peter green wrote:

>> Anyway, I think it can be revealing to understand a
>> sender-initiated-transfer system and do a comparison with a check-based
>> system. The question of "why oh why" is almost inevitable :)

> the big problem with sender initiated is that most such systems have no
> way to prove to a merchant that you have indeed sent the money until the
> money actually arrives (which at least in the uk takes days if the
> accounts are with different banks) 

Now try that with a check payment... the days become weeks :)

And you say correctly "with most systems". This just means that there are
some faulty implementations out there. 

The time it takes to reach the recipient's account is dependent on the
communication between the banks. If it's too long, the communication system
is not set up properly. There's nothing inherent in the system for it to
take that long.


> also sender initiated systems also often suffer from a high risk of
> errors and a difficult time recovering money if an error is made (a typo
> can mean your money can end up in the account of a third party who may
> not be particularlly willing to give it back).

This is correct. However, there are a number of ways to address this. 

One is (in online payments) to verify the account holder's name before
actually sending the money, after typing in the account information. This
is very likely to catch any mistyping. Another is to use redundant account
numbers that include something like a parity number. This is also quite
likely to catch any mistyping. Both together make such a mistake almost
impossible.

Another is to use the reverse method of the sender-initiated transfer
system: you give someone permission for a one-time or recurring withdrawal.
The way this is handled in Germany is that such withdrawals can be disputed
up until something like a month after the statement date where it appears,
similar to credit card transactions. Of course, with that you get (at the
receiver side) the disadvantage that the funds may be withdrawn after some
time. But that's not any different from credit card purchases -- it's just
/much/ cheaper. Don't be fooled that just because you never see the 3% that
the CC companies charge you don't pay them -- the merchants in places that
rely heavily on CC payments of course factor those 3% into their prices. 

Gerhard

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