Comment by djsumdog | Hacker News Reader

Comment by djsumdog | Hacker News Reader

Zelle exists because the US government hasn't mandated free person-to-person transfers like nearly every other country on the planet. It tries to be a private initative to allow for electronic transfers.

That being said .. it's still just a virtual check. If you write a real check to someone and they cash it and then don't give you what you ask for, you do have to get that person or entity arrested or take them to court somehow.

Even if Zelle was an official US federal reserve system (which it really should be and not this hacked together bank program), I think you'd still have the same exact issue.

Judging from the comments even Venmo appears to have the same issues, even though it's owned by PayPal. Their parent company PayPal has some protection because there's that buffer that exists in the PayPal account before it goes to your bank account (although I though Venmo had this too?) so they can recover money from that layer, but not always when it gets transferred all the way out.

It’s also a difference of expectations. I live in a non-US country where escrow services never took off and consequently nobody expects fraud protection from financial service providers. The banks cover unauthorised use but not authorised transfers for fraudulent reasons. That is dealt with by the police.

PayPal has set some interesting expectations for what a service provider should cover.

I'd argue that it's not just PayPal though, although they've played a part for sure. Credit cards in the US are ubiquitous and offer a very high level of fraud protection that consumers are used to.

Of course, that fraud protection (and the multiple points & cash back systems) are all covered by overhead in the system. Merchant fees are quite expensive, although the consumer never usually sees them except for small things like cash discounts or minimum transaction amounts at small businesses. There have been some interesting court cases about the ability for merchants to pass those fees onto their customers.

My country has free person-to-person transfers between all banks, but it is a separate issue from fraud. If you get scammed the bank will not help you.

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