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The Long Shadow of Checks

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Re: The Long Shadow of Checks

#91

Post by lxgr »

telotortium wrote: post #7
e63f67dd-065b wrote: post #4

I'm continually surprised by the political influence held by the thousands of tiny banks in the country. I must applaud the people behind the Check 21 Act: it's the combination of a neat backwards compatibility trick (if you want paper, we'll print it and send it to you) and political maneuvering that I must admire it. > Since the standard U.S. bank account is a checking account, even if it cannot write checks, it is…

Even without the bank giving the check writer the privilege of overdrafting, either the bank or the check recipient has to absorb the loss if they accept a check for which the check writer has insufficient funds (unless the bank goes after the check writer). By contrast, with a debit card, the credit risk is much less (since the bank knows before the transaction whether sufficient funds are available).

That doesn't make a checking account (especially one without check writing) a "credit product" though, no?

If anything, anybody accepting a check for payment and delivering goods/services before it clears is extending credit in a way, but that has less to do with the bank account and more with pre- vs. post-payment for goods/services.

Re: The Long Shadow of Checks

#92

Post by lxgr »

otteromkram wrote: post #33
e63f67dd-065b wrote: post #4

I'm continually surprised by the political influence held by the thousands of tiny banks in the country. I must applaud the people behind the Check 21 Act: it's the combination of a neat backwards compatibility trick (if you want paper, we'll print it and send it to you) and political maneuvering that I must admire it. > Since the standard U.S. bank account is a checking account, even if it cannot write checks, it is…

An alternative might be scaled NSF fees. Instead of one standard overdraft fee, smaller miscues might amount to a few bucks or something. Transactions in the hundreds or thousands could be proportionately larger. Maybe a "window" should be available for reversal of NSF fees if a balance is brought up to cover the credit amount. I can see the point of waiving the fee, but someone has to cover the cost of funds aren't…

> An alternative might be scaled NSF fees.

Why should these fees be scaled? There's no variable cost to the bank returning an item (i.e. a check, ACH debit etc.) as unpaid, unless I'm missing something.

Overdraft fees, on the other hand, have always seemed very strange to me, since I grew up with European-style banking: Overdrawing an account is standard procedure in most European countries and is just considered a form of credit, with standard interest rates and everything.

Calling it anything other than credit seems to me to be mostly an artifact of the structure of US banking (i.e. the fairly strong separation of the lending and deposit-taking sides of US banks).

Re: The Long Shadow of Checks

#93

Post by lxgr »

dqv wrote: post #17

It's interesting to see this discussion about speeding up check processing, because it seems that a lot of people use checks to slow payments down . It's a convenient way to make it inconvenient for the receiving party! It works like this: receive invoice, wait until due date, write a check dated for the due date, wait a few days, send it through regular mail, and complain about the past due notices because "I've alr…

If you prefer the user experience of cards over that of checks, imagine a world in which you can transfer money to anybody with a bank account by telling your bank to make a payment to their account number!

That's been the reality in many countries other than the US for decades :) And maybe (hopefully!), the US will finally catch up with FedNow.

Of course that model doesn't work for everything (it's usually a bad idea to pre-pay for goods or services with bank transfers since there is essentially no consumer protection in case the merchant goes bankrupt or turns out to be a fraudster), but I'm still fascinated by the US's lack of a "giro" system, i.e. an accountholder-initiated P2P and B2C push payment service.

Re: The Long Shadow of Checks

#94

Post by lxgr »

sneed_chucker wrote: post #19

Honestly, I just hate how insecure and legacy everything involving banking in this country is. For example, payroll - there's literally no reason your employer needs to store your account and routing number as another piece of your personal info that they can lose when some hacker finds out their MySQL admin password is "admin" Like, the system should be that you give your employer your banks name, plus a UUID associ…

> your employer needs to store your account and routing number as another piece of your personal info that they can lose

Having grown up with banking outside the US, even that concern seems largely bizarre to me. Bank account numbers are routing identifiers, which have no business being used as bearer tokens!

To be fair, the same thing (i.e. direct debits that can be initiated using only somebody's account and routing number) is possible in many other countries as well, but usually it's only used for very low-risk payments, since reversals are usually just a click away, with no recourse for the (former) payee.

> Like, the system should be that you give your employer your banks name, plus a UUID associated with your account that allows entitys to deposit but not withdraw funds for you account.

That UUID is just the account number. What needs to change is being able to initiate debits from somebody's account using only the account number; being able to make credit transfers to them is usually not a problem.

For example, I don't see why banks can't offer two forms of account numbers: One that's only usable for inbound payments (and automatically bounces debits of any form, whether (fraudulent) check or ACH), and one that allows debits as well, possibly even limited to a single payee.

Re: The Long Shadow of Checks

#95

Post by lxgr »

paulddraper wrote: post #40
lmz wrote: post #26

Earlier quoted context omitted.

As a non American, the idea of a bank account number being a kind of secret that is usable to pull money out of the account is the most curious thing to me. I guess something like this can only exist in a high trust environment.

As an American, I am perplexed by the fill-now-pay-after European gas pumps. I suppose something like that can only exist in a high trust environment.

I think it's less a function of a high trust environment, and more one of law enforcement consistently prosecuting even relatively minor theft.

I'd assume that even in the US, video taping everybody's plates wouldn't be that hard either, but actually getting your money back as a gas station owner might not be trivial.

Re: The Long Shadow of Checks

#96

Post by lxgr »

paulddraper wrote: post #22
sneed_chucker wrote: post #19

Honestly, I just hate how insecure and legacy everything involving banking in this country is. For example, payroll - there's literally no reason your employer needs to store your account and routing number as another piece of your personal info that they can lose when some hacker finds out their MySQL admin password is "admin" Like, the system should be that you give your employer your banks name, plus a UUID associ…

And most utility/etc bills will require ACH (or a payment fee). So now Bob's Valley Energy Inc has the information to empty your account. --- (Though FWIW, probably neither your employer nor your utility company is storing the information themselves in a MySQL db.)

But if they do, can't you just call your bank and ask for the ACH debit to be reversed?

I've never had to actually do this myself, but as far as I understand, there's a process for that just like for credit card chargebacks, and a legal requirement to do so within 10 days of reporting the problem to your bank.

Of course being out the money for 10 days is not pleasant; I also do wish there were ways to limit ACH payments a bit more proactively.

Re: The Long Shadow of Checks

#97

Post by lxgr »

otteromkram wrote: post #41
tjader wrote: post #29

Earlier quoted context omitted.

It is implemented in most of the world outside of the US. It is scary that the info you need to deposit funds into an account in the US also allows you to withdraw funds from it.

With approval (eg - PIN or password) you might be able to withdrawal funds. But, can't you say the same thing about a credit card? Heck, you don't even need a password for that; everything you need is right on the card. Or, your mobile device (if you pay through near-field tech)?

> But, can't you say the same thing about a credit card? Heck, you don't even need a password for that; everything you need is right on the card.

It being replicated widely (see also: SSNs) doesn't make the "account number as a bearer authentication token" approach any less insane!

I believe that the only way to get some momentum in getting away from this unfortunate situation would be regulatory intervention – using market forces alone, convenience and inertia will just inevitably punish whoever moves first by introducing even the slightest amount of friction.

Otherwise, the US would already have PINs for POS payments and 3DS challenges for online payments using credit and debit cards.

Re: The Long Shadow of Checks

#98

Post by lxgr »

reaperducer wrote: post #13

The longer you live, and the more things you do, the more you realize that checks are still alive and well. You still need checks for: Charitable donations - Many charities maximize every penny, and electronic contributions eat into that. Paying my accountant - Good accountants make every penny count, and aren't interested in tithing from their revenue to credit card companies. Tipping the paper boy Tipping the doorm…

I do many of these things, yet I've never had to use a check for them. Usually there is a free ACH debit payment option these days.

But maybe I've just also been lucky with my service providers – all of mine support at least free debit payments; quite a few of my utilities even accept credit cards without a fee.

Re: The Long Shadow of Checks

#99

Post by drsopp »

astrange wrote: post #75
drsopp wrote: post #11

Earlier quoted context omitted.

> the banks take on nearly all the costs of processing them Not for me. I live in Norway. I suddenly became an absent party of a class action lawsuit in the USA. The settlement came in the form of a check. A small amount, maybe around $50. But the cost of cashing it in Norway was more than the value!

You could sell a picture of it to someone in the US.

Don't you need an ID matching the payee to cash it? Anyway, it's expired now.

Re: The Long Shadow of Checks

#100

Post by erik_seaberg »

bloaf wrote: post #63
smitty1e wrote: post #52

Earlier quoted context omitted.

Eschew obfuscation.

Write newspeak for goodthink.

“Can you explain a hard idea using only the ten hundred most used words? It’s not very easy. Type in the box to try it out.”

https://splasho.com/upgoer5/

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