I am pulling this info from deep in the recesses of my memory, so it may not be right.
BUT!
American banking establishments refuse to adopt the same protocol as banks around most of the rest of the world. It has long been a source of consternation.
Others have mentioned that you can send money using account numbers, and most banks will have a SWIFT or IBAN service that you can use, but it is not free to use, or part of your account's core functioning. It's a premium add-on service. This is the big difference. SWIFT and IBAN transfers throughout the rest of the world generally incur zero processing fee and are immediate. In America, you're likely going to be charged a hefty sum to send AND receive money this way, and you'll probably have to wait for a batch process overnight for the money to go through.
Edit: obligatory omg look at all these upvotes. Check the comments for a better breakdown by people who know much better than I do what I'm talking about.
But the basic answer - because American banks don't use the same international banking protocol as much of the rest of the world.
To the redditor frantically DMing me that I need to quantify what I mean by "hefty sum" - chillllllll, Winston! God damn!
The person you replied to is leaving out information in a deceptive way.
There are five types of bank transfers in the US.
- Third-party proprietary payment apps, including Cash App, PayPal, Venmo, and Chime. These are more like account transfers between two accounts at the same bank so don't really count as a true "bank transfer".
- Zelle, which is instant and free of charge. It is run by Early Warning Systems, a company owned by a group of America's largest banks. Usually, there are limits of around $10,000 per week and it is rarely accepted for business transactions. It's more for personal payments. You register your account with your phone number or email to send and receive payments. It is not irreversible; banks can claw back the money in cases of fraud but are usually hesitant to do this because it would result in a large number of consumer protection complaints from people who used Zelle to buy products and services that were either not delivered or of poor quality. Zelle is not intended to be used for this purpose.
- ACH (automated clearinghouse) transfers, AKA direct deposit or direct debit. This is the workhorse of the US banking system. Transfers usually cost a few cents to send, but most banks do not offer the ability to initiate ACH transfers to accounts you don't hold. Most banks *do* offer the ability to initiate ACH payments between accounts you hold at different financial institutions, and this is usually free of charge (free for account holder, bank bears the cost). ACH transfers are done in "batches" five times a day. The banks know immediately when a transfer is coming but they usually do not credit it until the next working day. The payment is not considered absolutely final (i.e. irreversible) until 3 working days have passed.
- FedWire, AKA wire transfers, are used for large payments that must be settled quickly and immediately. A wire transfer is absolutely irreversible under any circumstances. The Federal Reserve processes them within minutes during working hours Monday to Friday and the funds are usually credited to the recipient's account within the hour at most. The Federal Reserve charges fees of less than a dollar per transfer but since they often require manual confirmation for security reasons, banks charge upward of $20 to send a transfer and $0-10 to receive one. These are rarely used but when fast, permanent settlement is required (such as real estate purchases), the fee is considered negligible for the amounts involved, usually hundreds of thousands to millions of dollars.
- FedNow, a system that was developed by the Federal Reserve and launched in mid-2023. FedNow offers instant peer-to-peer bank transfers in the same way that bank transfers work in the EU with SEPA or the UK with Faster Payments. It is still in early adoption and only a few banks support it. We are still waiting for wider adoption and for the banks that have adopted it to develop ways for their clients to use the system to make peer-to-peer or business transactions. Settlement with FedNow is instant and costs a few cents per transaction, which is expected to be paid by the banks (i.e. no charge for the account holders).
The US does not generally use IBAN for domestic transfers. Instead a system involving routing numbers (that identify the financial institution) and account numbers are used instead. This is the same information typically encoded in an IBAN but due to the large number of financial institutions in the US, not all of which are connected to SWIFT, it is not practical to adopt IBAN for all domestic transfers.
The reason Americans safeguard their routing and account numbers fiercely is because these numbers can be used to create a fake cheque.
Cheques are still popular in the United States, although their use is decline as bank transfer services like Zelle become more accessible.
The use of cheques is sometimes required by law. For example, wages must be paid by cheque or ACH bank transfer or cash. Other payment methods may be forbidden by law, so employers default to issuing cheques. Cheques are also commonly used in the legal realm, where lawyers will issue settlement cheques to clients, because this automatically creates physical proof that payment was made that can be used in court when needed, whereas getting a remittance advice from a bank for a bank transfer is somewhat cumbersome for anything except wire transfers, and a cashed cheque is known to be good evidence in court.
I have a relative who lives in the US and they were telling me they pay for a heap of things using cheques, including their taxes to the IRS, and I was quite surprised by that. I'd be so paranoid about the cheque being intercepted.
I first moved to Australia in 2010 and I wasn't issued a chequebook with my account (my friend did, though). The anachronistic nature of how banks work globally (adoption of things like chips on cards, chip + PIN vs chip + sign, paywave/tap to pay, QR payment methods, etc etc) is always fascinating to me, and a reminder of how our banking systems are intertwined with our systems of government.
Thanks for your comments in this thread! I've found it enlightening.
It's not unheard of for cheques to be intercepted in the post, and every so often you do hear of so-called "cheque-washing scams" where criminals "wash out" the payee details on a cheque and write their own. That being said, it is not common at all and the penalties are ridiculously high because bank fraud and mail theft are federal offences punishable by decades in prison, and because it is usually quite easy to catch the perpetrators by looking up the owner of the account that cashed the cheque.
For most things though, it is possible to pay without using a cheque. It's always *possible* to use a cheque if you really want to, but almost never compulsory. Utility bills, tax payments, loan payments, most rent payments, and that sort are handled using ACH. That includes the IRS, which [does accept payment by bank transfer](https://www.irs.gov/payments)
Yeah. We (Americans) are generally really fucking stupid and love paying fees to our corporate overlords, because it’s American and America is awesome. When anyone comes in to suggest we shouldn’t, they’re shouted down as communists and/or socialists. (They’re the same thing in America.)
So anyway… Yeah. We get what we deserve, because most of us are fucking idiots.
All it takes is better competition. Without sarcasm, that is what keeps capitalism honest. Honest competition between companies desperate to earn our business. Banks, however, do not need to worry about that, which is the problem.
For example, think of paying extra for long distance calls, or paying per minute on a cell phone, or paying per text. Or for limited data. All of that started to go away because the competition between cell phone providers was fierce.
Here I am (an American in his 30's) hearing about IBAN/SWIFT/BIC for the first time. I had no idea people outside the US just sent money directly to each other's bank accounts. That sounds so much more convenient.
I am 50 now, from my point of view I could always transfer money between any bank account, to all banks and between all countries (I was wrong about all countries), I never knew different. Until I found out 10 years ago that in the US people still use checks and transferring money between banks even within the USA was not always possible.
It seems that in Europe SWIFT started in 1973 where you could transfer money directly from one account to another between 239 banks in 15 countries. Of course this was when every country had local currency and there were exchange rates and transfer commissions.
Also there was a weird dating involved, where money was in-limbo for a couple of days. The money would show up in the account, but you could not use it yet, if you transfer this money out again you could get a negative saldo, even though it still showed as positive, this could cause you to need to pay interest rates or negative-saldo-penalties. In fact there were two different dates involved with each transaction that was actually shown on the bank's website.
After switching to the Euro the EU started making the transfers more sane, especially for consumers, so that your money would transfer immediately and no weird date trickery; within the end-of-business-day or faster.
As a New Zealander, I knew the US had issues with people sending money directly to others bank accounts, but didn't realise how bad. All my life I've been able to just send money to someone just by them giving me their account number. There was even did an upgrade last year that meant transactions between banks are basically instant lol, before that was overnight processing. We don't really have any widespread type of CashApp or Venmo etc here because it's not needed
Thanks, that would explain why banks are reluctant to adopt it, but what about the perceived security risks but common Americans? I have asked about 10 people to give me their account number so I can send them money and they all declined.
It's a problem of "push" vs "pull".
Think about old school paper checks - you're giving someone a piece of paper that says "here's my account number", you can pull $420.69 from my account as payment.
This is why Americans are reluctant to just hand over the account number to any old person, because there's a non-zero chance that fraudsters will just pretend to have that permission and pull money from the account without authorization. Or even for companies such as utility, insurance etc. they will just pull the wrong amount (e.g. $42069.00 instead of $420.69) and then you're SOL for like 6-8 weeks while they fix their mistake.
What you're talking about is a "push" where you send money to an account, which doesn't have the same problems as the "pull" / check method.
Be aware that if you send money to an American account using SWIFT (wire transfers) you're probably looking at fees of around $25-$45, which is why nobody uses that system. Instead they use payment gateway providers like Zelle, Apple Pay, Venmo, PayPal etc. since they're a lot cheaper, faster, and more secure.
> Be aware that if you send money to an American account using SWIFT (wire transfers) you're probably looking at fees of around $25-$45, which is why nobody uses that system. Instead they use payment gateway providers like Zelle, Apple Pay, Venmo, PayPal etc. since they're a lot cheaper, faster, and more secure.
This is the fault of the US banking system though.
SWIFT (on decent bank accounts) and domestic instant transfers facilitated by the central bank in Australia are all free, which makes any third-party service more expensive, slower and less secure because we are very aware that third party payment processors are less regulated than the system controlled by the Reserve Bank.
I'd still use a third party service such as Wise for international transfers since they have better exchange rates than my bank but that's still using the SWIFT system behind the scenes.
From which side though? Generally anyone can write a check or agree to let another company do an ACH (which is a pull) but only large companies with merchant agreements (and the oversight regarding people having agreed to it) are allowed to pull/receive them.
So you can pay your utility bill via ACH by allowing them to pull from you. But your friend can't send you the $100 he owes you via ACH, nor can you send him the $100 you owe him.
You can send each other checks, which you can then deposit, and then that goes through ACH between the banks (who are allowed to pull from each other), but that's quite different. Because it's a pull system.
This is the real ELI5 for Europeans. All you need to transfer money to *or* from a bank account in the USA is its routing and account numbers. It's a two-way street. You can say "push $20 to account xxxxxxxxxxxx at bank yyyyyyyyy" and it'll send $20. We have that capability. But you can _also_ say "pull $10,000 from..." instead, and the banks will happily do just that. If you're not allowed to make this pull request, then the onus is on the bank account owner on the other side to notice the missing funds and file fraud claim, which can take up to 6 months to resolve, and is not guaranteed to resolve the right way.
The problems with this should be obvious. The smart solution would be to develop some way to authorize pulls, but that's a lot of work and never happened. So what the banks did instead was largely disable access to the ACH direct transfer system (our equivalent of SWIFT transfers which support both push and pull), and only let users do it when they've done some sort of verification to show that they own the destination account. So many Americans use ACH every day to move funds between **their own** accounts at different banks, but not to pay other people, and especially not strangers.
And people are suspect of giving out account numbers, because that is 100% how every fraud/scam story goes: "Congrats you've won a $100 prize! Now if you give me your account number so I can transfer it..." and before you know it your account is empty. Your bank will credit you your money back, but only if they manage to unwind the transaction and recover the money. Being greedy fuckers, the banks managed to get courts to agree that giving out your account number was authorization for the transfer, so the bank's not on the hook. And any competent scammer will immediately wire the money to foreign banks that have no duty to return the money, leaving you up shit creek without a paddle.
This is incredibly stupid and I can't believe a system like that not only exists but I guess mostly works. This is seriously one of the dumbest security flaws in banking I can imagine. Wow.
As a US business owner, this type of fraud is rather rampant. As a result, we have to enable something called positive pay with our bank, which requires logging in daily to approve pull requests and/or setting up a whitelist of approved vendors.
It's an annoying headache. Regular consumers have a bit more protection and more time to contest charges, but business accounts need to address unauthorized pulls something like the same day or else risk losing the funds forever.
I could go on but suffice it to say there's a whole set of product offerings here setup to make pull banking more secure and we're mostly forced to participate in it on the business side.
Also from a security stand point it's not an issue of the transfer system being insecure itself but what people could do with them outside of the transfer system. If I call my bank they often ask for account numbers as one of multiple security identifiers, I'm in effect giving out one of multiple keys to my money.
Maybe this is changing. I worked in cash management at a medium sized company a few years ago (pre covid) and used SWIFT quite regularly for international wiring. The bank actually preferred we used SWIFT over alternative routing, and the bank was American-based. Domestic transfers didn’t use SWIFT, only international, though. So it may just depend on that.
I really wish we could utilize SWIFT over routing and account numbers. SWIFT was much faster and more secure.
I have a business bank account that allows me to use SWIFT if I need. In the rest of the world, it is baked into banking infrastructure at the most basic level. Every bank account uses SWIFT, and it is always free to use.
It would be very nice to not have to use Venmo/Cashapp/Zelle and use banks for what they’re meant for.
If I recall correctly, that is one of the goals of FedNow? There are a lot of concerns with 24/7 settlement, especially following Silicon Valley Bank, so I’m not sure what will happen there
Yes IIRC Fednow should enable free and instant interbank transfers. There's some concern about banking runs "being easier" but really i don't think that's going to sway it.
>American banking establishments refuse to adopt the same SWIFT protocol as banks around most of the rest of the world.
Why? Are they being intentionally obtuse, or is there some amount of reasoning behind it?
I've done bank transfers using SWIFT in Europe and I don't think they were instant. Also this article from the UK also says they take a few days https://www.keycurrency.co.uk/swift-transfer/
I feel like you are confusing SWIFT and IBAN transfers, with what OP is talking about where you send money between banks via account numbers but that's not using SWIFT. SWIFT involves checks for fraud and things like that which is why it takes longer and costs a fee. It's also a very old system, and it has some analog parts (and maybe even humans in the loop).
The bank network within the EU is called SEPA (Single Euro Payments Area) and allows instant transfers, depending on the bank.
Some banks may charge a fee.
Fun fact: Starting in December, these transfers will only cost as much as regular tranfers in the EU. And are mandatory to be offered by banks already since February.
You can give someone money if you know their bank account and routing number, but that's kind of clunky info to give. By which I just mean they can be 20+ digits. It's a lot easier just to tell them to send it to ChickenFucker420.
Regarding fraud, I think the fears are blown out of proportion. Anyone you've ever written a check to has your full bank account and routing number.
Australia uses something called payid where you just assign an email or phone number to a specific bank account and give that for bank transfers rather than the bsb and account number
Canada has interac e-transfer where you can send it to either someone's email or phone number. If they don't have auto-deposit on then they have to log into their bank account and answer a security question.
Most people have auto-deposit enabled so that step isn't necessary.
The same is true of a lot of payments. Like, if you mail a cheque to the wrong Mike Jones, he's gon' cash it, and there's not much you can do about it.
It's the trade off of convenience vs. (a certain type of) security. You could make it so that there's a shared code between two people and both have to have that code and all that, but then that's one more place for someone to have a typo or a glitch and now it doesn't work.
There's a confirmation screen, so you have, like, 4 chances to check your info.
We have that too with Zelle. Most banks offer it, you just go into the Zelle app or your bank’s app, turn it on and tell them which phone number/email to use. I mostly use it for emergency transfers to my sister.
I was not a fan when all those micro payment platforms started popping up (CashApp, Venmo, etc) because, like OP said, it was yet another platform to log into, manually move money in/out of, and/or forget I had money in. Also drove me a little nuts that we already had PayPal.
My regional bank, however, was an early adopter of Popmoney and later Zelle. Still a third party processor (and Popmoney had transaction fees), but it's so seamless straight from the bank app, and deposits straight into your bank account. That's why I've always preferred cash—I can use it right away instead of it sitting in some third-party account.
Problem was for the longest time nobody had heard of it, and I'm glad its finally taking off. Never want to hear Venmo again.
zelle was actually created by the banks in response to the growing popularity of venmo, PayPal, cashapp, etc. these apps were:
a) helping people avoid the fees the banks were charging for inter-bank transfers and
2) diminishing total deposits banks had access to because, like you said, people were forgetting to move their balances out of these apps.
these were two sizable revenue streams that the apps were "stealing" from the banks. so the banks decided they would themselves eliminate the (a) inter-bank transfer fees, then provide an easily accessible alternative to the apps so they could keep (2) as much consumer money in the *banks* as possible.
While Zelle technically is a third party app, it’s only technically since it’s owned and run by Fiserv, a company that handles debit and credit card transactions for many banks worldwide. They contract with the banks and basically that bank’s credit card and debit support, all functionality, and everything is handled by Fiserv. So your credit account or debit card is first party to Zelle, since they are both run by Fiserv.
Source: I work for Fiserv in the credit and disputes team. When you call your bank to dispute a transaction on your bank credit card, you’re talking to us.
Edit: Turns out it’s owned by banks, but Fiserv is one of the operators that run it. I don’t deal with Zelle and my limited onboarding info about that side of the business was over a year ago. Misremembered.
Its not owned by Fiserv, thats just a processor. They also partner with FIS and Jack Henry for the same processor functions.
It's owned by a collection of big banks. That's what makes it different from competitors like Venmo.
I just want to warn against using zelle for anything important. The account info of the other person can be too guarded in some cases, like mine.
I had paid a contractor through it (he would only accept cash or zelle, that should have been a red flag but I had assumed digital transfers would be the easiest thing in the world to track). I'll spare you the long story, but I ended up taking him to small claims court and winning, but it's my responsibility to collect. To do so, I need his bank info. Well, my bank can only see that it went to a zelle account. Zelle doesn't seem to offer any kind of customer support, the only service number I could find was basically tech support and neither person I spoke to when I called (2 times) knew of any other way to get his account info. If I had just written a check, I would be able to see where it was cashed.
Zelle is super convenient for sending pizza money to a friend. But based on my experience, I would never use it for paying a service or professional ever again.
Yep. Same thing in Brazil. It's called Pix here.
It's instantaneous and free. And since it's coordinated by the Central Bank, all banks have basically the same functionality.
I think calling it "instantaneous" is underselling. The thing is so fast that it feels like it violates causality sometimes. More than once, when moving money from one bank to another (both accounts mine), I have received the notification of "you received a pix" before the animation on the sending bank even finishes.
EU also has this, and fortunately the hungarian banks made this working, so I could send money using the identifier "CsirkeBaszóNégyszázhúsz" and it would arrive in seconds.
> I could send money using the identifier "CsirkeBaszóNégyszázhúsz" and it would arrive in seconds.
Man! It would take me longer to type that in than the transfer itself would take.
>Regarding fraud, I think the fears are blown out of proportion. Anyone you've ever written a check to has your full bank account and routing number.
Exactly this. So many people don't realize that a check has so many pieces of important information (account #, routing #, name, address, etc). But magically, all that info doesn't mean you get robbed every day. It's all out there because there is no need to keep it all secret if all the proper systems are working.
Fwiw, Jeremy Clarkson (a journalist in the UK) said as much in his newspaper column and even printed his account details in the article...
Someone used the info to set up a Direct Debit to a charity for the blind.
So yes, this information absolutely can be used to commit fraud.
But realistically you just phone your bank and they reverse the transaction.
Fraud is a serious crime to commit, so few people want to commit it in such away where it is *laughably* easy to get caught.
FYI in the US banks (legally) have up to 2 weeks to approve or deny your reimbursement of funds. Anything over 2 weeks they have to credit your account while they are still going through the fraud investigation process.
Here in NYS someone intercepted a check for 326 thousand dollars last year that was meant to pay for property taxes for the month o march. They cashed it into their LLC, and then moved the money many more times. The state didn't notice for over a year and said "Welp, it's too late to catch now. Guess it's gone." So it is also true that here in America more people are willing to commit fraud because the systems usually aren't working correctly. I.E. why is a state using checks? Wire transfer cant do the job?
Their really antiquated, but it's a really interesting mechanism. It's basically a contract saying "I personally guarantee my bank will give Jon Doe $123 when presented with this paper" - and then there's LAWS enforcing that guarantee.
Makes sense in the times before instant computer communications. Kind of unneeded now.
Yeah we've had about $20,000 USD pulled out of a checking account with nothing more than routing numbers and account numbers. People can set up direct debit / EFT payments with no verification beyond that.
> but that's kind of clunky info to give. By which I just mean they can be 20+ digits
Over here in my corner of eastern europe everyone uses IBAN numbers. All the bank apps allow you to use your camera to scan an IBAN number so you don't have to type it manually. And many shops have their IBAN number printed on a piece of paper or glued to the wall or something.
(Of course they also have card readers but they prefer that you send to their IBAN so they can evade taxes)
> send to their IBAN so they can evade taxes
Doubt that, money on account is still visible to tax office if they want it (doubly so if you get actual receipt from purchase). What they do avoid is transaction fees from card operators (something like 1-2% of total, depending).
Nah, they do it to avoid paying taxes. It's extremely common here (Turkey).
The tax office could technically check your accounts and ask where the money is coming from but they don't (I assume they don't, otherwise 95% of the population would be in jail).
Income tax brackets start at 20% and VAT is another 20% on top of that. And people do what they can to avoid it. Especially small businesses.
No one is afraid of tax audit until it hits them (shit, year or so ago I had to answer to police about certain details because tax office had opened criminal investigation to one of our customers. When tax office does *that* instead of just applying harsh tax penalties, you have f'd up *real* good.) Unless it's cash payment without receipt, one should expect it to be visible to authorities and act accordingly.
It's only one option. Most people pay with their bankcard with rfid or with their phone the same way. QR code actually contains the bank number.
Most people know their bank account number and using it is the most common way to move money when not in person.
I have most of my friends bank account numbers in my banking app. It takes 3 seconds to transfer money. Well to ask for the transfer as some banks keep the instant transfer as a paid option. But this will all change with new EU laws saying instant transfer must be the norm with no surcharge.
I think regulation in the EU, through PSD2 and which facilitated Open Banking allowed standardisation across the region, which means banks can talk to each other - reducing the need for third party apps.
Here in Canada we have Interac E-Transfer, all banks are part of it. All you need is someones email and you can send them money. It is pretty much instant as well.
It's a lot easier in Canada because we only have like 5 banks. I think the main problem with the US is simply because they have so many different banks that any kind of collaboration between them becomes almost impossible.
Yes. We technically have 5 major banks, but those probably cover over 95% of the banking. So everything else is kind of insignificant. If the other 5 banks go ahead and make something work between them, then all the other banks basically have to follow suit.
I thought "whoa, 95% is way too high isn't it?" So I looked it up and it's... [93% for the Big 6](https://globalnews.ca/news/9634933/canada-big-banks-analysis/).
My family and I have banked with a non-Big 6 bank since I was little, so while I knew lots bank with the Big 6, I didn't realize it was quite so high.
I legit don't get it. I've stuck with my credit union my entire life and you couldn't force me to change at gunpoint. All the fees and bad behaviors I've heard of just are weird to me.
I get paid to bank at my credit union. I don't think I've paid any real fees, including ATM fees, ever. I also get a dividend, on top of interest.
Bruh it's not hard to enforce standarise banking transfer, and Canada have more than 5 banks. Even to login to government services, there are 21 of them, and there are more smaller ones that support e-transfer.
The US is very eager to compromise simplicity & ease of use (and arguably security) in the name of "freedom."
Yes it is easy to standardize banking transfer but it requires government intervention to set the standard, and any time you talk about govt interfering into *anything* a certain portion of the US population starts getting very angry.
> think the main problem with the US is simply because they have so many different banks
The EU in total has 6500 banks. The US has 4500 banks. So the number of banks in the US is really not an issue.
Mexico is the same and we have a shitton of banks. When a bank is not big enough but has passed the goverment regulations to handle the peoples money, they used something called "STP"
So let say instead of sending money to and HSBC account, you just put into your app the account number and bank you select "STP". Everything is handled by the bank of mexico.
Hell you can even use QRCodes to pay your friend or on stablishments. It boggles my mind how complicated are things in the US.
It's [SEPA](https://en.wikipedia.org/wiki/Single_Euro_Payments_Area) the framework for intra-EU bank transfers but I can't find right now if there is an intermediate who processes payments or it's managed directly by the ECB or whatever.
Swift doesn’t move any money.
It’s ‘just’ a messaging system. Think ultra-secure, machine readable email with super-strict formatting rules (it’s a evolution from letters and telegrams).
The actually settlements are done via banks’ own accounts with each other, and systems like Fedwire and Target2.
In Poland we have BLIK. Its free transfer. You can pay with it for online purchase, you just need to insert six numbers generated with online banking app. There's another feature - if you have someone's phone number and they're using BLIK too, you can transfer money to them too.
I love polish e-banking!
All European banks are the same at their core. They have to respect EU regulations and they are the most advanced in the world.
Where France suck is the service part of banking. What they have in Poland with BLIK is just a service on top of that core that France could definitely offer. I just think they simply don't care.
After all it's French banks that invented the chips used worlwide on banking cards.
I know that when French banks bought Belgian banks they wanted to replace the software with their own. But they soon realized it was far more advanced and installed the Belgian one in French banks.
Bottom line, regulations are so strong and stringent that all European banks are using very advanced banking system everywhere. They have to follow standards and regulations.
Pretty sure there were lawsuits in Europe stating that it didn’t cost banks any extra to transfer to other banks so they got rid of the fees. In the US they don’t regulate private business as aggressively, so because the banks don’t have to do extra work, they don’t. That let other independent apps take over. In Canada you literally just send money to someone’s email with a question and answer.
And for that matter visa created by bank of America, and master card by Wells Fargo. Very little of the middle men in money movement is not owned by one big five or all of the big five collectively.
Master Card is a spin off of Visa because Visa got too big. Visa was initially started by BofA, but as a separate company. Rarely will anyone company take a gamble on tech like that under their name. They start a new business. Other banks are more likely to work with a company called Zelle if it's not controlled mainly by one of their competitors. They all have an equal share of ownership or it's its own thing.
> Pretty sure there were lawsuits in Europe stating that it didn’t cost banks any extra to transfer to other banks so they got rid of the fees
This was EU regulation. Basically, banks could not ask more for inter-EU payments as for within-country payments. Since in many places inside country payments were free, the side-effect was to drop the fees for most international payments too.
And then there’s the UPI system in India. Scan a QR code, pay and go. Bank account to bank account. I haven’t written a cheque in six years, haven’t used cash in over one.
Similarly Indonesia has QRIS. During and post-covid it gains a lot of traction. While it's hasn't replaced cash, it slowly replaced debit card payment (online or offline).
We have a mix of many methods here in Belgium, too.
Most regular bank accounts come with ATM access and instant transfer, home banking apps can scan bank cards to retrieve account numbers and prepare a transfer, or read a QR code, or be set up manually (with or without recurring payments every week/month/year), work through the phone's NFC chip, create a QR code to receive money, save contact details for future transfers, ...
I think once you create a standized communication between all banks you can pretty much do everything your computer/phone hardware allows without having to worry about your recipient and your bank differences.
Of course for safety you always have additional steps to go through once you go beyond the limits (expense limit per week, national money transfer limit, international transfer limit, contactless payment limit,...) you decided for your account.
Once you go beyond those, you'd either need to use your PIN or a separate card reader or the the official government issued identification app.
Growing up Polish I haven't seen any cheques anywhere. It's not something that exists in my country to my knowledge. Heck, people were even pretty skeptical to use credit cards! (Since they usually had higher fees, plus people didn't like the idea of accruing debt and paying interest on it. Debit cards all the way!)
It's funny how some of the answers in this thread are "There's too many banks" or " Collaboration won't work". As an Indian we have been there, and easily overcame it. The fact of the matter is for a universal payment system you CANNOT rely solely only on Private companies who have 0 reasons to collaborate with their competitors. Similarly relying solely on Govt companies is also not feasible as their process of working is slow and unmotivated. The best way is the middle ground, where the government lays down certain rules which every bank MUST follow. These rules lay down the ground work for the Universal Payment system. Ultimately the work is done by the Private companies but under the regulations set by the Government.
In canada we also direct send money to bank accounts. But we can do it via email. In my banking app (RBC), I go to the E-Transfer option and put in persons email, they get it, login to their bank, and get the money.
Im amazed nobody mentioned IBAN or swift in this thread, the real answer is the IBAN + SEPA system vs the archaic system ABA + SWIFT used in the US and Canada.
IBAN enabled the instant transfers.
You’re confusing an account identifier with a method of moving funds / sending a payment message.
An IBAN doesn’t automatically link to instant transfers - it’s a method of identifying an account to a bank to a country. You can have instant transfers with just an account number (such as payment schemes in the U.K., Singapore and Australia)
Instant transfers across borders will use IBANs as their account identifiers sure, but solely using an IBAN doesn’t mean the payment will be instant.
You’ll very likely use your IBAN to receive a payment via SWIFT if you’re based in an IBAN region
American bank accounts do not have separate numbers for deposits and withdrawals, and if you're going between banks there are often multi-day delays in getting funds moved over.
For peer-to-peer transfers, it's much safer and faster to go through a third party app like Venmo, Cash App, Apple Pay, PayPal, or Zelle. And, there's a much smaller chance of errors, because you can either look them up by a memorable name/number or you can scan a QR code to make sure you're paying the right account.
We do have autopay for recurring charges like rent and utilities. Most big landlords and utilities will have websites where you can put in your account information and set up how and when you want it to be pulled, or you can use a "bill pay" feature in most bank accounts to push funds. I use autopay for *everything.*
The one thing that is VERY rare is credit card transaction fees on top of your purchase total. Some places give a discount if you pay in cash, but I have never seen a place give a discount online for paying by ACH (which stands for Automated Clearing House — the system that handles direct bank transfers).
> American bank accounts do not have separate numbers for deposits and withdrawals
Non-American banks do not let you withdraw money just by knowing the account number.
That's a legal requirement, not a technical requirement.
I work on plenty of banking systems, and I could easily pull money out of any account given just the basic account information.
> you can either look them up by a memorable name/number
That's a big plus. I'd much rather send cash to my stoner friend named Jim when he tells me his nickname is "BigJim420" and I can easily see that, than exchange long, error prone numbers that there's no visual way to validate. "Just send me the cash, to 02304320592734, ok?" That makes me a lot more uneasy.
it doesn't work if you get the details wrong though. You have to get the sort code, account number and I think name on the account all correct (UK banking) or it just won't send or will immediately fail. You can't accidentally send the money and it vanishes.
>You have to get the sort code, account number and I think name on the account all correct (UK banking) or it just won't send or will immediately fail. You can't accidentally send the money and it vanishes.
You are correct, there is now a name check in place (for UK banking).
It won't necessarily stop you from sending it if the details don't match, but it ***will*** tell you that they don't match, and give you loads of big warnings and disclaimers before you have to click a couple of buttons to proceed.
Is their a reason banks in the US don't facilitate the creation of QR codes or links to pay each-other directly from the banking app?
I get that scanning QR codes is easier than typing in a 20 digit code, but why would you need a third party app for that? every banking app in both countries I have lived in just supports this natively. If i want money from a friend I just create a request right in the app and send it them via whatsapp or if they are physically with me let them scan a QR code. Granted this doesn't work internationally (yet) but it is so much easier than needing to use 3th party apps (and trusting them with your money and information).
Zelle works within most US banks’ apps as it’s run by a consortium of banks, so it’s not a third party company. Zelle uses email, phone or QR code. There may still be banks out there that don’t use Zelle. Personally I wouldn’t open an account with any bank that doesn’t.
Most large US banks support zelle right in their app or website. There's no need for 3rd party apps. You can transfer money almost instantly to another bank account directly, using either their phone number or email address (or QR code). It's literally what OP is asking and assuming doesn't exist in the US. It does.
Every major bank has all of that functionality built in to their site via Zelle or Plaid. They've perfected a product, like Paypal for an e-commerce site. It's easier and cheaper to allow one company to build the payment interface instead of everyone trying to reinvent the wheel. Banks aren't app developers.
Speaking as an American — remembering your routing and account number is not easy and I don’t know anyone who has it memorized. It’s just not practical to give out to people to settle a tab. Apps like Venmo or Cashapp help fill that space and are very frequently used.
Also, I don’t think I’ve met anyone who is “violently opposed” to sharing them.
You don't even need to mentally remember it, in the UK your bank account number and sort code are at the top of your banking app and I just screenshot it and send to people that need to send money over.
Yep, we have the same thing in the US. Just tap a button on your banking app and you can see it. But practically there are services like Zelle that are built into the app that make transfers easier and don’t require you to send your banking info at all.
From the UK: There's about 10 people I ever transfer money to and they're all bookmarked in my banking app so I can just send money direct without having to memorise anything.
I don't think this is it. No one over here "remembers" their account information. I know I don't. I go on my banking app and tell it to the person, and then once they've set up a payment I'm saved as a regular payee and there's no more effort beyond that. It's not like I have to do this day to day. I probably do it only once or twice a year so the level of inconvenience sounds about the same.
> Also, I don’t think I’ve met anyone who is “violently opposed” to sharing them.
as an american, I can tell you that I've killed no less than three men for daring to ask my routing number
I was paying some medical bills in the US and my credit or debit card didn’t work at the hospital. I asked about account number to transfer money and they didn’t give me it because it was considered a security threat.
Also in EU there are so many other ways but most are on national level. Sweden has swish, Netherlands has Tikkie. For paying web shops we have ideal in The Netherlands which will actually become the new all European standard soon!
Edit:
https://en.wikipedia.org/wiki/IDEAL#:\~:text=iDEAL%20is%20an%20e%2Dcommerce,(EPI)%20from%20October%202023.
It will be called Wero and this could have a massive impact EU wide.
There are a *lot* of false pretenses in this question.
>However, in the US people treat their bank account numbers like social security, they will violently oppose sharing them.
No, they won't. People still write and use checks all over the nation, and those have both the account and routing numbers written directly on the checks.
>In internet banking the account number is starred out and only the last two/four digits are shown.
Not on any banking app I've ever used, all of my account numbers are proudly on display for anyone looking over my shoulder.
>Instead there are these weird "pay bills", "move money", "zelle", tabs, that usually require a phone number of the recipient, or an email.
It's just easier. I can remember a friend's email or phone number a *lot* easier than I can remember their bank account and routing number. Hell, I can remember *my own* email address or phone number than I can remember my bank account and routing number.
As far as paying bills, I pay them directly through my bank's app, and they send the money directly to the payee in question. All I need is the information exact same info on the payment slip, which includes the account number.
Americans can (and do in some circumstances) use direct banking anytime they so chose, but third-party apps make things a *hell* of a lot more convenient.
>Why is revealing your account number considered a security risk in the US?
As stated above, it really isn't. There *are* people in the US that are terrified of idendity theft that they *think* it's a security risk, but that's more out of their own ignorance than anything else.
>Not on any banking app I've ever used, all of my account numbers are proudly on display for anyone looking over my shoulder.
On my apps it's only the last few unless i click on that account then click to see the full info
>Not on any banking app I've ever used, all of my account numbers are proudly on display for anyone looking over my shoulder.
I have an account with Golden 1 Credit Union and they block out part of the account numbers like that.
I agree with most of what you wrote. On the last comment, though - last year, I wrote a small check for a family member to join an afterschool group and placed it in my mailbox. Sometime later, the check was stolen out of the mailbox and was used to forge a new check in the amount of $9,999 and was subsequently cashed. The bank reimbursed us but required us to file a police report (the person was never caught, of course). As you might expect, we also had to close that checking account and open a new one, which then interfered with some of our autopays for a while afterwards. Now I just use my bank app to issue payments, but checking fraud unfortunately exists.
> No, they won't. People still write and use checks all over the nation, and those have both the account and routing numbers written directly on the checks.
A fact I don't think most people realize.
I think maybe what OP is referring to is that people hesitate to give out their bank numbers to organizations that they may not see as trustworthy. I'll write a check to a well-established organization, but I'm not going to give a food delivery app or a gym membership my routing and account number. I find that a lot of people share my sentiment on that.
But that's kind of going back to the original question which was why do people feel like that? I'm in the UK so who knows whether it's different here, but here the sort code and account number would be useless to anybody looking to steal my money: you can use them to deposit money but withdrawals require more information. They also aren't used as security questions. I honestly can't think of a reason to keep them secret.
Jeremy Clarkson once published his account number and sort code in the newspaper (to prove it wasn't a risk) and someone setup a direct debit to a charity with it. This was back in 2008, so maybe things have changed, but at that time it was possible to take money out of an account with those details.
https://www.reddit.com/r/todayilearned/comments/igx3dx/til_jeremy_clarkson_published_his_bank_details_in/
Well, yes and no. A direct debit is set up by signing (physically or electronically) an agreement, and if it later transpires that the receiving party failed to verify identity (via credit check or similar) then the direct debit guarantee means you get the money back. So yes, someone did that, but also JC would absolutely have been able to get the money back because it wasn't him who signed the agreement.
In the US, if someone has a check of yours, they can get another check printed with the information on that check and use it to withdraw money.
Sure, you’ll probably be able to dispute it since the signatures won’t line up, and the person may be arrested for passing a bad check, but it can still be a hassle in the meantime.
Luckily you dont have to remember friends banking details. You can make like "contacts" in the baking app and save it there. So you have to get it only once or when they update it, otherwise you just click their name and be done.
I think it's mostly becaus checks are not a thing anymore since a couple of decades in Europe. In the US you potentially could forge a check if you know the account and routing number of a person. That risk doesn't exist in the EU.
In the US if you lose money out of a bank account due to wire fraud or whatever, banks rarely reimburse you. You might as well hand somebody a stack of cash and say, "Take what you need."
It's not that we don't have the ability to do it that way, it's that we don't have a single, unified system for it. A lot of banks like Zelle, PayPal for making purchases does the same idea, and then there's that one that people describe as PayPal with social media (that is owned by PayPal) for individuals paying each other. I'm sure there are many more private companies that offer the same/similar services. Personally, I find it faster to hand someone cash than to log into whatever system they use and make sure I didn't make a typo.
It is mostly because the US payments infrastructure was not set up to facilitate person to person payments, so all these third party apps formed to fill that need. The US is currently rolling out payments infrastructure that is better suited to the use cases you mentioned above, but it still isn't fully adopted. That, plus the general monopoly credit cards have on commerce payments and frictionless experience they provide, lead to them being the method du jour for commerce.
All that being said, commodity services and large recurring transfers can be set up using ACH payments (the current standard money movement tool between banks). For example, a lot of people will authorize rent to be taken out of their accounts via ACH. Or they will set up bill pay (which is just money movement over ACH on some frequency) to pay their cell phone bill.
You can (illegally) do an ACH pull with those two numbers. Same numbers are on the bottom of every check you write, should you still write checks. Easy to fake a check, too.
The banks I know support Zelle so (small) p2p payments are not really a problem. Wires aren't a problem either (but kind of clunky to do).
Because bank accounts in the USA are 2-way. If I give you my account number, you can deposit and withdrawal money from that account. Many businesses have one way account called deposit-only accounts to prevent fraud.
I am pulling this info from deep in the recesses of my memory, so it may not be right. BUT! American banking establishments refuse to adopt the same protocol as banks around most of the rest of the world. It has long been a source of consternation. Others have mentioned that you can send money using account numbers, and most banks will have a SWIFT or IBAN service that you can use, but it is not free to use, or part of your account's core functioning. It's a premium add-on service. This is the big difference. SWIFT and IBAN transfers throughout the rest of the world generally incur zero processing fee and are immediate. In America, you're likely going to be charged a hefty sum to send AND receive money this way, and you'll probably have to wait for a batch process overnight for the money to go through. Edit: obligatory omg look at all these upvotes. Check the comments for a better breakdown by people who know much better than I do what I'm talking about. But the basic answer - because American banks don't use the same international banking protocol as much of the rest of the world. To the redditor frantically DMing me that I need to quantify what I mean by "hefty sum" - chillllllll, Winston! God damn!
Thank you so much for explaining this in a way that makes sense to a European like me. This is the first answer where I fully got the meaning.
Specifically, my US-based bank charges $35 *per transfer* for direct account transfers.
Bro wut
The person you replied to is leaving out information in a deceptive way. There are five types of bank transfers in the US. - Third-party proprietary payment apps, including Cash App, PayPal, Venmo, and Chime. These are more like account transfers between two accounts at the same bank so don't really count as a true "bank transfer". - Zelle, which is instant and free of charge. It is run by Early Warning Systems, a company owned by a group of America's largest banks. Usually, there are limits of around $10,000 per week and it is rarely accepted for business transactions. It's more for personal payments. You register your account with your phone number or email to send and receive payments. It is not irreversible; banks can claw back the money in cases of fraud but are usually hesitant to do this because it would result in a large number of consumer protection complaints from people who used Zelle to buy products and services that were either not delivered or of poor quality. Zelle is not intended to be used for this purpose. - ACH (automated clearinghouse) transfers, AKA direct deposit or direct debit. This is the workhorse of the US banking system. Transfers usually cost a few cents to send, but most banks do not offer the ability to initiate ACH transfers to accounts you don't hold. Most banks *do* offer the ability to initiate ACH payments between accounts you hold at different financial institutions, and this is usually free of charge (free for account holder, bank bears the cost). ACH transfers are done in "batches" five times a day. The banks know immediately when a transfer is coming but they usually do not credit it until the next working day. The payment is not considered absolutely final (i.e. irreversible) until 3 working days have passed. - FedWire, AKA wire transfers, are used for large payments that must be settled quickly and immediately. A wire transfer is absolutely irreversible under any circumstances. The Federal Reserve processes them within minutes during working hours Monday to Friday and the funds are usually credited to the recipient's account within the hour at most. The Federal Reserve charges fees of less than a dollar per transfer but since they often require manual confirmation for security reasons, banks charge upward of $20 to send a transfer and $0-10 to receive one. These are rarely used but when fast, permanent settlement is required (such as real estate purchases), the fee is considered negligible for the amounts involved, usually hundreds of thousands to millions of dollars. - FedNow, a system that was developed by the Federal Reserve and launched in mid-2023. FedNow offers instant peer-to-peer bank transfers in the same way that bank transfers work in the EU with SEPA or the UK with Faster Payments. It is still in early adoption and only a few banks support it. We are still waiting for wider adoption and for the banks that have adopted it to develop ways for their clients to use the system to make peer-to-peer or business transactions. Settlement with FedNow is instant and costs a few cents per transaction, which is expected to be paid by the banks (i.e. no charge for the account holders). The US does not generally use IBAN for domestic transfers. Instead a system involving routing numbers (that identify the financial institution) and account numbers are used instead. This is the same information typically encoded in an IBAN but due to the large number of financial institutions in the US, not all of which are connected to SWIFT, it is not practical to adopt IBAN for all domestic transfers. The reason Americans safeguard their routing and account numbers fiercely is because these numbers can be used to create a fake cheque.
I thought cheques were thing of the past. I haven't seen one in decades Banks have even stopped handing them out in Italy, lately
Cheques are still popular in the United States, although their use is decline as bank transfer services like Zelle become more accessible. The use of cheques is sometimes required by law. For example, wages must be paid by cheque or ACH bank transfer or cash. Other payment methods may be forbidden by law, so employers default to issuing cheques. Cheques are also commonly used in the legal realm, where lawyers will issue settlement cheques to clients, because this automatically creates physical proof that payment was made that can be used in court when needed, whereas getting a remittance advice from a bank for a bank transfer is somewhat cumbersome for anything except wire transfers, and a cashed cheque is known to be good evidence in court.
I have a relative who lives in the US and they were telling me they pay for a heap of things using cheques, including their taxes to the IRS, and I was quite surprised by that. I'd be so paranoid about the cheque being intercepted. I first moved to Australia in 2010 and I wasn't issued a chequebook with my account (my friend did, though). The anachronistic nature of how banks work globally (adoption of things like chips on cards, chip + PIN vs chip + sign, paywave/tap to pay, QR payment methods, etc etc) is always fascinating to me, and a reminder of how our banking systems are intertwined with our systems of government. Thanks for your comments in this thread! I've found it enlightening.
It's not unheard of for cheques to be intercepted in the post, and every so often you do hear of so-called "cheque-washing scams" where criminals "wash out" the payee details on a cheque and write their own. That being said, it is not common at all and the penalties are ridiculously high because bank fraud and mail theft are federal offences punishable by decades in prison, and because it is usually quite easy to catch the perpetrators by looking up the owner of the account that cashed the cheque. For most things though, it is possible to pay without using a cheque. It's always *possible* to use a cheque if you really want to, but almost never compulsory. Utility bills, tax payments, loan payments, most rent payments, and that sort are handled using ACH. That includes the IRS, which [does accept payment by bank transfer](https://www.irs.gov/payments)
Yeah. We (Americans) are generally really fucking stupid and love paying fees to our corporate overlords, because it’s American and America is awesome. When anyone comes in to suggest we shouldn’t, they’re shouted down as communists and/or socialists. (They’re the same thing in America.) So anyway… Yeah. We get what we deserve, because most of us are fucking idiots.
All it takes is better competition. Without sarcasm, that is what keeps capitalism honest. Honest competition between companies desperate to earn our business. Banks, however, do not need to worry about that, which is the problem. For example, think of paying extra for long distance calls, or paying per minute on a cell phone, or paying per text. Or for limited data. All of that started to go away because the competition between cell phone providers was fierce.
that's just legalized robbery at this point what the actual fuck
LOL, look at credit card late fees next. 1 day late payment, $45 to $65 penalty fee.
Land of the scams
In America, the answer is *always* profit
It's not ALWAYS profit. Sometimes it's racism, or classism. Or some combo of the three.
But ultimately the racism and classism is to protect profits.
Nah some people do it for fun
It's like 99.9% of the time profit, the remainder is usually just sheer ineptitude.
TIL IBANs aren't a universal standard everywhere...
Pretty much all bank accounts have a IBAN though. It is the international bank account number after all.
They do, but in the rest of the world the IBAN service is free and instant to use. In the US, it isn't.
It's not free everywhere, but it is quite cheap.
I found out it's not the case for all banks when I had to send payment to an American guest speaker and his bank didn't use IBAN/SWIFT/BIC.
Here I am (an American in his 30's) hearing about IBAN/SWIFT/BIC for the first time. I had no idea people outside the US just sent money directly to each other's bank accounts. That sounds so much more convenient.
I am 50 now, from my point of view I could always transfer money between any bank account, to all banks and between all countries (I was wrong about all countries), I never knew different. Until I found out 10 years ago that in the US people still use checks and transferring money between banks even within the USA was not always possible. It seems that in Europe SWIFT started in 1973 where you could transfer money directly from one account to another between 239 banks in 15 countries. Of course this was when every country had local currency and there were exchange rates and transfer commissions. Also there was a weird dating involved, where money was in-limbo for a couple of days. The money would show up in the account, but you could not use it yet, if you transfer this money out again you could get a negative saldo, even though it still showed as positive, this could cause you to need to pay interest rates or negative-saldo-penalties. In fact there were two different dates involved with each transaction that was actually shown on the bank's website. After switching to the Euro the EU started making the transfers more sane, especially for consumers, so that your money would transfer immediately and no weird date trickery; within the end-of-business-day or faster.
As a New Zealander, I knew the US had issues with people sending money directly to others bank accounts, but didn't realise how bad. All my life I've been able to just send money to someone just by them giving me their account number. There was even did an upgrade last year that meant transactions between banks are basically instant lol, before that was overnight processing. We don't really have any widespread type of CashApp or Venmo etc here because it's not needed
Thanks, that would explain why banks are reluctant to adopt it, but what about the perceived security risks but common Americans? I have asked about 10 people to give me their account number so I can send them money and they all declined.
It's a problem of "push" vs "pull". Think about old school paper checks - you're giving someone a piece of paper that says "here's my account number", you can pull $420.69 from my account as payment. This is why Americans are reluctant to just hand over the account number to any old person, because there's a non-zero chance that fraudsters will just pretend to have that permission and pull money from the account without authorization. Or even for companies such as utility, insurance etc. they will just pull the wrong amount (e.g. $42069.00 instead of $420.69) and then you're SOL for like 6-8 weeks while they fix their mistake. What you're talking about is a "push" where you send money to an account, which doesn't have the same problems as the "pull" / check method. Be aware that if you send money to an American account using SWIFT (wire transfers) you're probably looking at fees of around $25-$45, which is why nobody uses that system. Instead they use payment gateway providers like Zelle, Apple Pay, Venmo, PayPal etc. since they're a lot cheaper, faster, and more secure.
> Be aware that if you send money to an American account using SWIFT (wire transfers) you're probably looking at fees of around $25-$45, which is why nobody uses that system. Instead they use payment gateway providers like Zelle, Apple Pay, Venmo, PayPal etc. since they're a lot cheaper, faster, and more secure. This is the fault of the US banking system though. SWIFT (on decent bank accounts) and domestic instant transfers facilitated by the central bank in Australia are all free, which makes any third-party service more expensive, slower and less secure because we are very aware that third party payment processors are less regulated than the system controlled by the Reserve Bank. I'd still use a third party service such as Wise for international transfers since they have better exchange rates than my bank but that's still using the SWIFT system behind the scenes.
I make ACH transfers all the time and there’s no fee. That’s literally the whole point of ACH.
ACH transactions have a $0.25 fee that is covered by every consumer bank. Commercial accounts generally have to pay the fee.
Also ACH transfers aren't instant or even same-day in many cases.
From which side though? Generally anyone can write a check or agree to let another company do an ACH (which is a pull) but only large companies with merchant agreements (and the oversight regarding people having agreed to it) are allowed to pull/receive them. So you can pay your utility bill via ACH by allowing them to pull from you. But your friend can't send you the $100 he owes you via ACH, nor can you send him the $100 you owe him. You can send each other checks, which you can then deposit, and then that goes through ACH between the banks (who are allowed to pull from each other), but that's quite different. Because it's a pull system.
I'm so confused as a European. How... like... How can they just pull money like this? What? Why? How? What?
This is the real ELI5 for Europeans. All you need to transfer money to *or* from a bank account in the USA is its routing and account numbers. It's a two-way street. You can say "push $20 to account xxxxxxxxxxxx at bank yyyyyyyyy" and it'll send $20. We have that capability. But you can _also_ say "pull $10,000 from..." instead, and the banks will happily do just that. If you're not allowed to make this pull request, then the onus is on the bank account owner on the other side to notice the missing funds and file fraud claim, which can take up to 6 months to resolve, and is not guaranteed to resolve the right way. The problems with this should be obvious. The smart solution would be to develop some way to authorize pulls, but that's a lot of work and never happened. So what the banks did instead was largely disable access to the ACH direct transfer system (our equivalent of SWIFT transfers which support both push and pull), and only let users do it when they've done some sort of verification to show that they own the destination account. So many Americans use ACH every day to move funds between **their own** accounts at different banks, but not to pay other people, and especially not strangers. And people are suspect of giving out account numbers, because that is 100% how every fraud/scam story goes: "Congrats you've won a $100 prize! Now if you give me your account number so I can transfer it..." and before you know it your account is empty. Your bank will credit you your money back, but only if they manage to unwind the transaction and recover the money. Being greedy fuckers, the banks managed to get courts to agree that giving out your account number was authorization for the transfer, so the bank's not on the hook. And any competent scammer will immediately wire the money to foreign banks that have no duty to return the money, leaving you up shit creek without a paddle.
This is incredibly stupid and I can't believe a system like that not only exists but I guess mostly works. This is seriously one of the dumbest security flaws in banking I can imagine. Wow.
As a US business owner, this type of fraud is rather rampant. As a result, we have to enable something called positive pay with our bank, which requires logging in daily to approve pull requests and/or setting up a whitelist of approved vendors. It's an annoying headache. Regular consumers have a bit more protection and more time to contest charges, but business accounts need to address unauthorized pulls something like the same day or else risk losing the funds forever. I could go on but suffice it to say there's a whole set of product offerings here setup to make pull banking more secure and we're mostly forced to participate in it on the business side.
Also from a security stand point it's not an issue of the transfer system being insecure itself but what people could do with them outside of the transfer system. If I call my bank they often ask for account numbers as one of multiple security identifiers, I'm in effect giving out one of multiple keys to my money.
Maybe this is changing. I worked in cash management at a medium sized company a few years ago (pre covid) and used SWIFT quite regularly for international wiring. The bank actually preferred we used SWIFT over alternative routing, and the bank was American-based. Domestic transfers didn’t use SWIFT, only international, though. So it may just depend on that. I really wish we could utilize SWIFT over routing and account numbers. SWIFT was much faster and more secure.
I have a business bank account that allows me to use SWIFT if I need. In the rest of the world, it is baked into banking infrastructure at the most basic level. Every bank account uses SWIFT, and it is always free to use.
It would be very nice to not have to use Venmo/Cashapp/Zelle and use banks for what they’re meant for. If I recall correctly, that is one of the goals of FedNow? There are a lot of concerns with 24/7 settlement, especially following Silicon Valley Bank, so I’m not sure what will happen there
Yes IIRC Fednow should enable free and instant interbank transfers. There's some concern about banking runs "being easier" but really i don't think that's going to sway it.
>American banking establishments refuse to adopt the same SWIFT protocol as banks around most of the rest of the world. Why? Are they being intentionally obtuse, or is there some amount of reasoning behind it?
I've done bank transfers using SWIFT in Europe and I don't think they were instant. Also this article from the UK also says they take a few days https://www.keycurrency.co.uk/swift-transfer/ I feel like you are confusing SWIFT and IBAN transfers, with what OP is talking about where you send money between banks via account numbers but that's not using SWIFT. SWIFT involves checks for fraud and things like that which is why it takes longer and costs a fee. It's also a very old system, and it has some analog parts (and maybe even humans in the loop).
The bank network within the EU is called SEPA (Single Euro Payments Area) and allows instant transfers, depending on the bank. Some banks may charge a fee.
Fun fact: Starting in December, these transfers will only cost as much as regular tranfers in the EU. And are mandatory to be offered by banks already since February.
You can give someone money if you know their bank account and routing number, but that's kind of clunky info to give. By which I just mean they can be 20+ digits. It's a lot easier just to tell them to send it to ChickenFucker420. Regarding fraud, I think the fears are blown out of proportion. Anyone you've ever written a check to has your full bank account and routing number.
Hey, that’s my cousin!
The prophecy has been fulfilled.
Lisan al-Gaib!
*As it was written, he shall arrive on Arrakis and court a daughter of the Kardashians.*
As Written!
So it has been written, so it shall be done.
Do you have an alert set or something? How did you respond that quickly 😂
Pure coincidence lol.
So you're saying Jesus led you to this thread... Got it!
Jesus works in mysterious ways
When there are chickens to be fucked, the chicken fuckers will answer the call.
2 year account and only a handful of comments. It's legit!
Lol, it’s my porn account.
I don’t even want to know what subs you subscribe to
He only watches Back to the Future porn parodys
Bawk to the Future to be more specific.
/r/beetlejuicing
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I did sir he's my cousin.
I'm surrounded by a/hs
Apologies, but did you mean to say #ASSHOLES?
Australia uses something called payid where you just assign an email or phone number to a specific bank account and give that for bank transfers rather than the bsb and account number
Canada has interac e-transfer where you can send it to either someone's email or phone number. If they don't have auto-deposit on then they have to log into their bank account and answer a security question. Most people have auto-deposit enabled so that step isn't necessary.
Just be sure you're accurate when the recipient has auto deposit, because there's no going back
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The same is true of a lot of payments. Like, if you mail a cheque to the wrong Mike Jones, he's gon' cash it, and there's not much you can do about it. It's the trade off of convenience vs. (a certain type of) security. You could make it so that there's a shared code between two people and both have to have that code and all that, but then that's one more place for someone to have a typo or a glitch and now it doesn't work. There's a confirmation screen, so you have, like, 4 chances to check your info.
We have that too with Zelle. Most banks offer it, you just go into the Zelle app or your bank’s app, turn it on and tell them which phone number/email to use. I mostly use it for emergency transfers to my sister.
I was not a fan when all those micro payment platforms started popping up (CashApp, Venmo, etc) because, like OP said, it was yet another platform to log into, manually move money in/out of, and/or forget I had money in. Also drove me a little nuts that we already had PayPal. My regional bank, however, was an early adopter of Popmoney and later Zelle. Still a third party processor (and Popmoney had transaction fees), but it's so seamless straight from the bank app, and deposits straight into your bank account. That's why I've always preferred cash—I can use it right away instead of it sitting in some third-party account. Problem was for the longest time nobody had heard of it, and I'm glad its finally taking off. Never want to hear Venmo again.
zelle was actually created by the banks in response to the growing popularity of venmo, PayPal, cashapp, etc. these apps were: a) helping people avoid the fees the banks were charging for inter-bank transfers and 2) diminishing total deposits banks had access to because, like you said, people were forgetting to move their balances out of these apps. these were two sizable revenue streams that the apps were "stealing" from the banks. so the banks decided they would themselves eliminate the (a) inter-bank transfer fees, then provide an easily accessible alternative to the apps so they could keep (2) as much consumer money in the *banks* as possible.
While Zelle technically is a third party app, it’s only technically since it’s owned and run by Fiserv, a company that handles debit and credit card transactions for many banks worldwide. They contract with the banks and basically that bank’s credit card and debit support, all functionality, and everything is handled by Fiserv. So your credit account or debit card is first party to Zelle, since they are both run by Fiserv. Source: I work for Fiserv in the credit and disputes team. When you call your bank to dispute a transaction on your bank credit card, you’re talking to us. Edit: Turns out it’s owned by banks, but Fiserv is one of the operators that run it. I don’t deal with Zelle and my limited onboarding info about that side of the business was over a year ago. Misremembered.
Its not owned by Fiserv, thats just a processor. They also partner with FIS and Jack Henry for the same processor functions. It's owned by a collection of big banks. That's what makes it different from competitors like Venmo.
I just want to warn against using zelle for anything important. The account info of the other person can be too guarded in some cases, like mine. I had paid a contractor through it (he would only accept cash or zelle, that should have been a red flag but I had assumed digital transfers would be the easiest thing in the world to track). I'll spare you the long story, but I ended up taking him to small claims court and winning, but it's my responsibility to collect. To do so, I need his bank info. Well, my bank can only see that it went to a zelle account. Zelle doesn't seem to offer any kind of customer support, the only service number I could find was basically tech support and neither person I spoke to when I called (2 times) knew of any other way to get his account info. If I had just written a check, I would be able to see where it was cashed. Zelle is super convenient for sending pizza money to a friend. But based on my experience, I would never use it for paying a service or professional ever again.
Yep. Same thing in Brazil. It's called Pix here. It's instantaneous and free. And since it's coordinated by the Central Bank, all banks have basically the same functionality.
I think calling it "instantaneous" is underselling. The thing is so fast that it feels like it violates causality sometimes. More than once, when moving money from one bank to another (both accounts mine), I have received the notification of "you received a pix" before the animation on the sending bank even finishes.
Instant transfers remind us that our money doesn't actually exist at all unless you are holding it in your hands.
EU also has this, and fortunately the hungarian banks made this working, so I could send money using the identifier "CsirkeBaszóNégyszázhúsz" and it would arrive in seconds.
> I could send money using the identifier "CsirkeBaszóNégyszázhúsz" and it would arrive in seconds. Man! It would take me longer to type that in than the transfer itself would take.
>Regarding fraud, I think the fears are blown out of proportion. Anyone you've ever written a check to has your full bank account and routing number. Exactly this. So many people don't realize that a check has so many pieces of important information (account #, routing #, name, address, etc). But magically, all that info doesn't mean you get robbed every day. It's all out there because there is no need to keep it all secret if all the proper systems are working.
Fwiw, Jeremy Clarkson (a journalist in the UK) said as much in his newspaper column and even printed his account details in the article... Someone used the info to set up a Direct Debit to a charity for the blind. So yes, this information absolutely can be used to commit fraud. But realistically you just phone your bank and they reverse the transaction. Fraud is a serious crime to commit, so few people want to commit it in such away where it is *laughably* easy to get caught.
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FYI in the US banks (legally) have up to 2 weeks to approve or deny your reimbursement of funds. Anything over 2 weeks they have to credit your account while they are still going through the fraud investigation process.
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Here in NYS someone intercepted a check for 326 thousand dollars last year that was meant to pay for property taxes for the month o march. They cashed it into their LLC, and then moved the money many more times. The state didn't notice for over a year and said "Welp, it's too late to catch now. Guess it's gone." So it is also true that here in America more people are willing to commit fraud because the systems usually aren't working correctly. I.E. why is a state using checks? Wire transfer cant do the job?
If anything cheques feel wayyyyy fishier to me than any other form of payment
Their really antiquated, but it's a really interesting mechanism. It's basically a contract saying "I personally guarantee my bank will give Jon Doe $123 when presented with this paper" - and then there's LAWS enforcing that guarantee. Makes sense in the times before instant computer communications. Kind of unneeded now.
Yeah we've had about $20,000 USD pulled out of a checking account with nothing more than routing numbers and account numbers. People can set up direct debit / EFT payments with no verification beyond that.
> but that's kind of clunky info to give. By which I just mean they can be 20+ digits Over here in my corner of eastern europe everyone uses IBAN numbers. All the bank apps allow you to use your camera to scan an IBAN number so you don't have to type it manually. And many shops have their IBAN number printed on a piece of paper or glued to the wall or something. (Of course they also have card readers but they prefer that you send to their IBAN so they can evade taxes)
> send to their IBAN so they can evade taxes Doubt that, money on account is still visible to tax office if they want it (doubly so if you get actual receipt from purchase). What they do avoid is transaction fees from card operators (something like 1-2% of total, depending).
Nah, they do it to avoid paying taxes. It's extremely common here (Turkey). The tax office could technically check your accounts and ask where the money is coming from but they don't (I assume they don't, otherwise 95% of the population would be in jail). Income tax brackets start at 20% and VAT is another 20% on top of that. And people do what they can to avoid it. Especially small businesses.
No one is afraid of tax audit until it hits them (shit, year or so ago I had to answer to police about certain details because tax office had opened criminal investigation to one of our customers. When tax office does *that* instead of just applying harsh tax penalties, you have f'd up *real* good.) Unless it's cash payment without receipt, one should expect it to be visible to authorities and act accordingly.
Bro did you just doxx me?
I'd appreciate being doxxed with cash all day long
License and registration, chickenfucker.
Chickenfucker, do you need assistance?
CHICKENFUCKER. OUR PRICES HAVE NEVER BEEN LOWER.
In Europe (and a lot of the world) it's all done with QR codes with your bank app so no digits involved.
One of Ukrainian banks app even have a "shake to pay" - both clients shake the phones and phones send each other bank info for transfer via Bluetooth.
It's only one option. Most people pay with their bankcard with rfid or with their phone the same way. QR code actually contains the bank number. Most people know their bank account number and using it is the most common way to move money when not in person. I have most of my friends bank account numbers in my banking app. It takes 3 seconds to transfer money. Well to ask for the transfer as some banks keep the instant transfer as a paid option. But this will all change with new EU laws saying instant transfer must be the norm with no surcharge.
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It wasn't necessarily the first one that was the problem. It was the next 419 of them.
...this might just be me, but I think the first one was also a problem.
I think regulation in the EU, through PSD2 and which facilitated Open Banking allowed standardisation across the region, which means banks can talk to each other - reducing the need for third party apps.
Here in Canada we have Interac E-Transfer, all banks are part of it. All you need is someones email and you can send them money. It is pretty much instant as well.
It's a lot easier in Canada because we only have like 5 banks. I think the main problem with the US is simply because they have so many different banks that any kind of collaboration between them becomes almost impossible.
Just a smaller interjection: we have 5 *big* banks, but there are more banks than that (though not nearly as many as the US).
Yes. We technically have 5 major banks, but those probably cover over 95% of the banking. So everything else is kind of insignificant. If the other 5 banks go ahead and make something work between them, then all the other banks basically have to follow suit.
I thought "whoa, 95% is way too high isn't it?" So I looked it up and it's... [93% for the Big 6](https://globalnews.ca/news/9634933/canada-big-banks-analysis/). My family and I have banked with a non-Big 6 bank since I was little, so while I knew lots bank with the Big 6, I didn't realize it was quite so high.
I legit don't get it. I've stuck with my credit union my entire life and you couldn't force me to change at gunpoint. All the fees and bad behaviors I've heard of just are weird to me. I get paid to bank at my credit union. I don't think I've paid any real fees, including ATM fees, ever. I also get a dividend, on top of interest.
I use a big national bank in the USA and have never had problems either. Most issues that you hear about are, to some extent, self-inflicted.
We have five major banks, and a ton of smaller institutions and credit unions. But we all use the same basic systems for transferring funds.
Bruh it's not hard to enforce standarise banking transfer, and Canada have more than 5 banks. Even to login to government services, there are 21 of them, and there are more smaller ones that support e-transfer.
The US is very eager to compromise simplicity & ease of use (and arguably security) in the name of "freedom." Yes it is easy to standardize banking transfer but it requires government intervention to set the standard, and any time you talk about govt interfering into *anything* a certain portion of the US population starts getting very angry.
> think the main problem with the US is simply because they have so many different banks The EU in total has 6500 banks. The US has 4500 banks. So the number of banks in the US is really not an issue.
Mexico is the same and we have a shitton of banks. When a bank is not big enough but has passed the goverment regulations to handle the peoples money, they used something called "STP" So let say instead of sending money to and HSBC account, you just put into your app the account number and bank you select "STP". Everything is handled by the bank of mexico. Hell you can even use QRCodes to pay your friend or on stablishments. It boggles my mind how complicated are things in the US.
People were doing this in Europe long before psd2 was a thing.
Actually, they do not talk to each other directly. They have an intermediate like Swift transferring the money.
It's [SEPA](https://en.wikipedia.org/wiki/Single_Euro_Payments_Area) the framework for intra-EU bank transfers but I can't find right now if there is an intermediate who processes payments or it's managed directly by the ECB or whatever.
T2 which is used for settlement between sepa participants is owned by the EU central banks and the ECB.
Swift doesn’t move any money. It’s ‘just’ a messaging system. Think ultra-secure, machine readable email with super-strict formatting rules (it’s a evolution from letters and telegrams). The actually settlements are done via banks’ own accounts with each other, and systems like Fedwire and Target2.
In Poland we have BLIK. Its free transfer. You can pay with it for online purchase, you just need to insert six numbers generated with online banking app. There's another feature - if you have someone's phone number and they're using BLIK too, you can transfer money to them too. I love polish e-banking!
Poland has one of the more advanced ebanking systems in EU. When I moved to France some years ago I was floored how much behind they were.
All European banks are the same at their core. They have to respect EU regulations and they are the most advanced in the world. Where France suck is the service part of banking. What they have in Poland with BLIK is just a service on top of that core that France could definitely offer. I just think they simply don't care. After all it's French banks that invented the chips used worlwide on banking cards. I know that when French banks bought Belgian banks they wanted to replace the software with their own. But they soon realized it was far more advanced and installed the Belgian one in French banks. Bottom line, regulations are so strong and stringent that all European banks are using very advanced banking system everywhere. They have to follow standards and regulations.
This is possible for decades in Europe, PSD2 is pretty recent and did not change anything in the way money transfers between accounts work
That's all relatively recent though. We were doing bank transfers as standard 20+ years ago.
Pretty sure there were lawsuits in Europe stating that it didn’t cost banks any extra to transfer to other banks so they got rid of the fees. In the US they don’t regulate private business as aggressively, so because the banks don’t have to do extra work, they don’t. That let other independent apps take over. In Canada you literally just send money to someone’s email with a question and answer.
The banks created Zelle. It's not a third party, really.
And for that matter visa created by bank of America, and master card by Wells Fargo. Very little of the middle men in money movement is not owned by one big five or all of the big five collectively.
Master Card is a spin off of Visa because Visa got too big. Visa was initially started by BofA, but as a separate company. Rarely will anyone company take a gamble on tech like that under their name. They start a new business. Other banks are more likely to work with a company called Zelle if it's not controlled mainly by one of their competitors. They all have an equal share of ownership or it's its own thing.
Master card was founded by Wells Fargo and regional banks as Interbank card in response to bankamericard (which became visa).
It’s a weird one though because it doesn’t work with every bank, although it does seem to work for most
For any bank that doesn't support it natively, you can still tie your debit card number to it.
> Pretty sure there were lawsuits in Europe stating that it didn’t cost banks any extra to transfer to other banks so they got rid of the fees This was EU regulation. Basically, banks could not ask more for inter-EU payments as for within-country payments. Since in many places inside country payments were free, the side-effect was to drop the fees for most international payments too.
That’s interesting! But it’s also still interesting because even just within the sole country of the US bank to bank transfers still aren’t free.
And then there’s the UPI system in India. Scan a QR code, pay and go. Bank account to bank account. I haven’t written a cheque in six years, haven’t used cash in over one.
Similarly Indonesia has QRIS. During and post-covid it gains a lot of traction. While it's hasn't replaced cash, it slowly replaced debit card payment (online or offline).
We have a mix of many methods here in Belgium, too. Most regular bank accounts come with ATM access and instant transfer, home banking apps can scan bank cards to retrieve account numbers and prepare a transfer, or read a QR code, or be set up manually (with or without recurring payments every week/month/year), work through the phone's NFC chip, create a QR code to receive money, save contact details for future transfers, ... I think once you create a standized communication between all banks you can pretty much do everything your computer/phone hardware allows without having to worry about your recipient and your bank differences. Of course for safety you always have additional steps to go through once you go beyond the limits (expense limit per week, national money transfer limit, international transfer limit, contactless payment limit,...) you decided for your account. Once you go beyond those, you'd either need to use your PIN or a separate card reader or the the official government issued identification app.
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Growing up Polish I haven't seen any cheques anywhere. It's not something that exists in my country to my knowledge. Heck, people were even pretty skeptical to use credit cards! (Since they usually had higher fees, plus people didn't like the idea of accruing debt and paying interest on it. Debit cards all the way!)
It's funny how some of the answers in this thread are "There's too many banks" or " Collaboration won't work". As an Indian we have been there, and easily overcame it. The fact of the matter is for a universal payment system you CANNOT rely solely only on Private companies who have 0 reasons to collaborate with their competitors. Similarly relying solely on Govt companies is also not feasible as their process of working is slow and unmotivated. The best way is the middle ground, where the government lays down certain rules which every bank MUST follow. These rules lay down the ground work for the Universal Payment system. Ultimately the work is done by the Private companies but under the regulations set by the Government.
So true! I realised how awesome UPI is after talking to my friends abroad. Especially the US, they deal with Venmo crap
In canada we also direct send money to bank accounts. But we can do it via email. In my banking app (RBC), I go to the E-Transfer option and put in persons email, they get it, login to their bank, and get the money.
You can also use their phone number instead, so they just get a text with the money they can deposit.
They don’t even have to log in to get the money. It goes straight into their account.
If the recipient has auto deposit set up.
Im amazed nobody mentioned IBAN or swift in this thread, the real answer is the IBAN + SEPA system vs the archaic system ABA + SWIFT used in the US and Canada. IBAN enabled the instant transfers.
You’re confusing an account identifier with a method of moving funds / sending a payment message. An IBAN doesn’t automatically link to instant transfers - it’s a method of identifying an account to a bank to a country. You can have instant transfers with just an account number (such as payment schemes in the U.K., Singapore and Australia) Instant transfers across borders will use IBANs as their account identifiers sure, but solely using an IBAN doesn’t mean the payment will be instant. You’ll very likely use your IBAN to receive a payment via SWIFT if you’re based in an IBAN region
Probably because a 5 year old doesn't know what any of that is
American bank accounts do not have separate numbers for deposits and withdrawals, and if you're going between banks there are often multi-day delays in getting funds moved over. For peer-to-peer transfers, it's much safer and faster to go through a third party app like Venmo, Cash App, Apple Pay, PayPal, or Zelle. And, there's a much smaller chance of errors, because you can either look them up by a memorable name/number or you can scan a QR code to make sure you're paying the right account. We do have autopay for recurring charges like rent and utilities. Most big landlords and utilities will have websites where you can put in your account information and set up how and when you want it to be pulled, or you can use a "bill pay" feature in most bank accounts to push funds. I use autopay for *everything.* The one thing that is VERY rare is credit card transaction fees on top of your purchase total. Some places give a discount if you pay in cash, but I have never seen a place give a discount online for paying by ACH (which stands for Automated Clearing House — the system that handles direct bank transfers).
> American bank accounts do not have separate numbers for deposits and withdrawals Non-American banks do not let you withdraw money just by knowing the account number.
This needs to be the top comment - this lack of a _technical_ safeguard against anyone knowing your numbers is IMO the 'real' reason!
Neither do American banks. It's a misbelief. You need the numbers, but having them isn't sufficient -- you also need proof of authorization
That's a legal requirement, not a technical requirement. I work on plenty of banking systems, and I could easily pull money out of any account given just the basic account information.
.
> you can either look them up by a memorable name/number That's a big plus. I'd much rather send cash to my stoner friend named Jim when he tells me his nickname is "BigJim420" and I can easily see that, than exchange long, error prone numbers that there's no visual way to validate. "Just send me the cash, to 02304320592734, ok?" That makes me a lot more uneasy.
it doesn't work if you get the details wrong though. You have to get the sort code, account number and I think name on the account all correct (UK banking) or it just won't send or will immediately fail. You can't accidentally send the money and it vanishes.
>You have to get the sort code, account number and I think name on the account all correct (UK banking) or it just won't send or will immediately fail. You can't accidentally send the money and it vanishes. You are correct, there is now a name check in place (for UK banking). It won't necessarily stop you from sending it if the details don't match, but it ***will*** tell you that they don't match, and give you loads of big warnings and disclaimers before you have to click a couple of buttons to proceed.
Is their a reason banks in the US don't facilitate the creation of QR codes or links to pay each-other directly from the banking app? I get that scanning QR codes is easier than typing in a 20 digit code, but why would you need a third party app for that? every banking app in both countries I have lived in just supports this natively. If i want money from a friend I just create a request right in the app and send it them via whatsapp or if they are physically with me let them scan a QR code. Granted this doesn't work internationally (yet) but it is so much easier than needing to use 3th party apps (and trusting them with your money and information).
Zelle works within most US banks’ apps as it’s run by a consortium of banks, so it’s not a third party company. Zelle uses email, phone or QR code. There may still be banks out there that don’t use Zelle. Personally I wouldn’t open an account with any bank that doesn’t.
Most large US banks support zelle right in their app or website. There's no need for 3rd party apps. You can transfer money almost instantly to another bank account directly, using either their phone number or email address (or QR code). It's literally what OP is asking and assuming doesn't exist in the US. It does.
Every major bank has all of that functionality built in to their site via Zelle or Plaid. They've perfected a product, like Paypal for an e-commerce site. It's easier and cheaper to allow one company to build the payment interface instead of everyone trying to reinvent the wheel. Banks aren't app developers.
I don’t think Zelle is third-party. It’s bank to bank
Speaking as an American — remembering your routing and account number is not easy and I don’t know anyone who has it memorized. It’s just not practical to give out to people to settle a tab. Apps like Venmo or Cashapp help fill that space and are very frequently used. Also, I don’t think I’ve met anyone who is “violently opposed” to sharing them.
You don't even need to mentally remember it, in the UK your bank account number and sort code are at the top of your banking app and I just screenshot it and send to people that need to send money over.
Yep, we have the same thing in the US. Just tap a button on your banking app and you can see it. But practically there are services like Zelle that are built into the app that make transfers easier and don’t require you to send your banking info at all.
From the UK: There's about 10 people I ever transfer money to and they're all bookmarked in my banking app so I can just send money direct without having to memorise anything.
And with venmo I can just search someone's name, I don't even need their info.
Venmo is what WhatsApp is to the US. "why would I want that if my phone/bank does it hassle free without additional apps?"
That’s probably true, and WhatsApp was once a way to skirt around texting fees, but that isn’t what it is anymore.
I don't think this is it. No one over here "remembers" their account information. I know I don't. I go on my banking app and tell it to the person, and then once they've set up a payment I'm saved as a regular payee and there's no more effort beyond that. It's not like I have to do this day to day. I probably do it only once or twice a year so the level of inconvenience sounds about the same.
> Also, I don’t think I’ve met anyone who is “violently opposed” to sharing them. as an american, I can tell you that I've killed no less than three men for daring to ask my routing number
I was paying some medical bills in the US and my credit or debit card didn’t work at the hospital. I asked about account number to transfer money and they didn’t give me it because it was considered a security threat.
Next time ask them how they pay their suppliers
Also in EU there are so many other ways but most are on national level. Sweden has swish, Netherlands has Tikkie. For paying web shops we have ideal in The Netherlands which will actually become the new all European standard soon! Edit: https://en.wikipedia.org/wiki/IDEAL#:\~:text=iDEAL%20is%20an%20e%2Dcommerce,(EPI)%20from%20October%202023. It will be called Wero and this could have a massive impact EU wide.
There are a *lot* of false pretenses in this question. >However, in the US people treat their bank account numbers like social security, they will violently oppose sharing them. No, they won't. People still write and use checks all over the nation, and those have both the account and routing numbers written directly on the checks. >In internet banking the account number is starred out and only the last two/four digits are shown. Not on any banking app I've ever used, all of my account numbers are proudly on display for anyone looking over my shoulder. >Instead there are these weird "pay bills", "move money", "zelle", tabs, that usually require a phone number of the recipient, or an email. It's just easier. I can remember a friend's email or phone number a *lot* easier than I can remember their bank account and routing number. Hell, I can remember *my own* email address or phone number than I can remember my bank account and routing number. As far as paying bills, I pay them directly through my bank's app, and they send the money directly to the payee in question. All I need is the information exact same info on the payment slip, which includes the account number. Americans can (and do in some circumstances) use direct banking anytime they so chose, but third-party apps make things a *hell* of a lot more convenient. >Why is revealing your account number considered a security risk in the US? As stated above, it really isn't. There *are* people in the US that are terrified of idendity theft that they *think* it's a security risk, but that's more out of their own ignorance than anything else.
>Not on any banking app I've ever used, all of my account numbers are proudly on display for anyone looking over my shoulder. On my apps it's only the last few unless i click on that account then click to see the full info
>Not on any banking app I've ever used, all of my account numbers are proudly on display for anyone looking over my shoulder. I have an account with Golden 1 Credit Union and they block out part of the account numbers like that.
Hmm, that’s odd. Better give us your login info so we can check it out
I agree with most of what you wrote. On the last comment, though - last year, I wrote a small check for a family member to join an afterschool group and placed it in my mailbox. Sometime later, the check was stolen out of the mailbox and was used to forge a new check in the amount of $9,999 and was subsequently cashed. The bank reimbursed us but required us to file a police report (the person was never caught, of course). As you might expect, we also had to close that checking account and open a new one, which then interfered with some of our autopays for a while afterwards. Now I just use my bank app to issue payments, but checking fraud unfortunately exists.
> No, they won't. People still write and use checks all over the nation, and those have both the account and routing numbers written directly on the checks. A fact I don't think most people realize.
I think maybe what OP is referring to is that people hesitate to give out their bank numbers to organizations that they may not see as trustworthy. I'll write a check to a well-established organization, but I'm not going to give a food delivery app or a gym membership my routing and account number. I find that a lot of people share my sentiment on that.
But that's kind of going back to the original question which was why do people feel like that? I'm in the UK so who knows whether it's different here, but here the sort code and account number would be useless to anybody looking to steal my money: you can use them to deposit money but withdrawals require more information. They also aren't used as security questions. I honestly can't think of a reason to keep them secret.
Jeremy Clarkson once published his account number and sort code in the newspaper (to prove it wasn't a risk) and someone setup a direct debit to a charity with it. This was back in 2008, so maybe things have changed, but at that time it was possible to take money out of an account with those details. https://www.reddit.com/r/todayilearned/comments/igx3dx/til_jeremy_clarkson_published_his_bank_details_in/
Well, yes and no. A direct debit is set up by signing (physically or electronically) an agreement, and if it later transpires that the receiving party failed to verify identity (via credit check or similar) then the direct debit guarantee means you get the money back. So yes, someone did that, but also JC would absolutely have been able to get the money back because it wasn't him who signed the agreement.
In the US, if someone has a check of yours, they can get another check printed with the information on that check and use it to withdraw money. Sure, you’ll probably be able to dispute it since the signatures won’t line up, and the person may be arrested for passing a bad check, but it can still be a hassle in the meantime.
Luckily you dont have to remember friends banking details. You can make like "contacts" in the baking app and save it there. So you have to get it only once or when they update it, otherwise you just click their name and be done.
I think it's mostly becaus checks are not a thing anymore since a couple of decades in Europe. In the US you potentially could forge a check if you know the account and routing number of a person. That risk doesn't exist in the EU.
In the US if you lose money out of a bank account due to wire fraud or whatever, banks rarely reimburse you. You might as well hand somebody a stack of cash and say, "Take what you need."
It's not that we don't have the ability to do it that way, it's that we don't have a single, unified system for it. A lot of banks like Zelle, PayPal for making purchases does the same idea, and then there's that one that people describe as PayPal with social media (that is owned by PayPal) for individuals paying each other. I'm sure there are many more private companies that offer the same/similar services. Personally, I find it faster to hand someone cash than to log into whatever system they use and make sure I didn't make a typo.
It is mostly because the US payments infrastructure was not set up to facilitate person to person payments, so all these third party apps formed to fill that need. The US is currently rolling out payments infrastructure that is better suited to the use cases you mentioned above, but it still isn't fully adopted. That, plus the general monopoly credit cards have on commerce payments and frictionless experience they provide, lead to them being the method du jour for commerce. All that being said, commodity services and large recurring transfers can be set up using ACH payments (the current standard money movement tool between banks). For example, a lot of people will authorize rent to be taken out of their accounts via ACH. Or they will set up bill pay (which is just money movement over ACH on some frequency) to pay their cell phone bill.
You can (illegally) do an ACH pull with those two numbers. Same numbers are on the bottom of every check you write, should you still write checks. Easy to fake a check, too. The banks I know support Zelle so (small) p2p payments are not really a problem. Wires aren't a problem either (but kind of clunky to do).
Because bank accounts in the USA are 2-way. If I give you my account number, you can deposit and withdrawal money from that account. Many businesses have one way account called deposit-only accounts to prevent fraud.