Hacker News Reader

Comment by 2143 | Hacker News Reader

Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face.

Regarding payment systems specifically, people generally don't realize what they're missing.

Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.

View on HN

When I lived in Japan twenty years ago, everybody just wired money electronically and checks were long obsolete. In the US, I write checks every week or so. They also had a system where you would put your checkbook into the teller machine and it would print your credits and debits into the book for you. It was very convenient. On the downside, the ATMs were turned off (!) during national holidays, so you had to get cash beforehand.

Surprised you're writing checks every week: I haven't written a check in years. ACH transfers, sure, but not physical checks.

I do still receive them occasionally, almost always as printed checks from companies.

It depends. I have to use checks to pay my landscaper and housekeeper, because there isn't another unilateral payment document.

By this I mean, in the US everyone could use CashApp, Venmo, PayPal, Zelle (glorified ACH, right?), etc. for p2p payment. If you have the same bank, many banks have a trivial "send money to another customer's account" feature. However, to do so requires essentially a 'handshake' where the two parties agree on a method. Checks require no up-front handshake, since everyone knows what to do with a check (deposit it at your ATM, take a picture of it with mobile app, or take it to a check-cashing place or the issuing bank).

If I could print on paper a key or QR code that allows you to claim the money into the account of your choice, like a check does, I'd use that. Sadly, banks seem to have put their effort into Zelle instead.

Zelle may still allow for you to send money to a non-Zelle account - as a dark pattern, they'll hold that cash for the recipient and give them an opportunity to sign up and receive it. This was a big pressure point for smaller banks and CUs to sign up.

Sure, so will all the real fintech payment companies that came before Zelle too, but you can’t count on someone to be interested in signing up. They might just say “no, screw that, I don’t like Zelle/PayPal/CashApp, I demand you pay me I with cash or check or I won’t work for you anymore.”

For all I know, they might even be banned from that app, and unable to sign up to retrieve my payment.

Yeah. And with online banking apps, it's basically not worth anyone's time to do the handshake because depositing just isn't a big deal [ADDED: If there's an in-person transaction]. I use credit/debit/ACH 95%+ of the time but if that's not an option check is easy.

I mean, all you need for Zelle to send someone money is an id, if they have a Zelle-supported bank account. Which is effectively the same situation as bank transfer payments in other countries.

Aren't you just describing cash? Cheque has the same issue as the online alternatives in that it could "bounce" - cash (or I guess crypto) can't

Large checks are cheaper to handle than an equivalent amount of cash. Most people won't just toss $10k in the back of their car and drive to the bank, but would think nothing of taking a $10k check to the bank.

Also, there is less of a need for a receipt when paying by check. If I pay someone by check, my bank has a record of it. If I pay them by cash, I better get (and keep) that receipt in the case of a later non-payment dispute.

I gather check verifications have gotten better. I had to buy a new car last year and my deposit was via CC but, for the final payment, they were fine with a personal check whereas I've always had to pay with a cashier's check from the bank in the past.

I think car dealers just run your credit and if it's good enough they accept a personal check these days.

I can’t print cash in my house ;) and I don’t want to keep a board of it under my mattress!

I run into this myself a whole lot with various home service businesses in particular.

It’s not unusual for me to get an invoice for a company via QuickBooks Online, with cash or check as the only payment options.

Other businesses around here have started giving discounts for paying with cash or check versus apps or credit/debit cards, to avoid the recent increases in fees.

I’ll also write checks when having a “hard” traceable payment instrument physically makes sense for auditing purposes or fraud prevention, although that’s less frequently needed.

I find I still have to write a few a year, annoyingly.

Of all things my life insurance company is still not set up for credit card payments. In 2023.

Boggles the mind.

The significant credit card fees might have something to do with it. Perhaps better luck with FedNow.

I’m 41 , I’ve never written a cheque in my life, and have received less than 10 in my life.

Australia/Canada have been doing free bank transfers since before I was old enough to know

Checks never took off in Japan because their 1947 Labor Standards Act (Art. 24) actually made it illegal to pay wages by check [1]. So it's not that checks were made obsolete, it's that they were smothered in their crib. Until the advent of electronic payment, it's said that tens of millions still got paid in cash rather than bank transfer in the early 90s [2].

I think it's easy to forget that societies that adopt a technology early might be doing so because the slightly outdated alternative from elsewhere was never brought over. Japan has no shortage of those, like a lot of dining is still cash only. Who knows, perhaps in 10 years those restaurants will skip credit cards and contactless and go straight to face-based automatic payment.

[1] PDF warning https://www.ilo.org/dyn/travail/docs/2018/Labor%20Standards%... [2] 1991 article https://www.sun-sentinel.com/1991/10/24/japanese-prefer-cold...

I'm only nominally a grown-up, but I've lived in the US my entire life and I don't think I write a check more than once a year. Most stuff I buy is done with credit cards (which I generally pay with their respective mobile apps with bank transfers), my mortgage is automatically withdrawn from my checking account, and I use CashApp or Paypal to send money to people directly.

I think the last time I actually wrote a physical check was when I refinanced my house in 2021.

I don't think cheques are obsolete in Japan, so much as never having been popular and established in the first place. A lot of things are just done in cash (even e.g. buying houses!) and that's not seen as unacceptably risky the way it is in many countries; COD is an established practice that again just doesn't exist (and wouldn't remotely be considered safe) elsewhere. Furikomi is slow and expensive and cheques would actually be an upgrade in many ways.

> When I lived in Japan twenty years ago, everybody just wired money electronically and checks were long obsolete. In the US, I write checks every week or so.

And yet in Japan they're still obsessed with using backwards fax machines and paper.

> They also had a system where you would put your checkbook into the teller machine and it would print your credits and debits into the book for you.

That's intresting to know.

Where I'm at, we had (still have?) a "passbook", a small booklet where you could get all your transactions printed onto.

But AFAIK we couldn't do it ourselves through the teller machine though. Once in a few months or so you go to the respective bank and ask the staff there to update the passbook. They use a machine, however.

Of course, there days it's unnecessary as you can electronically download a list of your transactions for a given period from the bank's website/app.

I've seen (and actually even used once, I think) automatic passbook updating printer machines in quite a few ATMs in some places.

> In the US, I write checks every week or so.

What the hell? I need 'checks' of some kind (regular check or cashier's check) maybe once a year for something like a deposit on a rental home.

For actual rent payments and the like I use Zelle, since most major banks support it. What do you need actual paper checks for?

> Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.

This is like comparing candles and lightbulbs. Sure you can light up your home using both methods just fine, but you end up realizing how inconvenient candles were once you've made the jump to the newer technology.

Yes, but in many cases the people using candles fight like hell to insist that electric bulbs aren't better, can't be better, and even if they were better, there's no way to have electricity in the US.

I don't think anyone is arguing that an automagical system of electronic payments that everyone uses wouldn't be desirable [so long as cash wasn't also an option] but writing/depositing a check now and then is so far down my list of weekly annoyances it doesn't even register especially given my bank actually "writes" most of them based on online payment instructions. I'd be much more annoyed if I had to use cash on a regular basis as is the case in some countries.

Sure, but in most countries, those services are provided by banks, not the government. There is certainly something to be said for legislation like open banking regulations that encourages/forces banks to facilitate instant peer to peer payments. But that's a far cry from a service offered directly from the government (okay, technically the fed isn't the government, but it may as well be).

Interbank payment systems are actually provided by central banks or the government (or affiliated organizations of either) in quite a few cases.

Europe has TIPS (an ECB-operated implementation of the SEPA Instant Credit Transfer scheme), India has UPI (which is pretty close to the central bank, as far as I understand) etc.

In the case of FedNow and TIPS, there are private alternatives as well, such as RTP in the US or EBA Clearing's SEPA Instant implementation in Europe. This is similar to ACH – there's both a public (FedACH) and a private (The Clearing House) implementation/network available.

> in most countries, those services are provided by banks, not the government

That's something I always point out when telling others how awesome the Brazilian Pix system

https://en.wikipedia.org/wiki/Pix_(payment_system)

is. It's not a private initiative by a bunch of individual banks, but rather a zero-fee payment system managed by the country's central bank: https://www.bcb.gov.br/en/financialstability/pixfaqen .

And it seriously rocks. It has been such a tremendous change to everyday life.

What happens when it becomes so good that it's the only option? There's no need for it to be profitable, so it can inevitably undercut private sector competitors. Do you want to live in a country where the central bank controls and monitors your ability to transact with other people?

Just last year, the Canadian government weaponized "debanking" in an effort to quell peaceful protests against vaccination mandates. They restricted the bank accounts of people who peacefully disagreed with government policy stances. And that was just with the status quo of deputizing private banks to enforce the sanctions against the individual citizens - imagine how much more systemized and effective it would be as a coercion measure if the bank accounts were directly managed and controlled by the government.

We're not a banana republic and actually have laws governing what the central back can do, and they can't block transfers without a warrant. Any private banking solution would be subject to same kind of laws.

Banks use Bank Secrecy Act as a cover to debank people. When you complain, banks retort that you agreed to their terms and conditions. Add machine learning and/AI to this mix: debank people because their algorithms flagged them as risky. Just as c-level executives use code language to talk to their yes-men to execute unethical and/or illegal activities. Now replace yes-men and code-language, with maching learning/AI; viola, perfect way to debank without any evidence of unethical doings.

> What happens when it becomes so good that it's the only option?

Nothing is stopping banks from creating something better.

But not something cheaper.

If the government has to step in and fix your industry, you have failed.

I'm fine with an alternative that's also free. No need to pay me when I use the service.

Should I be feeling sorry for the poor banks that were too greedy to come up with this new payment solution? I'll try.

This, ladies and gentlemen, illustrates the point I was trying to make.

OK.

But it doesn't seem to me like there's a huge difference between "Know Your Customer" + FDIC and Fed Now aside from removing risk to consumers that most people ignore anyhow.

There's a big difference between checking passports before onboarding a customer, and sending every transaction to the federal government in real time.

> There's a big difference between checking passports before onboarding a customer, and sending every transaction to the federal government in real time.

I guess there's technically a difference between "sending every transaction to the federal government in real-time" (FedNow) and "sending every transaction to the federal government, in batches three times per day" (the status quo).

But from a privacy standpoint, the two are functionally identical.

Can you clarify something? I thought FedNow was for settling up when I, as an ABC Credit Union customer, initiate a transfer of $5000 to you, a Chase customer. Now ABC needs to subtract it from my account, and if successful, tell the Fed to take money out of ABC's Fed account and put it into Chase's, and to tell Chase to expect $5000 (Transaction ID: XXXX?) and here's who it's for.

Does FedNow, or whatever batch job it is replacing, involve ABC telling FedNow "This is for a transfer from Jane Doe (SSN 123-45-6789) to Joe Bloggs (SSN 098-76-5432)"? As I imagined it, FedNow would only need to know what bank is sending and what is receiving.

You should do some research on the Automated Clearing House (ACH) system. It's how most bank transfers are done. Most ACH transactions will likely move over to FedNow as it's implemented. I believe both systems do account to account transfer, fed now is just faster and settled instantly, while ACH takes a couple days to settle.

> Most ACH transactions will likely move over to FedNow as it's implemented... fed now is just faster and settled instantly, while ACH takes a couple days to settle.

FedNow is more of an extension to ACH than a replacement for it.

Same-day ACH also exists, although it's relatively new. FedNow is faster than same-day ACH though.

Sounds like a European view.

>Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.

As an American, this definitely isn't true for me. I've found so many large organizations fail to make auto-pay work, transferring money is mind-bogglingly slow, and going from magnet to chip-and-pin instead of straight to tap-and-go was a regression. Some companies are able to bill you after you no longer wish them to bill you, while other organizations make it difficult to find out how much you even owe them in the first place when you want to pay them. Not sure how much the last couple can be solved with incremental tech.

I think that was their point - the rest of the world solved this long ago, it is just the USA that lagged

I could see that. "Anybody from any country" could have included the US or meant "any other country."

But if it did include the US, it would have the assumption that Americans are unaware how terrible our payment systems are (generally untrue I think) or unaware that other countries have better systems (may or may not be generally true).

It's true that America is very far behind now but they're also the ones who started creditcards all the way back in the 1950s.

Anyway I have a theory: big countries are too far up their own ass to notice or care what the rest of the world is up to.

Compare a small, international oriented country like the Netherlands or Denmark to sleepy provincial Germany.

Singapore might be another interesting example. They are very much living the future.

Which is basically why all the De-Fi, Web 3.0, Cyrpto nonsense are very much US centric.

When I want to know what the future of money transfers could look like, I'd ask people from, say the Swahili-speaking regions of Africa, not Silicon Valley.

Not my good friend from Tuvalu

> Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face.

I thought FedNow was explicitly inspired by the success of India's UPI?

Reply on news.ycombinator.com