M Graff wrote:

>> You Americans (USA-type) 

> Ahh, true.  

The thing is that the differences in how the banking systems work are so
enormous that a (continental?) European (at least a German, and, as it
seems, a Netherlander and a Swede) can not imagine the complications and
insecurities of the US banking system.

And vice versa, it seems that most in the USA who never banked in Europe
don't have a clue how simple the whole story could be.


The most basic, cheapest and most often used financial transaction in
European systems is a direct transfer. The payer advises her bank to
transfer the amount to the payee's account (and has of course the account
number and routing information). The transaction may contain a limited
number of arbitrary text (something like two lines of 40 characters). The
payee receives the money on her account, and on the statement appear the
account number and routing information of the payer's account and the added
text.

This is a one-way street: my bank will only pay out money from my account
based on authorization from me, not from anyone else. (This is in a way
similar to a check, just that this authorization goes directly from me to
my bank. It doesn't go the huge loop a check goes.)

This system provides the infrastructure for many transactions for which the
USA banking system has to create separate mechanisms. Of course you can pay
/all/ your bills that way, not only the ones for which your bank has an
agreement with the vendor (yes, US banks have to set up special agreements
with vendors for bill payment; something a European can't imagine being
necessary) -- because all you need is the vendor's account information
(which usually is on the bill). And you receive your paycheck or invoices
that way; even small mom-and-pop shops pay paychecks this way, just the
same as with big multi-national companies. You pay your taxes that same
way; of course all public entities have accounts for tax payments, and you
just transfer your taxes to the appropriate account. Proof of payment is
included with the transaction: the payee's account number (and, say, the
tax id that you wrote in the additional information text) appears on your
bank statement. 

There are of course enhancements and variations; e.g. you can give your
credit card company or your electricity provider authorization to initiate
a transfer and retrieve money from your account to automatically pay their
bills. But any such transactions can be reversed by you without having to
give any reason to the bank; any further dealings are then between you and
the payee, just as if you hadn't paid the bill, leaving the bank completely
out of the loop.

I could go on for a while :)  But seriously, there is a whole world
separating the two systems. I'm sure not many in the USA imagine how
convenient and safe it is to do banking "European style"; if they knew,
they'd bug their own banks more. (And note that this all is not something
recent; I'm 45 and I never knew it differently -- until, of course, I lived
in the USA :)

Gerhard

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