Why are wire money transfers so much easier in Europe than in North America?
On a recent trip to Czech Republic and Germany I learned about just how easy it is to send money between bank accounts. From autogenerated QR codes that folks can scan to send money, to paying bills in restaurant directly from their bank accounts, I was surprised just how easy it is. Money moves immediately, minimal fees, no third-party vendors or credit card companies profiting on top of it. On the other hand, in Canada, you have to go through Interac, Paypal or other vendor to send money immediately, or have to go in person to a branch to initiate a wire transfer, which can take days. Why are banks not pushing for easier solutions around this? I don't understand why it is impossible to just initiate a wire transfer online, if I have all the necessary info (IBAN). If this was about fraud detection, how are banks in Europe handling that?
14 comments
[ 3.4 ms ] story [ 33.5 ms ] threadYou also have to picture the other perspective. People in Europe are so spoiled with 5 lines of code to do secure transactions our eyes almost fall out if we mistakenly think of doing business in the US.
I'm sure it looks far more absurd than it is because we are unfamiliar with the system. We have no configuration where the customer gets the product without payment.
What are you referring to? From restaurants to hotels, all kinds of interactions involve the product or service being delivered before payment.
When I went to the US to clean up my mother's affairs, I found this shocking. Companies saying "oh, we'll just take XXX out of her account". Um, like hell. I closed out her accounts immediately.
Writing checks to settle legitimate claims was like a trip back into history. In Europe, everything goes electronically with zero or minimal fees. No one can just suck money out of your account.
I can only assume the US banks are earning good money keeping such a horrible system alive?
In my experience, the bank sides with whoever claims fraud.
The other element is credit cards: Americans tend to pay with credit, not cash. As a result, the lack of retail bank-to-bank payment infrastructure was easy to not notice.
> why it is impossible to just initiate a wire transfer online
I send and receive wires for free with Fidelity. The only times I have to go into a branch is for large wires overseas. (For $100k+ domestically they’ll ask for a call.)
[1] https://en.wikipedia.org/wiki/Wire_transfer#History
[2] https://www.federalreservehistory.org/essays/fedwire
[3] https://www.frbservices.org/financial-services/fednow/organi...
That is somewhat true. Usually, a regular bank transfer does not take longer than 1-3 working days, mostly dependent on the institutions involved. Some banks take what feels like ages, some are done within 12 hours. But I have never experienced a transfer taking more than 36 hours, even internationally.
> The immidiate wire transfer exists only for a few years and costs money for initiating one for some banks.
SEPA Instant Payments we're a bit slow to roll out but are now catching up. They're now fairly widespread in terms of availability and cheap as well (the banks I have accounts at charge 50ct for an Instant Payment). Apparently there is also legislation in the works which would make instant payments the default by making them mandatory to support and capping their prices to the prices of non-instant SEPA payments [1]
[1]: https://www.consilium.europa.eu/en/press/press-releases/2023...
Effectively every merchant who accepts Sepa is extending credit to their customers. That may be the right policy choice but I can imagine it makes life very hard for small merchants.