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Comment by jordanthoms | Hacker News Reader

Meanwhile, everybody outside the US is trying to figure out how it's taken so long for easy person-to-person payments to happen there.

Here in NZ, you've been able to pay directly to someone's bank account number for free for as long as I can remember, and my bank introduced payments to mobile numbers, facebook accounts, and email addresses 3 years ago. (Oh and it's totally safe to broadcast your account number to everyone, most companies have it listed on their website. No way to pull money from it through ACH without their permission).

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As someone else from NZ I would like to second this. We got a US bank account for our company and I was surprised how archaic the US banking industry is.

Another thing very interesting in NZ/AU is EFTPOS. EFTPOS is like the credit card system only with no transaction costs. Any shop in NZ/AU will take it.

The original business model for EFTPOS was that the user pays a fixed charge per transaction. I think it was something like 20c originally. However, because each bank was free to charge it's customers whatever it pleased for EFTPOS, price competition very quickly reduced that cost to zero (Which to be fair is what the actual cost of a purely electronic transaction should be).

There is no reason not to pay for even the most trivial purchase with EFTPOS so I haven't carried cash around in my entire life.

The only reason everyone still uses credit cards as well is for online purchases. EFTPOS is in person only. The number on the front of the card has no ability to be used for making a payment.

I think the place where VISA is starting to get more inroads into the NZ market is with NFC. NFC is getting more prevalent, and we are also starting to see things like this turn up as well: https://www.asb.co.nz/paytag/

> EFTPOS is like the credit card system only with no transaction costs.

Somebody is picking up the tab. Is it the merchants? or the banks? gov't (=taxes)?

Your question was answered in the parent comment: the users paid, and competition drove the fees to zero, i.e., the costs are now paid by the banks.

The merchant has to buy (or rent) an EFTPOS terminal. The bank also charges the merchant a setup fee to connect your terminal to your bank account. Once that has been done there are no more fees.

You have to look at the way it evolved. Because this is a service offered to customers by each bank in competition with each other, the competition drove the price per transaction to zero.

> the competition drove the price per transaction to zero.

So the customers are paying. The banks just build it into the banking fees.

It's not like that infrastructure is free.

> so the customers are paying.

Yeah. Kindof. NAB has the debit card account free of charge, unlimited ATM withdrawals, transfers across banks free and attractive savings rates. CBA's fee is $5/mo unless you get a salary per month through your account. Pretty much the same for the 4 major banks.

In France you need to pay 60-120€/year for an account + CC. In Australia you don't need to pay. In US don't they beg you to open a credit card?

> In US don't they beg you to open a credit card?

Yeah, pretty much. If you are responsible, you get back 1% of all of your purchases on the CC. And in the spirit of "who pays for that", it's the folks carrying a balance who pay for the 1% cash back on everything.

Another group of folks who pay for the 1% cash back are the merchants who pay fees well over 1% for transaction processing. http://www.cardfellow.com/blog/credit-card-processing-fees/

it's not the people carrying a balance that pay for that - it's the merchants. it's an extra fee added on to the credit card fee that a merchant can't predict nor can they avoid.

As a merchant, I charged people, say... $10 for something. The fee might be 2.9%, but if it was 'rewards card' (which I can't tell ahead of time) the charge would show up as 4%.

The cost is passed on to every in the form of higher prices. The people carrying a balance have nothing to do with this. That would simply eat in to the banks' profits. Why would they just randomly give people x% of the profits from balance-accrued interest?

Hm... I wonder who gets the extra 0.1%.

Hrm.... indeed.

It's different. I've had some cards charge me > 4% - one was... 5% IIRC. I think it was an Amex.

Can you get an account in NZ as a US citizen without residing there?

I think it's worth remembering what job the bank is supposed to have.

The bank is supposed to make it attractive for you to give them your money so that they can then lend it to others or invest it however they see fit to make a profit. Remember, you are doing them a service by handing them your cash, not the other way around.

If the price for them is to create infrastructure for payments offered free of charge in exchange for being allowed to have access to your money than that is a price that they should be happy to bear.

In NZ banks there are generally no monthly fees for personal accounts and no fees for transferring money to others. I would generally expect to pay zero bank fees at all so long as I'm not going in to overdraft. I'm not saying that everything is 100% sunshine and roses, but certainly that is the minimum I should expect the bank to do in order to earn the right to hold my money.

I get what you're saying, but not everything costs money. For example, SMS piggybacked on infrastructure that already exists, so they are pretty much free to run (despite what your phone bill might say).

Similarly, this payment infrastructure could be a similar thing (maybe it opened up channels used for other mechanisms already?)

No, in some countries there are transaction costs for EFTPOS, but it's very low compared what is being charged for credit card transactions.

> There is no reason not to pay for even the most trivial purchase with EFTPOS so I haven't carried cash around in my entire life.

Unfortunately, there is a reason to still carry some cash in Australia: EFTPOS minimums. Airport stores are notorious for this, but it's quite widespread.

"Oh sorry, we have a $10 minimum on EFTPOS."

"... You're a coffee shop."

This stemmed from the fixed price per charge being charged to the merchants. The less you pay, the higher percentage that charge is of the total bill you're paying, resulting in them making slightly less profit.

In reality, those charges have been abolished by almost all, if not all, banks in Australia. It's now just a game of trying to make you buy $7 worth of miscellaneous stuff for your coffee. No thanks, I'll go elsewhere.

Right, I suspect that the difference is that there never were any charges per transaction to the merchant in NZ. I've never seen a shop that had a minimum size for an EFTPOS transaction here.

On the other hand there are a lot of shops that either have a minimum transaction size, or a surcharge, on Credit Card transactions.

First you guys make us look like idiots with our Internet capability, and now with the transaction charges. Slow down a bit and let us catch up, yeah?

> On the other hand there are a lot of shops that either have a minimum transaction size, or a surcharge, on Credit Card transactions.

That also happens here in Australia. I'm fairly sure that's common worldwide.

> Oh sorry, we have a $10 minimum on EFTPOS." > "... You're a coffee shop."

I always just ask them to charge me a surcharge instead. Some places "get it", but a few have stared at me blankly. I don't want to a) walk back down the street to an ATM or b) buy a bunch of pastries that I don't want to eat just to pad out my bill.

But otherwise, AU/NZ's EFTPOS system is generally fantastic, although being replaced (anecdotally) by the credit card system since PayPass/PayWave were deployed so quickly here.

> I always just ask them to charge me a surcharge instead. Some places "get it", but a few have stared at me blankly. I don't want to a) walk back down the street to an ATM or b) buy a bunch of pastries that I don't want to eat just to pad out my bill.

Most stare at me blankly and then tell me they can't do that.

You type the value in yourself. It's not difficult. Do it.

> Which to be fair is what the actual cost of a purely electronic transaction should be).

When you pay with PayPal/Visa/MasterCard, you're not paying for the electricity or the transaction, you're paying for fraud insurance. I wonder, how does EFTPOS handle fraud, and who's responsible for it?

I'm not sure, because I've never had a fraudulent transaction with it and never heard of anyone who has. Probably because it's point of sale, card present only. (Fraud with ATM withdrawals is an issue, but that's the bank's problem).

Even more to the point - Kenya and Tanzania have had M-Pesa (which allows payments and transfers via mobile phones) since 2007 (http://en.wikipedia.org/wiki/M-Pesa). Note that this is not necessaries smart phone stuff - just a plain 'ol mobile phone with text capabilities will do.

Also, I was visiting that region in 2006 and was struggling to add some phone credits to my phone that I had just purchased. Some random guy in the queue offered to send me credits from his phone, and I was pretty much blown away with how easy it was.

> Oh and it's totally safe to broadcast your account number to everyone, most companies have it listed on their website. No way to pull money from it through ACH without their permission

Totally second this; I'm from India. It's bit scary to know that in US "account number + routing number" is sort of secret key to the account, this is from my limited knowledge of course, but I don't think I'm far off.

And yes, account to account transfer has been around here for ages; though they were bit late to get it right now we have a whole range of options; pay to debit card, IMPS and what not.

Sometimes I wonder if banking in the so called third-world countries are is evolved than in the US, I could be wrong though.

It's primarily a regulatory problem with how the US financial system is set up and overseen by the Federal Government. It's a hyper regulated industry. Trying to do anything even slightly different in the world of moving money, banking, finance etc is simply a nightmare.

Payment innovation would have been drastically faster, were it not for the obscene regulations that are in place at both the Federal and State levels. PayPal ran into this brick wall while traveling at a high rate of speed, very early into its existence.

You have a point, but you are missing a larger problem that is part of why the US financial system is regulated the way it is. Regulatory capture by the banks themselves. At this time the regulatory environment serves as much as a barrier to entry as it does protection for the consumer. All the "whips and bondage" compliance requirements are relatively easy to achieve if you're already a full-scale multi-billion dollar bank. But they are a formidable moat for any startup that needs to scale before they can afford to do all the necessary compliance auditing.

This is why simple.com is a friendly front-end for an existing financial institution and not a bank in it's own right.

So Europeans have better credit cards than us because they have less regulations? And New Zealanders have easy peer to peer transfers because of what less regulations?

And all of this could be more easily done by getting rid of banks except for a single federal bank.

I'm not sure if you're being sarcastic or not, but there are thousands of banks in the US [1]. Getting rid of all of them except for a single federal bank is a gargantuan task.

1. http://online.wsj.com/articles/SB100014240527023045794045792...

Same here in Brazil. Bank accounts are "push-only", though utilities companies can "pull" if I allow them to. My bank even has a slick app to send money to others using their mobile number.

Credit card fees still exist and are pricier than the US, though. All chip-and-pin so POS fraud is much lower than Card Not Present.

the global issue, in theory, is easily solved with a cryptocurrency like bitcoin. if bitcoin could ever get a better user experience (don't have to go through the pain of setting up a wallet, etc.), these type of services would be much less attractive.

Agreed. Going from a NZ bank to another country's bank isn't that simple anymore. Using an international currency makes it equally simple anywhere in the world.

Bitcoin already has a better user experience than banks. Just give it another year or two, to the point where bitcoin will be invisible to users the same way that Linux is invisible (yet, the world runs on it). These services will be rewritten with bitcoin under the hood and nobody will even know or care.

I think you're radically underestimating the entrenched interests that are at play here.

What are you talking about? You can send payments to others from most if not all banks (other than small / local banks probably).

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