> Inter-bank money transfers in US are handled by a system that needs multiple "business days"
I wired some money from my US bank account to my Swedish bank account. The US bank obviously operates on a batch process basis, because around 6AM EST I got an email from my US bank saying that they've sent the money, and I should expect it within three days in my destination account.
It was already available in my Swedish bank account at that moment, because they have no delays whatsoever because what the hell is there to delay? The difference is like night and day, and I do not understand why American consumers put up with their extremely shitty banks that all seem to be stuck in the 70's. It drives me crazy.
Well, most Americans aren't doing international wire transfers.
I've never had an issue with my American credit union. I draft loans directly out of my account and I can send money to anyone for free (instantly to people with the same bank.) For everything else, I use my credit card for the fraud protection and rewards points.
This is another one of those US quirks. The only time I had to deal with banking fraud was when my wife's credit card was stolen. CCs are pretty low on the trust scale here in Germany, they mostly exist to simplify transactions with US-oriented companies.
Fraud protection (at least as I was thinking of it) encompasses a lot more than banking fraud.
A couple of years ago, a vendor charged me $500 instead of the $50 they had claimed a service would cost. When I complained to them, they called me a liar and refused to do anything.
I disputed the transaction with my credit card company. The money never even had to be refunded to me because it never came out of my account.
This is a rare occurrence, but having an intermediary preventing $450 that I don't owe being directly debited out of my account is vastly superior to the alternative of complaining to my bank after the actual money is gone.
> When I complained to them, they called me a liar and refused to do anything.
Atleast in germany you have a multitude of options you can pull even without a lawyer getting involved. You can also file legal complaints easily and most fraudsters will drop the money at that point and apologize.
Added to that is that most online payment in germany works with a push system, which means you'll see the amount you'll transfer on your banks online form or whichever webservice you use (GIROdirect or SOFORT). If they charge more, don't pay.
SEPA Debit, which is a pull system has more fraud protection and vendors are very unlikely to ever do anything like fraud over Debit as the bank will go after them like some 80s slasher movie killer if they do. Plus you get the money back.
> Atleast in germany you have a multitude of options you can pull even without a lawyer getting involved. You can also file legal complaints easily and most fraudsters will drop the money at that point and apologize.
In this case, all I had to do was log into my credit card website, click "dispute transaction", explain what happened, and forget about it.
Moreover, I don't know what would have happened legally, as it is a reputable, well-established vendor in the local area, and it came down to my word versus theirs - I didn't have a receipt or anything.
> Plus you get the money back.
The money never even leaving my account is much preferable to getting it back.
The US debit system works in a similar way as you describe, but the credit system is still better for that reason.
IIRC from my current law course, if you didn't get a receipt (or other proof of transaction/contract) the vendor has no right to your money. You'll get receipts everywhere.
Fraud is rare enough here that it's not much of a hassle, the legal system being in favor of the customer helps too.
Germany has also a rather non-credit oriented mindset, people don't like taking up debts or credit, a debit card is usually prefered by everyone, seller and buyer.
Three separate cron jobs are needed to clear the transaction, and they only run at midnight, because that's how they were set up decades ago? (My guess)
The US ACH system does rely upon COBOL mainframe systems which only support batch processing. But that constraint does not cause the multi-day process. In fact, since September 2017, the US ACH system has supported same-day ACH processing (with a slightly higher fee of 5.2 cents).
The main constraint has been more related to operations. There are thousands of people whose sole job is to process ACH files. They mostly work at bankers' banks and corporate credit unions (credit unions' banks). But also at financial institutions that range from under $1mm in assets to over $100bn. Most of these jobs could be fully automated away, but they haven't been yet for a variety of reasons.
Since November EU regulation mandates that SEPA transfers should finish within 10 seconds[0]. In practice we're not quite there yet since some smaller regional banks have trouble moving from batch processing to streams, but their deadline extension ends june 2018.
It mandates that banks offer a 10-second-transaction but not that all transactions are that fast. For example, the only German bank currently supporting that charges a 0,50€ fee while regular (slower) transfers are free.
Huh, that's interesting. I remember transferring a few euros for shared pizza to a friend's account a few months back and it took a day. This was between two very large, modern Dutch banks.
Is it still that slow? Since a few months 95% of my transactions between Germany, the Netherlands and the UK (EUR account) happen the same day. It's not like banks actually can earn interest right now anyway. If anything it costs them to hold money currently.
Yes, I forgot to mention that the cutoff now seems to be at around 2pm for most banks (it was much earlier even recently). Transfers after that usually show up on the next day but the value date is often the sending date.
I don't do transactions after 6pm or so, therefore no experience that late. All of this only applies to banking days, no transactions get processed on the weekend.
In Sweden we can transfer money instantly between banks. You essentially register a service tied to your phone number, and people can use that phone number to instantly transfer money to persons or companies without any fees. The service is called Swish [0]. The only requirement is that the receiver has registered the service to his/hers phone number, and that you can authenticate yourself using mobile BankID [1].
This sounds like the same as Vipps in Norway. Anything up to NOK5000 is free. And it is instant.
It has become a huge hit the last year. As for why I guess it's almost as fast as cash and you can add a little note so you can prove (rarely necessary but sometimes useful) that you paid.
Now a number of companies are also embracing it and I've started to receive invoices on Vipps. If it could be the thing that kills "Avtalegiro") I'd say that would be great.
Inter-bank money transfers in US are handled by a system that needs multiple "business days" for a transaction to be finalised so you're on the money here: https://engineering.gusto.com/how-ach-works-a-developer-pers...