Item — HN Reader

Germans pay by card all the time (I think you know them as debit cards?), we just don't use credit cards, because there is no advantage of doing so. Every "giro" account comes with one, and you can use it at the ATM and at the cash register.

I think this is because historically, wire transfers between most banks in Germany have been easy and cheap for decades, while it is different in the US, as I understand it.

1 comments

Wire (instant) transfers from consumer US bank accounts typically carry a $25/transaction fee, and in some cases can only be initiated by phone or in person.

Interestingly, Citi has a nice web interface for person-to-person ACH transfers (direct deposit), but it's not widely used and I don't think most other banks have it.

Wow, $25 per transaction is insane! So, just to make sure I don't get this wrong: in the US, most people can't login to their bank's website and transfer cash to someone else's account for free? Its usually not instantaneous (I think EC is, though), but rarely takes more than 1-2 days between different banks.

Citibank's web interface is integrated with PopMoney which lets me send large transfers via ACH (3 days) or smaller overnight transfers to accounts I've interacted with before. I think some of the other large corporate banks have this. I've never heard of anyone using it. My dad works in the financial services sector and was stunned that such a thing even existed.

It would be impractical to use this for most payments because the recipient has no indication that the transaction is actually going to take place until at least the next business day.

When individuals buy from merchants in the US, they almost always use a MasterCard or Visa (sometimes attached to a checking account, sometimes to a line of credit) via magnetic swipe or by typing the number. Individuals settle with each other individuals (tutoring, babysitting, reimbursing tickets, etc) using paper checks or cash.

I believe there are some startups targeting person-to-person payments, but most involve transaction fees and/or or creating an account with your banking details, neither of which anyone wants.