AHC: American Giro System

kernals12

Banned
Americans have been stuck with an antiquated system of bank transfers for decades. Checks, which Americans write more of than anyone else, still take days to clear even in this computerized era. Things have gotten a lot better thanks to automatic bill deposits and debit cards but still, a lot of money travels by way of check.

Other countries have for decades known of a much better system, giro. With giro, transfers are credited once they arrive at the receiving center, whereas with checks, it doesn't happen until they get mailed to a central location, sorted, and then sent to the bank of the receiver.

The interesting thing is that there is sort of a Giro system already, but it's only available for banks to use. In 1974, the Federal Reserve created the automated clearing house where bank settlements could be cleared at the end of the day. The question therefore becomes, how do we get the Fed to extend this service to everyone else?
 
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You can record check at Walmart they run it through the machine the money's debited out of your account but I will check and they hand you the canceled check back. Is that what you're talking about?
 

kernals12

Banned
You can record check at Walmart they run it through the machine the money's debited out of your account but I will check and they hand you the canceled check back. Is that what you're talking about?
Do they give you cash or do they put it in your bank account?
 
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kernals12

Banned
It’s spelled Gyro
No, these are Gyros
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kernals12

Banned
The best way I can think of to do this is through the Post Office. The Postal Service had banking services starting under President William Taft in 1911 until it was abolished by LBJ in 1966. Post office banks were popular for a while because they were extremely secure with no chance of failure, but this advantage disappeared with the advent of deposit insurance. Deposits peaked in 1947 before steadily declining. The convenience of Giro would give a big competitive advantage to the Post Office and most other countries offered Giro through their postal services so it looks like two problems can solve each other.
 
Aren't they mostly state-run in Europe? Because that might be a sticking point, since a lot of folks on the left or the right trusts the government to use all that financial data in a way that won't invade people's privacy.
 

kernals12

Banned
Aren't they mostly state-run in Europe? Because that might be a sticking point, since a lot of folks on the left or the right trusts the government to use all that financial data in a way that won't invade people's privacy.
We're talking pre 1980, long before that was possible.
 

HJ Tulp

Donor
The American payments system has always amazed in how antiquated it is. This would certainly be a good developement. Absolutely noone uses checks around here. Saves on a lot of fraud as well.
 
It is alleged that the Swedish Prime Minister invited the heads of the clearing banks in Sweden to a meeting where he asked them to explain why it took 4 days to clear a cheque when the information can be exchanged in seconds with modern IT. There was much mumbling , shuffling of feet and avoidance of eye contact and they had to admit they had no known reason so he told them to go away and make sure cheques were cleared by the next working day.

It is also alleged that a reason for the lengthy delay is that it allows banks to hold onto the money for extra days which allows them to use that credit to make more loans at a profit.

I can neither confirm nor deny the tales.

I believe that Denmark no longer uses cheques?
 

kernals12

Banned
It is alleged that the Swedish Prime Minister invited the heads of the clearing banks in Sweden to a meeting where he asked them to explain why it took 4 days to clear a cheque when the information can be exchanged in seconds with modern IT. There was much mumbling , shuffling of feet and avoidance of eye contact and they had to admit they had no known reason so he told them to go away and make sure cheques were cleared by the next working day.

It is also alleged that a reason for the lengthy delay is that it allows banks to hold onto the money for extra days which allows them to use that credit to make more loans at a profit.

I can neither confirm nor deny the tales.

I believe that Denmark no longer uses cheques?
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Checks basically don't exist in Japan, Belgium, Germany, or Sweden.

I like the Swedish PM humiliating the bank executives into speeding up check clearing. I wanna see some President do that. And it doesn't even take Modern IT to make bank transfers instant, Wire transfers have been with us since the 19th century.
 
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I
Americans have been stuck with an antiquated system of bank transfers for decades. Checks, which Americans write more of than anyone else, still take days to clear even in this computerized era. Things have gotten a lot better thanks to automatic bill deposits and debit cards but still, a lot of money travels by way of check.

Other countries have for decades known of a much better system, giro. With giro, transfers are credited once they arrive at the receiving center, whereas with checks, it doesn't happen until they get mailed to a central location, sorted, and then sent to the bank of the receiver.

The interesting thing is that there is sort of a Giro system already, but it's only available for banks to use. In 1974, the Federal Reserve created the automated clearing house where bank settlements could be cleared at the end of the day. The question therefore becomes, how do we get the Fed to extend this service to everyone else?

Actually you are wrong here. US banks do have systems for imeadiate electronic debiting of 'checks'. While I do not know all the details I do know some large bank customers insist on contracts that prohibit such transactions, requiring only the standard drafts be honored. An organization I'm a board member of a organization which took this seriously enough that when bank violated the contract once, we imeadiatly closed the account and took legal action against the bank.

Beyond standard checking accounts debit and credit cards are as common as dirt in the US.
 

kernals12

Banned
I


Actually you are wrong here. US banks do have systems for imeadiate electronic debiting of 'checks'. While I do not know all the details I do know some large bank customers insist on contracts that prohibit such transactions, requiring only the standard drafts be honored. An organization I'm a board member of a organization which took this seriously enough that when bank violated the contract once, we imeadiatly closed the account and took legal action against the bank.

Beyond standard checking accounts debit and credit cards are as common as dirt in the US.
It's taken a few days for some of my checks to clear. And let's think back to the times when very few had debit or credit cards and checks were the only way to make exchanges without cash. Americans had to wait days for their checks to clear while Europeans could expect their Giros to go through before the end of the day.
 
I think until the 1980's there was a big cultural difference between European and American bankers and consumers. European bankers were more risk avoiding. So they weren't that keen on consumer credits unless there was a sure collateral like a house or a bankaccount. In a way Creditcards and cheques are consumer credits not based on collaterals but on futured income. The US devised a working system for this with the technological advances of the time at hand. That system has grown into US society. When Europe catched up on the point of also giving credit based on future income after 1980, they built their system more around existing bank-accounts. It is a case of the law of the handicap of a headstart.
Concluding: To change the system, you need an american society that is focused more on saving than on consuming upon credit, for a longer period of time.
 
It's taken a few days for some of my checks to clear. And let's think back to the times when very few had debit or credit cards and checks were the only way to make exchanges without cash. Americans had to wait days for their checks to clear while Europeans could expect their Giros to go through before the end of the day.
Not 30+ years ago.
 
...And let's think back to the times when very few had debit or credit cards and checks were the only way to make exchanges without cash. Americans had to wait days for their checks to clear while Europeans could expect their Giros to go through before the end of the day.

You need to reach back to the 1950s for credit cards to be uncommon. Main difference then was the inability to place a cost effective electronic transfer input at the point of sale.
 

kernals12

Banned
You need to reach back to the 1950s for credit cards to be uncommon. Main difference then was the inability to place a cost effective electronic transfer input at the point of sale.
As recently as 2000, Check payments outnumbered credit and debit card payments combined
 
It's taken a few days for some of my checks to clear. And let's think back to the times when very few had debit or credit cards and checks were the only way to make exchanges without cash. Americans had to wait days for their checks to clear while Europeans could expect their Giros to go through before the end of the day.

Back in the Day, Store accounts were very common, and by the mid '70s, there were 170M+ Credit Cards with Gas companies alone, from a population of 220M

Popular back then was Cash on Delivery, Postal Money Orders, and Wire Transfers thru Western Union if you didn't want to wait for check clearing
 
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