[djhworld]

I was listening to a podcast a few weeks ago (Planet Money) and was genuinlely shocked at how poor the US payments network is in relation to here in the UK.

Most bank transactions here complete within 2 hours (faster payments service) and are completely free.

[jwr]

I could not believe my eyes when I saw that a transfer (it's called a "wire transfer") will cost me $35 on the sending side, and the receiver will pay another $25. Then you need the bizarre routing numbers which banks bizarrely obfuscate for even more bizarre reasons and which are easy to get wrong because there is no checksum. And then it takes days.

No wonder when anything even slightly better appears, people jump on it.

For comparison, a SEPA transfer in the EU costs around 1 EUR, gets done within a single business day, and account numbers have checksums, so you can't easily make a mistake.

[digikata]

A wire transfer is a little different than an ACH. Some transactions seem to require wire transfer, not sure if that's just momentum or there is some other driving reason for the choice.

https://www.thebalance.com/ach-vs-wire-transfer-3886077

[Qworg]

Wires are required at times because they're "good funds" faster - ACH may take up to 6 days to clear in bad cases.

Also, wires can't be reversed (generally). If that's a good or a bad thing is dependent on the transaction and transactors.

[wiredfool]

ACH never really clears, it just hasn't returned yet.

Big banks will have the money next business day at the latest, Tiny correspondent banks in alaska might be as far behind as an extra day or two.

There's a class of return that's supposed to come within 3 days, (NSF/No Account/Closed Account) that's usually what the banks are waiting for, but fraud related returns can be up to 60 calendars later by the rules.

[Qworg]

Ah, perfect - I had forgotten that banks had up to 60 days! Just nuts.

[wiredfool]

Yeah, but a CC chargeback has a similar time frame.

[syedkarim]

Wires don't cost the banks that much. I believe the actual cost is under one dollar, which is what I've seen some brokerages charge for outgoing wires. The reason banks charge so much for outgoing and incoming wires is because customers pay it.

[nwallin]

> when I saw that a transfer (it's called a "wire transfer") will cost me $35 on the sending side, and the receiver will pay another $25.

Wire transfers are different than ACH transfers. Wire transfers cost money and take less than one business day. ACH transfers are inexpensive* and generally take in the ballpark of five business days.

* They are inexpensive for the bank. At banks that treat their customers fairly, they're generally free because the cost accounting is generally more than the cost of performing the transfer. At shitty banks, (BofA, Wells Fargo, etc) they're arbitrarily expensive.

[Spoom]

ACH, once initiated, usually happens overnight in my experience (which matches up with my understanding that they are largely settled internally by a big overnight batch job). Is this incorrect?

[zAy0LfpBZLC8mAC]

> For comparison, a SEPA transfer in the EU costs around 1 EUR

That's ... expensive? In .de it's usually free for consumers with online banks, around 10 ct for business accounts ...

[jwr]

Even if they are cross-border? In Poland the in-country ones are free/cheap, and anywhere else in the EU is around 1 EUR.

[zAy0LfpBZLC8mAC]

Yes, actually it's illegal to differentiate the price based on destination country, a SEPA transfer is a SEPA transfer. But as .de uses the euro as its currency, all in-country transfers are SEPA transfer, which I suppose isn't the case for Złoty transfers within Poland, thus allowing for differentiated prices?

[Spoom]

They obfuscate the routing and account numbers because once you have them, there's little that prevents someone from debiting money from that account.

[jwr]

Really? Isn't that considered to be a problem?

In the EU, I put my bank account numbers on every invoice, which makes sense, because I want people to transfer money to me. I would never imagine that knowing my account number would allow someone to take money from me.

[Spoom]

Yup, it's a problem. Checks are way more frequently used in the US than they are in Europe, and all you need to create a forged check in the US is someone's name, address, routing, and account numbers. (Theoretically they're supposed to check signatures too, but who knows if they actually do on a regular basis.)

Combine that with bank apps that allow you to take a photo of a check to deposit it and, well, game over.

There are also lots of places that will let you pay bills by giving them just the routing number and account number, which are all that are needed to initiate an ACH debit.

The US is way behind the rest of the first world when it comes to payment tech.

[dpedu]

A common argument in favor of bitcoin and other crypto tokens is the large cost reduction of sending money, commonly paired with the US figures you mentioned.

I find it fascinating that the much saner situations in the EU are never mentioned. Perhaps I need a more diverse source of news on this topic.

[Qworg]

International transfers are where crypto or other modern payment systems can shine - currently, low cost startups still charge ~2-3% plus onboarding fees to send funds (in comparison to banks 7-22%), and they have volume limits.

[laurencerowe]

Transferwise is much cheaper than that, under half a percent for larger currencies and no onboarding fees.

[xtracto]

About 3 years ago I was raising money in the USA for a Mexican FinTech startup. Said startup uses Mexico's equivalent of ACH to transfer money (it is called SPEI).

VCs in the US were amazed when we told them that SPEI transfers costed $.4 USD and the money was moved in 15 minutes or less.

Fast forward years later I work in a company that uses ACH, I have came to know some of its internals, and man how bad it is... taking up to 5 days to clear a transaction, and never really giving you an ACK signal (but you have to wait and pray not to get a NACK).

Sometimes the USA surprises me the bad way.

[cal5k]

Canada is like this as well.

[inspector-g]

Like Mexico, or like the US? (Your comment is ambiguous; genuinely curious)

[Spoom]

In some ways Canada is like the US (e.g. use of checks) but in others they are like Mexico / Europe (Interac, i.e. PIN-based payments, email money transfers).

[NullPrefix]

yes

[Qworg]

The US Federal Reserve is currently trying to work towards faster payments - and seems to want to let private industry solve the problem.

It really is terrible though and has been for a long time.

[PeterisP]

Historically, in EU the private industry chose not to solve the problem because (just like in USA) the problem is profitable for them. Sometimes people need fast payments and you can charge them lots of money for that; if everyone's basic payments are fast and cheap, then you lose that revenue.

The point of change in EU was legally mandated changes (PSD) which (after a transition period, something like 2 years maybe?) essentially required banks to deliver payments within a certain time or compensate the payer for any losses/costs caused by the delay, at which point suddenly the private industry managed to quickly solve all the technical and organizational problems that were impossible before.

[pfranz]

I think it's a bit odd we rely on governments to print and issue currency (estimates that only 8% of currency is physical), yet are very hands off about the digital side of things.

[ericd]

The problem with that from what I've heard is that private industry really loves the float on that 3+ day transfer window.

[pfranz]

I think a few years ago there was a summit of US bankers to talk about creating a faster alternative to ACH. They decided not to (presumably because they didn't see any benefit to themselves).

I do keep hearing about "Same Day ACH" which was rolled out and phases and phase 3 was supposed to be done on March 16, 2018.

https://www.nacha.org/rules/same-day-ach-moving-payments-fas...

[jrochkind1]

Isn't "letting private industry solve the problem" exactly what we've already got?

[pfranz]

I'm pretty sure a bunch of years ago Planet Money had a podcast where they just marveled at someone in the UK sending their daughter in NYC enough to buy a pint in realtime.

I think they've reported on ACH a few times each year and there never seems to be any incentive (from the group maintaining ACH) to improve it. What's worse is that it not only takes a few days, I often don't see it show up until a few days after that (back dated to when it was supposed to be received!).

[anitil]

At the risk of repeating myself, it's in the epilogue of the same episode as OP: https://news.ycombinator.com/item?id=19579575

[pfranz]

Thanks! Yeah, six years ago and it's still amazing compared to the bleeding edge of ACH (Same Day ACH, where transfers are processed twice a day).

[anitil]

I believe it's this one [0]. The context is that Planet Money raised a bunch of money to manufacture (sort-of from scratch) T-shirts, and needed to wire some money. Very worth a listen.

[0] : https://www.npr.org/sections/money/2013/10/04/229224964/epis...

[getcrunk]

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