[Nextgrid]

Just because the law forces them to make the money available doesn't prevent them from putting a big warning on the associated transaction.

Clearly, the bank knows how cheques work and how they can bounce 6 months down the line. They should make it clear to the user with a warning explaining "we are required to make this money available to you by law now, but this money can be taken back at anytime if the cheque ends up being fraudulent, and this can happen for up to 6 months down the line".

The bank also knows (doing otherwise would make me doubt their competence to operate a bank) that this is a common scam and should similarly warn their customers about it. They also know (and have the data) to prove that a lot of people fall victim to this scam suggesting that there is a lack of knowledge in the majority of people when it comes to how cheques work and how they can bounce down the line after the money has already "cleared".

Finally, when it comes to the law, the law was most likely drafted at a time where 1) there were no easier ways to transfer money instantly while making sure it's actually legitimate, so it was a necessary trade-off and 2) there were similarly no easy ways to irreversibly transfer money out of the country in an untraceable fashion, so that the majority of occurrences of such scams would also give better chance to law enforcement to actually trace the funds and make the victim whole, so the fact that someone could temporarily end up out of pocket was also not a big deal.

Nowadays that particular law is clearly inadequate and is doing more harm than good, but laws take time to change (and no doubts there are vested interests at play that would want the system to remain as-is) and there's nothing preventing the banks doing their own part to "patch" the bug until a proper fix can be installed (by deprecating the whole cheque system altogether).

[Silhouette]

It amazes me that in 2020, we still struggle to implement a simple system where someone can reliably and permanently transfer money to someone else as the default, expected behaviour of the financial system.

There are far too many scams based on someone thinking they've got money they haven't, whether it's person-to-person because of weirdness about reversible money moves or someone successfully abusing some sort of chargeback or dispute mechanism against a merchant. It's not as if these things aren't well known by the industry. It just chooses not to do anything about them, and to continue to rely on fundamentally insecure and unreliable methods of moving money around when it is perfectly capable of implementing better ones.

[Nextgrid]

> It amazes me that in 2020, we still struggle to implement a simple system where someone can reliably and permanently transfer money to someone else as the default, expected behaviour of the financial system.

Certain countries have done so; look at Faster Payments in the UK for example. There's technically nothing preventing FPS to be used right now in place of the majority of card transactions. All it needs is better UX and a standard, like a fps://<sort_code>:<account_number>/<reference> URL that can be either put in a QR code for in-person payments or a clickable link online. Mastercard, Visa and plenty of other companies that make their $$$ off card payments in one way or another (whether supplying overpriced card terminals or selling fraud detection services) wouldn't be too happy that their entire industry is obsoleted by a feature everyone has by default in their bank account that is no longer earning them any fees.

I'm pretty sure any effort to improve the payments system and fix its inherent flaws would see pushback (either obvious, or behind the scenes) from a (big) industry which makes its money on patching symptoms one by one instead of fixing the root cause of the problem (as an example, the fraud detection systems for online card payments - they need fraud to exist and be possible because otherwise if the system is bulletproof in such a way that fraud is technically impossible they wouldn't have a business).

[Silhouette]

I'm in the UK, and yes, Faster Payments are clearly an improvement and more like how things ought to work. But they only work for payments to others in the UK.

Elsewhere across Europe, SEPA provides a similar facility, but again only "within its own walls".

I would love to see the sort of alternative payment methods you mention taking off as a replacement for card payments. That is exactly what needs to happen. But as you say, there are some very powerful organisations with a vested interest in preventing or disrupting any such change.

[NovemberWhiskey]

>It amazes me that in 2020, we still struggle to implement a simple system where someone can reliably and permanently transfer money to someone else as the default, expected behaviour of the financial system.

It's called cash, maybe you've heard of it?

If you want an electronic system that's exactly like putting cash in an envelope and handing it to someone, Zelle etc. represent that system. A wire transfer is basically the same, only with greater formality, complexity and cost.

By and large, consumers don't actually want that. They like protections such as being able to chargeback if services they've paid for don't get delivered; goods are defective or counterfeit and so on. Yes, this can make life hard for merchants: on the other hand, they are free not to accept credit cards. Most do, because it's a price of doing business.

[Silhouette]

By and large, consumers don't actually want that. They like protections such as being able to chargeback if services they've paid for don't get delivered; goods are defective or counterfeit and so on. Yes, this can make life hard for merchants: on the other hand, they are free not to accept credit cards. Most do, because it's a price of doing business.

That's the problem. You're free not to accept credit cards, but only in the sense that you're free not to be able to actually sell anything to a large number of people in some very important markets. It shouldn't be a "price of doing business" to accept chargeback abuse, and it shouldn't be OK for the financial firms that permit chargeback abuse using their systems to wash their hands of the resulting liability. But right now, in practice, it is.

[thaumasiotes]

> It amazes me that in 2020, we still struggle to implement a simple system where someone can reliably and permanently transfer money to someone else as the default, expected behaviour of the financial system.

Did you ever wonder why many transactions will accept money orders, but not checks?

The system is in place, and has been forever. It just isn't checks.

[Silhouette]

The problem is widespread around the world, and exists in different variations in different countries. And then even more variations if you're trying to transfer money internationally.

Part of that problem is the continued existence of insecure-by-design systems that should have been forcibly retired many years ago. Another part is that even where safer alternatives exist, as this very story unfortunately demonstrates, it's all too easy for an honest person to be misled about whether they are using one of them.

Both of these problems are directly attributable to the financial services industry, which continues to make a fortune from the status quo even as lives get ruined and businesses go under as a result of preventable crime. Sadly, I can't see this changing until someone in a national government grows enough of a spine to regulate the industry properly, by which I mean setting out a realistic timetable for fixing the problem and then imposing crippling fines on any banks and other professional actors that don't step up.

[jivings]

We have this system though, it's just we also still support systems that should have deprecated a long time ago for being insecure.

[Silhouette]

We have this system though

Are you sure? You're certainly correct that many popular payment methods are well overdue for being discontinued, but many methods of transferring money that you might think are permanent or even immediate can, under some circumstances, subsequently be reversed.

Unless you've been the victim who sent money to a scammer, of course, in which case all too often it mysteriously turns out that the method you used doesn't suffer from such a limitation. It's almost as if there's a whole dark industry of people who know which methods can be exploited like this and use it to abuse innocent people who made reasonable but incorrect assumptions about the competence and security of the financial services industry.

[jivings]

In the EU we have Instant Payments powered by SEPA[1], which requires banks to confirm payment is sent/received in under 10 seconds.

So yes, it's certainly available and possible, and incident of fraud is very low by all accounts.

[1]: https://www.ecb.europa.eu/paym/integration/retail/instant_pa...

[Silhouette]

SEPA is certainly one of the best options for a payer-originated transfer. We have something similar here in the UK as well, the Faster Payment system.

On the other hand, SEPA Direct Debits can be involuntarily refunded up to 13 months after the payment goes through if the payer claims the charge was unauthorised. From bitter experience, some customers are quite willing to lie about a legitimate charge being unauthorised in order to take their money back retrospectively.

In the spirit of the original article here, I wonder how many people appreciate the profound difference between those two methods of transferring money, both commonly known as SEPA.

[srtjstjsj]

Have you ever heard of a money order or wire transfer being reversed?

[Silhouette]

No, I haven't. On the other hand, I don't think I've ever made a payment either way, and I'm not even sure that my bank account has the facility to do so. They're certainly no use for things like purchases in a typical online store.

[Nextgrid]

We don't have such a system in the US as far as I know. Wire transfers would be the closest fit but 1) they are artificially made expensive and 2) they are not instant.