Electronic funds transfer in the US, stone age?

Pretty much the case.

dinged by the transaction fees. Large supermarkets seem not to care.

As far as I can tell, for SMEs the banks charge as much to handle cash as they do to handle credit or debit cards. (Or as I prefer to think of them "debt or debit cards")

Then use an online payment....

Then give cash.... who doesn't like cash??? They even make special cards for cash.

You mean opening a card with cash? Yeah!!!

I don't bother with checks. I pay online. With vendors who are expecting a check for services I have to convince them I will send the check. I guess they don't like to hear, "The check will be in the mail".

Duh!

I normally hand a tradesman the cheque when they've finished doing the work.

If an online transaction is for more money then I'm prepared

it arrived. That takes time and effort. For repeat transactions, that's time well spent - but not for one-off.

OTOH, so does finding an envelope and walking to the post box.

Clearly there are some sweet spots!

In the UK it is a fixed fee and a percentage on top which means that

I did. Protons in Belgium worked that way as cryptographic cash held on the same bank card as you use for normal transactions. The difference is that for tiny amounts you can do the transaction locally with the vendors terminal sending your Protons to their account. It is almost certain that the vendor pays an annual fixed fee for the terminal to accept the cards but after that there is no percentage take.

It worked by the central banks not having to mint, manipulate count and circulate vast amounts of physical cash. When the Euro came in rather than learn the new coinage almost the entire population switched.

It was truly cutting edge cryptography when introduced in 1995.

Every now and then you have to top up your eCash when you use the bank card in a hole-in-the-wall machine. It reminds you when funds are low.

I stand corrected. When I was living there it seemed to be going very well but according to Wiki it has since died out as of 31/12/2014:

A similar eCash storage card system exists in London as the Oystercard for transport - but it isn't useful for anything else. The Belgian one was ubiquitous - you could even buy a single loaf of bread with it.

In the UK most bank accounts are "free" but woe betide you if you ever go into overdraft - the bank fees then are usurious and even make payday lenders look good! Basically the have nots subsidise the haves.

Same with utilities - the very best rates are for those that can set up a monthly direct debit online and the worst are for prepay meters.

There are a variety of systems for "electronic cash". Most people just use their bank cards - it is a direct debit cards connected to my current account. It also works as a direct debit VISA card (not a credit card), so it works internationally through VISA.

I don't actually know if the banks and/or VISA get a cut of the payment

- that would come from the receiver's side, not the payment side. (Obviously for international use there are currency conversion fees and whatnot.) But the cost to the shop is small - and overall it is much cheaper than cash for the shops.

What people often miss is that it is expensive for a shop to handle cash. The factors include:

1. Cash takes more time at the checkout, and time is money. Nothing is more painful at a shop than standing in line behind a pensioner paying in pennies.
2. Cash can get lost, stolen, miscounted, forged.
3. A shop with cash can be robbed. I have seen notices in fast-food places saying "please pay by card - it protects our employees from robbery".
4. Cash has to be handled manually, collected, counted, taken to a bank. You have to keep change on hand.
5. Cash has to be handled manually for accounting and record keeping - with cards, it is all done automatically.

Then there is the cost for the customer - they need to make sure they have the cash, take it out of the bank or ATM, carry it around. Change and small coins often gets "lost" to the system as it ends up in jars, underneath the sofa, etc. They too can be robbed, or lose their cash - and you can't just ring your bank to cancel your lost banknotes.

And there is the cost to society. With cards (or other cashless transfers), transactions are all recorded and it's easy to automate taxes. With cash, taxes can be evaded. And if some people are evading taxes, the honest people have to pay more taxes to make up the difference.

As an iTunes voucher available in most stores ;-)

Online banking.

Most banks won't let you touch the funds from a cheque until it has cleared for outcome (ie the other bank has accepted it as valid). ISTR there was a cunning scam in the US that exploited their arcane physical clearing method by printing the wrong magnetic info on fake cheques so that they went to the wrong place and were visually seen to be wrong so put back into clearing again and again and again (this is way back).

Mostly not having it stolen from under a mattress.

You might be missing out then if you have cash savings and a decent monthly income. Check out TSB, Nationwide and Santander 123.

That excludes balancing your cheque book, tracking the connection between the bill and the cheque, etc. It also excludes the tradesman's time - tracking the connection between the cheque and the bill, cashing it at the bank, waiting to see that the cheque does not bounce, then marking off the bill as paid. That might not be /your/ time - but /you/ pay for it.

If the tradesman were desperate for a quick payment, I'd do it with mobile banking on my phone - a couple of minutes, most of which is in typing the comment for the transaction on the on-screen keyboard.

Otherwise, I'd do it when handling other bank stuff, perhaps once every week or two. So the computer is already on, using a different user (under Linux) for banking rather than needing a separate live boot (I am careful, but not irrationally paranoid). Bank login is well under a minute, typing in the transaction is quick, authorisation is 20 seconds.

If the business is big enough to use electronic bills, the tradesman's accounting software sends the bill directly to my online bank - all I need to do is authorise the payment.

I happened to have an electronic bill outstanding at the moment, so I have just run a timed test on paying it from my mobile. In total, from taking my mobile from my pocket to putting it back, I took 51 seconds.

And the tradesman uses no time at all. The money comes into his account, the ID code on the bill that I typed in is matched up with the payment due by his accounting software - everything is handled automatically.

not only that, it costs a shop/business money to /deposit/ cash in a bank. (My single data point is 2%)

That is reportedly one reason that shops offer "cashback", i.e. pay for goods with a debit card and simultaneously "withdraw" cash "from" your account.

Where is the risk in an online transfer? The only problem I've had is a first payment to a new payee of a large sum often won't go through unless they can reach me by phone to verify.

I only use checks when I absolutely have to like paying taxes.

I sent myself a check from one bank to deposit in my account in another bank. They wouldn't accept it as a "non-locally generated check". They said it could be returned up to three months later. When I checked on this with the originating bank they said *all* checks can be returned for up to three months.

Debit cards are not remotely the same as credit cards. When you use a VISA /credit/ card, it is /VISA/ that pays the shop - then you pay VISA. That means VISA has the cost of fronting that money, together with the risk that you might not pay them back - they have to cover that cost. Part of that is from interest from people who have outstanding credit card bills, and part is from the fees they charge in the transactions.

With a debit card, even if it goes through VISA, there is far less risk and far less outlay for VISA - they are just facilitating the transfer and guaranteeing it in the case of stolen or invalid cards. So the fee is lower.

For the kind of bank cards we use in Norway, VISA is only involved if the receiver is not part of the Norwegian banking system - basically, they handle international purchases. The fees are minimal - zero for the customer, and very small for the shop.

Big businesses have better rates. Smaller businesses would be happy to pay 3% to avoid dealing with cash if they knew how to do the sums and see how much it actually costs them to accept cash and cheques - but most don't understand the real, total costs involved. The only painful part is when credit or debit card companies take a fixed fee per transaction as well as a percentage - that makes the real percentage high when transactions are small. As we don't have that here, customers and shops are quite happy with using bank cards to pay for a cheap cup of coffee.

Somewhere along the line, there will be a cost. But when you don't have to pay a percentage to a international institution like VISA, the costs are not high. (Don't get me wrong - I am quite happy to pay VISA for the services they do. I am just happy /not/ to pay them when they are not doing anything.)

It all comes from the customers somehow - of that you can be sure!

The only way a vendor can accept a card transaction in the US is if they are a registered merchant which means they have some sort of account with a credit company. It used to be banks only with significant fees. Now there are services like "The Square" and others. But most smaller service companies still don't take credit or debit cards in the US.

I believe the merchant paid fees go to their service and the card company. The card user only pays if they use the credit and pay interest.

What taxes are you talking about, sales taxes? I've never seen anyone not charge sales tax just because I was paying cash.

That used to be the rule here (US), but they changed something. I use a CC to buy $1 items on paypal and locally few places have a minimum card purchase.

Ok, so the system is similar. So if Proton is done then you no longer have a cash card, just the credit/debit cards everyone else has?

I won't pretend to completely understand debit cards, but I believe here in the US the fees are the same as credit cards. In fact, I can use my credit card *as* a debit card and possibly vice versa. The only real difference that matters to the vendor is that one requires a PIN and the other a signature. They see the same fees and deal with the same companies.

I believe businesses know how to run themselves. Yes, larger companies get a smaller charge, but it is still significant. They are willing to pay in order to get the business while most local businesses don't necessarily have to do that.

Spit :) I've largely managed to educate my daughter why DRM (Digital /Restriction/ Management) is not in her interest.

Trying and failing to understand how the iTunes software worked cured me of any misconception that Apple's products are ergonomic and user-centered.

Too painful if the tradesman is at your house anyway.

As I wrote elsewhere...

Writing a cheque takes 2 minutes, of which one is to find the cheque book. Hand cheque to tradesman (0.5min)

Online banking takes >15 minutes.

- go to and turn on computer (2 mins)

- boot up LPS from a live-image CDROM (~4 mins)

- login to bank (2 mins)

- type in and check new recipient bank details (5 mins)

- wait for authorisation validation on my phone (1 min)

- enter auth code (0.5 min)

- enter payment amounts, check, authorise (1.5 mins)

If an online transaction is for more money then I'm prepared

it arrived. That takes time and effort. For repeat transactions, that's time well spent - but not for one-off.

There's the famous Patrick Combs tale of the $95093.35 cheque: "In May of 1995, I suddenly found myself smack in the middle of a very unusual 'life experiment.' I deposited a junk mail check into my ATM and to my absolute dismay, it cashed. Thus began one of the wildest adventures I've ever been on in my life."

Since he seems to be making a living telling the story in theatres, the original has been deleted. Fortunately the internet archive exists:

Yes, I've looked at them and can't be bothered. The costs vs payback is in my favour, but not wildly so when the aggro of changing bank (or maintaining multiple banks) is factored in. I've even thought of maintaining multiple

each month :)

Money is a hygiene factor; life is too short.

Over here, anyone who has a bank account can accept bank cards. You need to be a registered merchant to accept credit cards, but for normal bank cards all you need is a card reader. You can get a reader and an app for telephones and pads.

You have never paid for a service where you could pay cash to avoid the "receipt fee" or "accountancy fee"? You have never known a shop to take money straight out the cash register to pay temporary employees, or buy their own shopping? The /customer/ will pay the full price, including any sales tax - it's just that the tax part never makes it all the way to the taxman.

I used to do that, but I write so few cheques nowadays that it isn't an issue.

Yup, that's a "externality", and therefore I don't count it :)

My phone is advanced enough to do SMSs, no more :)

Being concerned about keysniffers and man-in-the-browser threats is only slightly paranoid. Live boot means less that I have to worry about (and therefore think about).

I've never seen that, nor any mechanism for such.

I'm not sure I like the idea of it being easy to access my account. Some pain is desirable :)

Not here; credit and debit cards are very very different.

Debit cards can only be used if you have cash in your account when the card is presented. Debit cards give no consumer protection if the vendor or goods fail.