Why are wire money transfers so much easier in Europe than in North America?

[fermier]

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?

[JumpCrisscross]

Bank wires were invented in America [1]; the Fed sent its first in 1915 [2]. Similar to how recently-developed nations have newer infrastructure, in America we’re stuck with some legacy cruft. (It should get better with FedNow [3].)

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...

[bradley13]

"any org can initiate an ACH transaction from your account without you approving the transaction first"

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?

[JumpCrisscross → bradley13]

You can turn off ACH at some banks. (You can also reverse fraudulent ACH transfers more easily than Fedwires.)

[bradley13 → JumpCrisscross]

Maybe, but what is fraudulent? If a company claims you owe them money, you claim you don't, but they suck money out of your account? That should not be possible.

[JumpCrisscross → bradley13]

> what is fraudulent?

In my experience, the bank sides with whoever claims fraud.

[m348e912]

I don't know why. I guess Zelle is an improvement but moving a semi-significant amount of money quickly can be a difficult task in North America. I also hate the fact that any org can initiate an ACH transaction from your account without you approving the transaction first. It seems rife for abuse and I am not sure why it actually isn't abused more.

[simonblack]

Everybody has an IBAN. (International Bank Account Number). That makes things very easy, as the IBAN is specific to just one bank account, and is recognised throughout most of the world.

[sickofparadox]

The US should be catching up with the slow deployment of FedNow, which if I understand correctly, will allow for near instant transactions between bank accounts.

[6510 → sickofparadox]

Right,

You 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.

[JumpCrisscross → 6510]

> 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.

[stop50]

Fraud detection: the banks know how specific schemes work and have some checks for that, like when customers send many transactions at ones or checks for the amounts themself, since some numbers are more rare than others. What exactly is checked is is secret and changes all the time. The mandatory 2fa also helps the security. A normal wire transfer takes days even in europe. The immidiate wire transfer exists only for a few years and costs money for initiating one for some banks.

[moooo99 → stop50]

> A normal wire transfer takes days even in europe.

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...

[kasey_junk → moooo99]

Expect to see prices rise to cover the risk then. Sepa chargebacks are even more payer friendly than credit transactions (which are already wildly payer advantaged) with no dispute resolution process even available to the payee before 2 months.

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.

[Finnucane]

Because banks made money on the float.