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Comment by Tomdarkness | Hacker News Reader

This is one area where the US seems to be behind compared to the UK. I am from the UK and that service would look quite poor if it launched over here. We have a system called faster payments service that offers instant (although in some cases up to 2 hours) bank transfers for payments up to £100,000 (can differ between banks). You can use this directly if you share bank account numbers and sort codes but there are also wrappers around FPS like Barclays PingIt that people can register with and use your mobile number instead. There is no fee associated with these services.

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The US equivalent is ACH, which has the major downside that using only the bank ID (routing number) and account number you can effectively wipe out the target's account. It's up to your bank (or whatever ACH proxy) to keep you from doing that, not to the interchange, both legally and technically. ACH also takes several days to work, and has a wide window for either bank to declare the transfer fraudulent, so many banks stretch the time out longer to account for that. Most stock brokers will credit your account long before the ACH transaction completes (with some restrictions of course).

There are also wrappers around this here like Chase's Quickpay or Ally's Popmoney but most require that both people use the same bank, or that you give your ACH details to a bank that isn't your own.

Paper cheques just have the routing/account numbers along the bottom, and AFAIK essentially work via ACH anyway, so they have all of the same downsides, plus taking longer to complete.

Also, the window for fraud with ACH is so great that when you tell one bank about another account's ACH details so that you can transfer money, they "authenticate" this by making small, sub-$1 deposit amounts, and asking you what the amounts were, to prove that you can see the target account. So this "linking" process takes the entire ACH transaction time as well the first time you do it. Some banks have taken to using a service called Yodlee which asks you for the target accounts' username and password. That's right, Wells Fargo asks for your username and password on Scottrade to authenticate the transfer because they don't trust the way ACH's liability lies. So this won't work to send $8 to your buddy anyway.

Moving money without a service like paypal/venmo/square/google wallet is really quite difficult, especially if you don't want to trust an organisation with a history of taking people's money (Paypal) or if you don't want to pay a transaction fee.

If anyone is interested more about the state of transferring money and ACH in the US, there was a good Planet Money episode [1] about it recently.

[1] http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...

> The US equivalent is ACH, which has the major downside that using only the bank ID (routing number) and account number you can effectively wipe out the target's account

Interesting. I had come to a similar conclusion myself. I noticed that in paying my school fees all I needed was those two numbers (banking routing #, bank acct #) for payment with no further verification. As you have observed all of these details are readily available on paper checks.

One way to mitigate the issue of someone potentially wiping your account is to have two accounts. One public and one private. The private one would contain (most of) your actual funds whilst the public account, which you would share freely as needed would contain just enough funds to complete whatever transactions that you need to do. Sure, it is not as convenient because you have to manage two accounts but at least that way you reduce your exposure to your funds being completely depleted.

I use checking and savings in this way. I think it's pretty common to do so that checking is a revolving fund and doesn't hold any significant money, but it's also common to just have all your money in the one account.

Anyway, good description of ACH above. Very few people understand how it works.

Are you serious? Why would _anyone_ design a system like this?

In Australia, the equivalent is EFT (Electronic Funds Transfer). You can deposit money to anyone's account by telling the bank their BSB (Bank/State/Branch number) and their account number; however this is not sufficient information to withdraw money.

To withdraw money: 1. at a physical bank branch: a. you put your credit/debit card in a POS terminal and enter your pin/sign to authenticate. b. provide yous credit/debit card and photo ID to the teller. 2. at an ATM: credit/debit card + pin number. 3. online banking: either the credit/debit card number and a password and often a pin as well, or a separate number and password.

All of these use an independent authentication source to the bank account number.

Also the delays quotes here are insane: In Australia, there are essentially 2 ways to pay for something (excluding cash): 1. EFT (Electronic Funds Transfer) 2. Credit card (possibly using a debit card) transaction.

On POS terminals, you can choose either; the differentiator being whether you want to use a savings account (EFT) which goes via your bank, or a credit (or savings account accessed via debit card) account, which goes via MasterCard/Visa.

All forms of EFT take 1-2 business days between banks, pretty much all the time; and they're universally free for the payer.

Credit/debit transactions seem to take 1 day universally.

We have a fairly stagnant banking system, with 4 major banks having basically the entire consumer market (and the vast majority of the nonconsumer market as well). Why, in a small, stagnant market like ours, do we fare much better than the US system?

[edit: I forgot to mention, checks are dead here, they're now almost only used for large transfers of money where: 1. you don't want to use EFT; 2. they're over the daily online maximum for EFT transfers, and you can't be bothered to go to a bank branch (although you can only get bank checks at a branch AFAIK); 3. You want an immediate guarantee that the ammount was paid and the date/time/payer/payee (as opposed to waiting 1 day for the payment to come through).]

> Are you serious? Why would _anyone_ design a system like this?

Because it's descended from writing simple letters of credit (and by this I literally mean a letter that says "Hey bank, pay John here $15 out of my account kthx"), and giant ancient heavily regulated institutions are terrified of change.

The system wasn't designed exactly, it just sort of evolved

Also, the US has a very weak culture of consumer protection and regulation; solutions that require co-operation between competing entities are much harder to get off the ground. See the ACA software mess.

and they're universally free for the payer.

Not quite. Vendors can now legally add a surcharge to cover the cost for payments from a credit card. Some vendors traditionally refused Amex when they had to eat the charge, since Amex was something like a 4-5% cost to the vendor as opposed to the 1-2% costs of the other cards.

Why, in a small, stagnant market like ours, do we fare much better than the US system?

We have strong banking regulations, apparently. I heard somewhere that during the GFC, there were only ten banks of that kind globally that hung on to their AAA credit rating, and all four of the Australian big banks were in that ten.

Credit card transactions do sometimes have fees attached; specifically I was referring to EFT, which for person-to-person has no fees at all, and doesn't attract fees to the payer at the POS (whereas credit cards can).

Yeah, the real question I was getting at was, given the Australian market is even more insular and stagnant than the US, why do we have much better systems?

What you're saying sounds plausible; a comparison of the US and Australian regulations on deposit banks would be interesting.

I never realised how good we had it comparatively in Australia. I always just thought that Eftpos was something that "just worked" and that everyone around the world had (or at least an equivalent). No fees, no credit, no monthly payments, no bullshit. Just a card that you use to pay for things out of your bank account.

No processing times too :)

Actually EFT does have fees. Typically between 10c - 25c / transaction.

They are minimal, but they are there.

Plus the fee for the terminal of course. Which varies significantly between banks in AU.

Sure; I could have been clearer here.

Specifically, you can do an EFT transfer from a bank account to any other bank account in Australia via online banking, and it's free (at least in all the times I've used it).

In the case of ETFPOS terminals, EFT is always free for the payer (the customer), and credit cards are usually free for the payer, but do sometimes have a fee for the payer (certainly AMEX and Diners).

As I've now been corrected on, both types of transaction have a fee for the payee (the merchant).

The fee for the terminal itself is definitely true - I was mainly thinking of fees in terms of payers, i.e. the customer, not the merchant.

Though given there are alternative methods for credit/debit payments (i.e. alternative terminal types, like the swipe thingy that plugs into iPhones) it'll be interesting to see if people keep the combined EFTPOS + credit/debit card terminals, or abandon the EFT side, as the number of non-debit bank/keycards dwindles.

Our bank regulations are a joke (in the last few years, we just nationalized a fraudulent bank for €2.7 billion and re-sold it for €30 million), and yet we have a similar system, plus free virtual CCs, plus an award-winning ATM network that doesn't charge any fees for usage/withdraws.

> All forms of EFT take 1-2 business days between banks, > pretty much all the time; and they're universally free for > the payer.

Other people have already weighed in on the fact that actually not all of the payment systems are free for the payer (even EFT via a terminal costs).

But ask yourself, why does it take 1-2 business day for this to happen? In the UK, the worst case scenario is 2 hours between different banks. And if the account transfer is within the same bank, it is instant.

In AU, even between St. George accounts you can see delays of up to 1 day. Insane! Especially since the money isn't changing banks but accounts within the bank.

The AU transfer delay is bizarre.

Every bank I've been with (Commonwealth, ANZ and Bendigo) has instant transfers between accounts within the same bank.

Could just use bitcoin.

surprised to see that this is the only mention of XBT in this thread.

Seems to me like square cash is comparable to the extremely low friction nature of XBT to XBT transactions, but with fiat currency.

I'm not saying square did this in response to bitcoin, just that it's scratching the same (or a similar) itch.

Now, if only I could Square my BTC into somebody's fiat account without friction...

It's bad. One time I mistakenly reversed the source/destination when sending my roommate two months of rent money and I over drafted his account because it took the money without asking his permission.

Once the accounts are linked, either party can pull/push money without the other's approval.

Seriously? That's insane!

That sounds like whatever user interface allowed you to use the remote account as a source was equally to blame.

Having recently moved from the UK to the US, I was quite shocked at the state of US banking. In the UK we can transfer money for free, use many ATMs free (not just the bank's own), we get free chequebooks, and there are plenty of accounts with no monthly fees. My US bank has a whole list of charges, and it's not made up by higher interest rates.

UK banks do the same, they just charge their fees to people who go overdrawn instead.

There's no such thing as "free banking" in the UK

As another person who has lived in both places, banking is a lot freer in the UK. Yes, UK banks charge overdraft fees - but so do US banks. Most US banks will charge you to send you replacement checkbooks; many will even charge you a monthly fee to maintain the account. There are notable exceptions, but they don't have mass market buy-in.

I moved to Canada (from UK) and similar situation. Monthly fees, X amount of transactions per month, fee to withdraw from other banks (although we had this in UK too for a few years), fee to pay someone else money whether in the same bank or not and even via the internet.

I tried to deposit a cheque into my landlords account and the bank teller would not accept it, had to be cash or bankers draft - I presume because they may have a limit on the number of transactions per month and anything over wold cost them additional money. I found it very bizarre.

Remembering people's bank account details is a nightmare though. I sometimes need to pay friends or family back for a meal or whatever, but going through the rigamarole of requesting their bank account details and then logging onto internet banking, going to the payment screen, putting their details in (making sure you don't mistype a digit in their bank account number) and then hoping you did everything OK is just a fundamentally broken UI.

The Barclay's "pingIt" system is a step in the right direction, I think all banks should adopt a similar system. Paypal "gifting" is a good alternative to this but not everyone has a paypal account

Both banks I've used recently (Natwest and Halifax, not that I can recommend either) keep a saved list of people you've paid in the past, so I only had to go through that dance once for each person I paid. For the people I paid most frequently it was very convenient, I could send them money in seconds using the Natwest Android app.

Ah - I was under the impression PingIt could be used by non-Barclays customers.

That said, NatWest's mobile app also allows this behaviour: I can send a contact a text with a link allowing them to deposit the amount specified: up to £250.

That's how it works in much of Europe. The US banking system sucks. I have clients in Germany. They pay me via credit card because bank transfers to US accounts are such a pain. If I had a German account they could pay me instantly without hassle. Even many of my US clients pay me by credit card because they'd otherwise have to mail me a check (yuck) or get some kind of 3rd party bank transfer service which they're not willing to do.

Faster payments are so fast in some cases that, transferring between accounts with different banks, I see an update in the recipient window before the sending bank website has finished serving the confirmation page!

On one occasion I asked someone to transfer me money while I was queueing for an ATM. Hung up the call and took the money out. It's FAST!

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