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Comment by thfuran | Hacker News Reader

>American hate for wire transfers will never sound anything other than irrational to me.

I'm assuming "wire transfer" means something different to you than what it means in America. In the US, a wire transfer is when you call up your bank, give them a routing number and account number, tell them to wire however much money to it, agree to pay like $20 or something for the transfer, and then they tell you the transfer will happen tomorrow morning because it's 3:30 PM and the last batch gets handled at 3:00. They're not so much hated as pretty much entirely irrelevant to everyone. I've made one wire transfer in my life, and that was for buying a house.

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We have “faster payments” in EU/UK. You enter a bank account number and sort code, confirm it, and it transfers instantly in 99% of situations. 0 fees, it’s faster than card payments and available to anyone with a bank account. If you want to go down the clearing route you can do CHAPS which is the same as a US wire.

In Sweden, we use Swish, you enter the phone number, not bank account. Everyone has it and connect the app to their bank account, so payments are instantly in your bank account.

There are two problems with faster payments in the UK as an alternative to cards.

1. A lack of a mechanism for using it for things like online purchases. 2. What about the 1% of the time when it is not instant?

On top of that you are not allowed, by law, to charge customers more for a card purchase so customers have no incentive to switch from cards and the existing mobile phone payment systems.

Not sure how they do it in the UK, but in the EU, for online purchases they typically give you a unique code to enter in the note field. This is picked up by an automated system and matched to your order.

It does sometimes take two business days to clear, so it's not good if your service requires fast turnaround (e.g. pizza delivery). Of course, it's always good to have another option, and perhaps even for pizza delivery you could accept it on trust with customers you have a good relationship with.

(On the software side, unlike a credit card payment, this does require that you temporally decouple ordering and billing. Besides the processing delay, a lazy user might not send the payment immediately. Two weeks seems to be a typical length of time, and of course you don't ship anything until payment is received. Treat it a bit like a cash-by-mail payment.)

It is guaranteed to take no more than two hours in the uk, but still not fast enough for some purposes. Entering a code manually is also not convenient and is more error prone. its useful and widely used but not a replacement for card payments.

Well, in Hungary had the "instant payment" for years, but last year the National Bank issued the spec. & requirement for the banks to facilitate the "qvik" payment method. Which is pretty much a QR code which you scan with your bank app and they will automatically parse & populate the fields for wire transfer. Then the payment provider will do a callback to the merchant which confirms that the payment was made [1]: https://www.cib.hu/en/Maganszemelyek/digitalis_bank/mobilalk...

Funnily enough, the company that runs UK Faster Payments (Vocalink) is a Mastercard subsidiary.

A more specific, but not commonly used, term is "giro transfer" (coming from an Italian word). That's a payment where the sender pushes money, as opposed to the receiver pulling it, as they do with a cheque or a card swipe. In the past you'd send a letter (which is why it was inconvenient), but nowadays you log into my online banking page, enter a destination account number, amount of money to send, and a note, and click "send", and the money is transferred somewhere between immediately and three working days depending on which system you're using. This capability is very obvious to non-Americans and I'm sure even to Americans, is an extremely obvious thing that any banking system should have...

The key difference here is that you communicate with your bank, giving them a direct instruction to send money to the recipient at their bank. With cheque or card, the recipient communicates with the recipient's bank, to forward an authorization written by you, which is sooner or later verified against your bank. Which is convenient for you, but involves more steps.

Basically this, but through a web form, the fee is €0.50 (recently lowered to €0.00) and the transfer is sometimes instant, other times still takes 2 business days, but you can show the recipient the proof that you sent the transfer and get the goods immediately.

Wow. I was assuming Americans pay that much for wire transfers (vs ACH) because they are fast?

It's commonly a low volume - high value transaction, so they can charge that much. I have used them to buy houses and change banks. But not to buy a car - because car dealers are evil and there's no way to easily reverse one when the dealer stiffs you.

Ah you poor naive soul.

That's not the American way. Our services are both expensive and slow. You see, it's about freedom! We are the Most Free (lol, sorry) and therefore corporations are free to be bad in both ways simultaneously. :D

American retail banks are so heavily relationship based that there's zero competitive pressure on pricing, even for things that people use quite a bit more than wire transfers. For example, it's completely trivial to find savings accounts paying a 3.50% interest rate right now, but the largest banks offer more like 0.03%.

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