Comment by bloopletech | Hacker News Reader

Comment by bloopletech | Hacker News Reader

Parent Full thread

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.

> 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.

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.

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.

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.

Reply on news.ycombinator.com