Category Archives: Banking

Instant banking

Please, no more forms, just take my money!

Please, no more forms, just take my money!

One thing I love about living in the US is how easy it is to get things done here. After nearly one year back in the US, I’m still continuously pleasantly surprised by how convenient and functional everything is. The stores are always open, the customer service is so smooth you barely notice you are parting with your money, things almost always happen when they are supposed to happen, and if not, they’ll make it up to you with a smile, an apology, and a freebie.

One perfect example of this is opening a bank account. I recently opened a checking account with TD Bank. It couldn’t have been easier: I just walked into a nearby branch, told them my information, and voilà, I had an account. They even printed a debit card for me on the spot (but if I wanted checks, I had to order those to be sent to me in the mail). I don’t think I even needed to go into a branch in person; I could have called and opened an account over the phone.

For whatever reason, opening a bank account seems to be much more of a hassle in other countries. Indeed, it can be an uphill battle. In many countries, you need to supply a proof of address in that country in order to open a bank account.

In the UK, I remember struggling to provide this when I first arrived; I didn’t have any utility bill or council tax bill to show, given that I was only renting a room in a shared flat (moreover, I remember being confused and incensed to see that on the list of “valid forms of proof of address,” one of the items was “UK bank statement”… go figure).

In France, during my academic year abroad in undergrad, I made repeated harrowing visits to the bank, clutching onto various slips of paper and struggling to navigate the Byzantine account opening requirements and face the sour-faced clerks in my broken French. I never understood why it was so difficult to get the bank to agree to take my money. 

 

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Chipless and pinless

Magical microprocessor.

Magical microchip.

I’ve been making a lot of purchases with my debit card lately. Because, as I quickly realized upon returning to the US, nobody pays with cash anymore (although checks seem to stubbornly persist).

Sure, paying with your debit card can make life easier because you’re not required to carry cash around with you all the time. But, what’s with all this signing of receipts? In the US, when you pay for something with your debit or credit card, you often have to put pen to paper and sign to authorize the payment.

That’s not the way it’s done in the rest of the world. In fact, it’s a totally outdated technology. The US is the last major market to use the old fashioned swipe and signature system. In the UK, France, the Netherlands, and all the other European countries I’ve been to, debit cards use a so-called “chip and pin” system, also known as EMV cards (Europay, MasterCard, and Visa) or “smart cards.”

They’re smart because they have microchips embedded in the card which authenticate your identity in conjunction with your personal identification number (PIN). The microchip just looks like a small silver or gold square on the front of the card. But it makes life so much easier. Rather than swiping your magnetic stripe card and then signing a printed receipt to prove you’re you (or some fraudster forging your signature), you just insert your SMART card into the card reader and then enter your PIN into the payment device. Voila, payment complete! No paper, no signing. Ta-da.

In Europe, all merchants have the equipment to process chip and pin payments. At supermarkets, it’s usually a device fixed in place at the checkout counter. At restaurants, it’s a handheld device that the waiter or waitress brings to your table to stick your card into and hand to you for PIN entry. In recent years in Europe, this has been further evolving into contactless payments, where you just tap the card against the reader without even entering your PIN (this is usually limited to smaller payments).

And here we are state-side, writing checks and signing receipts… and I have a chip on my shoulder about it. (Yes, pun intended.)

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Chequed out

An ancient scrivener employing the art of calligraphy to write a bill of exchange.

An ancient scrivener employing the art of calligraphy to write a bill of exchange.

I just paid my rent for June. And that involved doing something very antiquated: writing a check.

Who does that anymore? Checks remind me of the 1980s and grocery shopping with my mother. I always thought of checks as a relic, a vestige of the paper-based banking system, something that ought to be framed and archived to show our children one day.

I can probably count on one hand the number of checks I wrote in my entire 5.5 years living in the UK. My checkbook was relegated to a drawer and rarely dusted off. And when I say “my checkbook,” I mean my one checkbook, because that is all the bank issued me with my account. That was all that was necessary.

Here in the US, on the other hand, I find myself all-too frequently reaching for my checkbook. As an indication that checks are alive and well, when I recently opened a new bank account, I received an entire check box filled with with four checkbooks. And now I find myself steadily working my way through them. At the very least, I use one per month to pay my rent.

I think the persistence of checks in the US can be in large part explained by the fact that there is no free and easy way to make an electronic payment to another person. In the UK, no matter what bank you have an account with, if another person gives you two simple numbers – their account number and their bank sort code – you can transfer them money, completely for free, in a matter of minutes by logging onto your online banking. The money will post to their account in just a day or two.

In the UK, people use this all the time for everything; it’s not only used for paying rent to your landlord. Let’s say you go on a weekend trip with a group of friends, and one friend pays the car rental and gas; at the end of the weekend, you want to divide the costs. Well, just calculate how much that person is owed, and everyone makes a bank transfer to that person’s account to pay their portion; there’s no need for any cash or checks. Likewise, a friend of a friend recently carried my suitcase from London to DC; I will pay her back by remotely making an online bank transfer to her account.

This doesn’t seem to be an option in the US. Unless if you happen to have the same bank as the person you want to pay (in which case transfers are free), then you have to (a) pay a fee, usually at least $3, to make an online transfer to another account; (b) wait 3 days for it to go through (unless if you pay a premium to have it go faster), and – most annoyingly – (c) you have to enter a whole slew of information about the receiving account to get the recipient set up in your online banking system. And, while everyone in the UK knows their sort code and account number, nobody in the US seems to know their routing number.

All of this is a royal pain in the backside. So, instead, you just end up pulling out your quill pen and parchment paper…

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When it costs money to get your money

Money costs money.

Money costs money.

When I lived in the UK, I had a bank account with Barclays. If I wanted to take cash out, I’d go to any ATM (or “cash point” as the Brits call it), be it Barclays, HSBC, RBS, Lloyds, or whatever other “high street” bank. It didn’t matter. Because, no matter where I took cash out in the United Kingdom, I’d never pay any fees, either to Barclays or to the bank operating the ATM.

Well, I totally forgot that we don’t have it so good on this side of the pond. When I returned to the US on a one-way flight in January, as soon as I cleared immigration and baggage claim, it occurred to me that I needed to get some greenbacks (obviously not yet appreciating that everything today is done by cards, not cash). And that’s when I remembered that meant I’d have to find a Bank of America ATM.

Unless I wanted to pay an ATM surcharge of $2.50 (or thereabouts) to the non-Bank of America ATM machine – for the “privilege” of using their machine without being a customer of their bank – and another “foreign” fee of $1.50 to Bank of America for using an ATM machine not in their network. Add these two fees up, and you can easily end up paying $4 to $5 just take out your own money (regardless of whether you withdraw $20 or $100). So, instead, you walk fruitlessly around town trying to hunt down a Bank of America ATM, not wishing to spend $5 of your own money just to, err, spend your own money.

I’ve seen the same system in Australia, where ATMs charge service fees for withdrawals at their ATMs by non-customers. So, clearly the US is not the only country that follows this practice. That doesn’t make it any less infuriating. On the bright side, it seems like recently there are some non-traditional banks, such as Capital One and Charles Schwab, which have a policy of not charging their customers for using any bank’s ATM and offer automatic reimbursements of any ATM fees that are charged by the other bank. I recently set up accounts with both. Suck that, ATM fees.

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