouble with money and finance not being on the gold standard. And the stock market just seems like gambling to me, which I don't partake in (gambling or stock market). probably why I'll always be poor.

smokelegend 3y ago
No risk, no reward...

buzer 3y ago

There are lots of things that many countries do better than US in regards to banking. One thing that I don't often see mentioned are invoices. In Finland you can get many of them delivered as standardized e-invoice to your bank. This then allows you to setup automatic payment for them on your side (pay on the due date, set maximum value that will be approved automatically if the amount is not static). For consumer protection if the due date falls on weekend/bank holiday, the due date in reality is the first normal day. It's also the day when you need to make the payment, it doesn't need to arrive on seller's account on that date (though these days it normally will).

AdeptusAquinas 3y ago

Isn't this just EFTPOS? I've been paying with that since I first got a eftpos card thirty years ago in NZ

miki123211 3y ago

Poland has a really interesting system (Blik), based internally on fast interbank wire-transfers I believe. Each banking app that supports this system can give you a six-digit code valid for two minutes. You can enter this code in a supported store or ATM, either online or in-person, you get a popup in the app with the amount to be paid, the merchant and a description of what you're paying for, you click "confirm" and the transaction goes through. This system is great because it enables secure payments on devices you don't trust. Because the codes are single-use and transactions require an extra confirmation step in the app, it's perfectly fine to give a code to your child who wants to buy something online, text it to a family member who is at an ATM, or give it to a friend who has free shipping due to a loyalty program and wants to order something for you. This system can also do transfers and transfer-requests to a phone number. In some banks, you can even generate "Blik checks", 9-digit codes that are valid for 24 hours, cover a pre-set amount and don't require a confirmation, which you can give out to someone. These checks have been used to efficiently send money to unbanked Ukrainian refugees when the war started, as they could simply be redeemed at any supporting ATM.