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Comment by kolinko | Hacker News Reader

Why would you use a piece of paper for any sum of money?

In Poland, I've seen a real-life check only once in my whole adult life (past ~20 years). Any amount, literally from $1 to $10M+ is being sent by a wire transfer, and wire transfers cost $0-$0.25 flat fee, arriving within the same working day, or instant.

This is how it has worked for the past 20 years, and the more recent innovation is having a similar system working all across Europe, and instant transfers within the same country.

Depending on a bank's security policy, the only difference between amounts is that some banks won't allow you to send wires above a certain amount from mobile, and with some banks you have to appear in person for wires above say $50k.

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> Why would you use a piece of paper for any sum of money?

In the US, sending money to another person's account, especially as an individual, is a difficult process, often requiring giving long account and routing numbers that many of us were told not to give out. It also takes several days to process, and sometimes has fees of $25-30. Also some banks have limitations allowing you to do transfers only to accounts where the name matches.

While many major banks have an online transfer system (eg, Zelle), this is far from being universally supported (my bank is not a member) and many people don't have it setup. Also the transfer limits might be low.

Other options like Venmo or Cash require both sides of the transaction to have an account. They also don't work well outside of friend-to-friend interactions.

My understanding is the US is due to replace the current clearing house system with one up to modern standards, but we'll see how that goes.

> often requiring giving long account and routing numbers that many of us were told not to give out. It also takes several days to process, and sometimes has fees of $25-30

I get there probably isn't a single answer to this, BUT WHY? The US is a mature, skilled economy with a competitive B2C market, why does it still lag behind even comparable countries in terms of consumer financial infrastructure?

> BUT WHY?

In US even the idea what there are could be some nation-wide (ie federal) registry of it's own citizen could get you pitch-forked. US still doesn't have a national-wide internal ID, and for the thing what essentially replaced it in function - driver's ID, every state has it's own format and idea what should be in it. It is not uncommon to hear what for something what requires ID (like buying alcohol or entering a nightclub) the people out of state would be barred from doing so because the clerk doesn't recognize the driver's ID of some other state and thinks it is a fraudulent one.

Most European countries have it easy, compared to the US, having a single law across the country and one citizens registry, or at least something much closer to it than the US.

Add to this a whole "embarrassed millionaire" mentality and a total unwillingness even to acknowledge the need for a change.

For the last one see any thread on Reddit where sane^W any non-American asks why US shops can't write the final price on the tag already.

I think this thread shows most American people don't understand European bank transfers.

I give you my account number. No risk to me. You can't take money from my account. You can only put money into that account.

No statewide ID or anything like that is needed by anyone for this system to work.

Checques work the opposite. I give you permission to take money from my account with a piece of paper. Very risky!

> No statewide ID

"Sure but now everyone can track me down with my account ID! [Which is of course in the number of The Devil!11]" - the guy who has SSN.

I wasn't clear in my previous post, but statewide ID isn't needed for the consumers, of course, but behind the curtains this is still much a bank to bank wire transfer, just using a different protocols. One of the attack vectors is making an account, filling it with money (eg stolen from the other accounts) following with the cash out and begone in the wind. With the near instant money transfers it would means it could be done VERY fast and nobody (except criminals) would be happy if that could be done easily. Having an account tied to your nation-wide ID means you can do it only once and then you have painted a target on your back by yourself. Of course there are SSN, KYC and other things, but aside from FBI's Most Wanted (joke) there is amusingly small list of things one US state entity can know about entity of other US state.

It is also always helpful to remember to treat US not as a country but as an association of countries under a single flag and currency. That way it would be much easier to answer multiple "WHY in America...." questions.

> It is also always helpful to remember to treat US not as a country but as an association of countries under a single flag and currency.

But is this materially any different to other federations, like Australia, Germany, and Canada (who’s provinces generally have significantly more autonomy than US states)?

> US still doesn't have a national-wide internal ID, and for the thing what essentially replaced it in function - driver's ID, every state has it's own format and idea what should be in it.

One of the nation-wide IDs actively in use is the tuple (state, driver_license_number).

Which means John Doe, DOB 11/12/1975, 6'12'' (OH, 123456) and John Doe, DOB 11/12/1975, 6'12'' (FL, 123456) are two different people!

Each identifier identifies a person. A person may have multiple identifiers. I have a non-US nationally-unique drivers license ID and a passport number.

I imagine it is very profitable for the existing players.

> with a competitive B2C market

This is the disconnect. There are only a couple of national banks, and they are all crappy in their own important ways. This was largely the same in the UK until Mon{z,d}o came along and banks had to treat user experience as a source of competitive advantage seemingly overnight.

The Faster Payments Service, which has allowed transfers between accounts of any UK bank which usually happen within minutes has existed since 2008. And it is free to use for non-business account holders throughout the entire market.

Paym, which allows transfers using mobile numbers is available with most high-street banks, but notably, not the fintech banks has been available since 2014. So arguably the fintech banks are behind the curve here, likely to try and drive some sort of network effect to increase friction of transferring money to customers of other banks.

Were the existing banks processes, apps & websites janky before the likes of Monzo came about? Sure, to varying extents. But the actual method of making transfers between accounts hasn't been influenced at all by the new banks, they're all using the existing structures that everybody was using before.

> In the US, sending money to another person's account, especially as an individual, is a difficult process, often requiring giving long account and routing numbers that many of us were told not to give out. It also takes several days to process, and sometimes has fees of $25-30. Also some banks have limitations allowing you to do transfers only to accounts where the name matches.

Wow. Here in Russia you only need a phone number, and when you enter it all the banks that recipient uses are automatically shown to you when you, it takes about 5 second and is completely free.

It's not "completely free". If you transfer more than 100 000 roubles/month (~ $1360) then it costs 0.5% of the amount. There are also limits of about several hundreds of roubles per month.

If the recipient wants to withdraw the cash in less than 30 days after receiving the payment, the bank may request documents that prove compliance with anti-laundering regulations. If you fail to provide such written documents then the bank will charge a fee of about 5-10%.

Also it is not secure because anyone who has your phone number can learn in what banks you have accounts. And if you have an account in Sberbank, anyone can lookup your name by your phone number. Very convenient for criminals and scammers.

>If the recipient wants to withdraw the cash in less than 30 days after receiving the payment, the bank may request documents that prove compliance with anti-laundering regulations.

The US is similar with amounts over $10,000. Structuring transactions to avoid that number is also forbidden.

Writing a check instead won’t avoid that since the account and routing number are printed right on it

Oops, I could have reworded that paragraph to be clearer. Yeah, the check giver can't do much, but as the other commenters point out, the receiver of funds doesn't need to give out the numbers.

I can receive and cash a check from someone without giving them my account/routing info.

Ah yes, good point it does work for getting paid.

Our (the US) government, primarily the law making arm Congress, has been dysfunctional for so long it erodes various functions of society. For examples look at how the US doesn't have Federal bank accounts for individuals, or expanded services from the US Postal Service, proper simple taxation, straightforward immigration, digital identity management without the need for elaborate expensive physical identity documents--there are a range of issues that speak for themselves. Both of the prevailing parties have effectively the same problem, the Republican one has simply become so excessively backward and activist that it's more distracting, sort of a shiny object. Just consider gun rights and how there's no effective sense of responsibility associated with that right. Or that there's no Federal ballot mailing program for all locales and States (for example Puerto Rican's cannot vote for even the POTUS) despite there being high security and USPS services providing a solution with excellent scalability.

One reason, not everyone can or wants to open a bank account. Illegal immigrants, for example. Or people receiving food stamps, disability benefits, they often work for cash, because they can't show money in their bank account. You can cash a check at any walmart.

> Why would you use a piece of paper for any sum of money?

Because people like the assurance of a check, or a receipt, or a payment confirmation.

How do you initiate a wire transfer? Seems like you would need to know a lot about the recipient -- their bank and account number, for starters -- to be successful. Sure you could do it on a mobile device but seems a lot more time consuming than writing a check. Privacy concern as well.

What happens if the transfer fails or doesn't go through, for whatever reason? If you hand the recipient a check, they have physical proof that you intended to pay them, and they know the payer's bank and account number. What recourse, proof, or evidence does the recipient have for a failed wire transfer?

How do B2B transactions work? Is it all wire transfer or do they pay each other with checks? In the USA, a huge percentage of consumer payments have migrated from checks to debit/credit cards (with near-instant confirmation), but companies still use tons of checks via standard postal mail all the time.

Writing not from Poland, but from Czechia, which is similar. I have only seen checks arriving from the U.S., never used for payments within Europe as such.

If you receive an invoice to pay, it will have the correct account number on it. Also, nowadays, many merchants include a QR code that makes payment with mobile banking app much easier. You just start the app, it activates the camera, reads the image and all you have to do is confirm the transaction. Very fast and with few possibilities to make a mistake.

Landlords will give you their account number as well, it is usually written in the contract.

If transfer fails, it is your problem. I am not sure how Americans handle bounced checks, but if someone gave me a check that I was unable to clear, I would suspect them of fraud.

B2B is mostly wire transfers and sometimes credit cards. Bookkeepers prefer wire transfers, because matching them to invoices is usually trivial nowadays. Any good accounting program will do that for you.

As for privacy, I would feel a lot more comfortable giving someone my account number (they cannot really do anything bad with it) than my postal address. And if your business is a VAT payer, its account number will be publicly listed by the tax authority anyway.

All these issues (and many many other issues both in and outside of banking) have been solved problems for so long outside of the US that the rest of us have forgotten about them.

They've generally been "solved" as well inside of the US also, via debit cards, online/mobile banking, and ACH. I'd guess that most people handle fewer than 10 checks per year, outside of rent/mortgage. But there are occasions when checks come in handy and are preferable. I'm glad they remain an option.

> What happens if the transfer fails or doesn't go through, for whatever reason? If you hand the recipient a check, they have physical proof that you intended to pay them,

For most of Europe transfers are instant. So you’ll know if you’ve been paid or not pretty much immediately because you get a push notification confirming the payment within seconds of someone hitting send.

> Because people like the assurance of a check, or a receipt, or a payment confirmation

What is more assuring then the actual payment itself, transferred to you just as you talk?

> How do you initiate a wire transfer? [...] -- their bank and account number, for starters

Ugh, 21st century says hi.

Just a mobile number, some provider independent number, like SEPA [0] or in some circumstances just the plain plastic card number, be it a debit or a credit one.

> Sure you could do it on a mobile device but seems a lot more time consuming than writing a check

Scribbling something on the paper and taking it to the ATM/bank (or use said mobile to "online check it", oh irony) is sure to take more time than punching in some number in mobile or web app and actually transferring money.

[0] https://en.wikipedia.org/wiki/Single_Euro_Payments_Area

Reconciliation, Retries and other aspects are baked into that standardised payment system.There are countries that have completely abondoned cheques since early 2000s.

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