Interesting. As security-concsious as the U.S. banking system seems to be, the privacy of the account number appears to this layman to be the primary safeguard. Yes, yes, you have to sign your name, and theoretically have your signature match a card you signed when you opened your account. Sometimes, you have to give a thumbprint (but then, the bank did not previously have a thumbprint on file … don’t ask me how that system works).
In the U.S., casually giving someone your bank account number is considered all but giving that person the total funds in your account. Yet another hurdle to frequent, casual use of electronic-fund-transfers between private individuals.
Hermetian is more right than wrong AFAIK … but I confess, I don’t know HOW crooks manage to clean out accounts with no information other than routing number and account number (U.S. accounts). But “everyone knows” that crooks can do this (or do we?).
I know enough not to ask for the crooks’ specific techniques here. Maybe there’s an oblique way it can be explained so that it can’t be readily & successfully duplicated by any shady SDMB readers
I use only a couple of cheques in a year, for donations to small charities which have not moved with the times. Everything else is cash or electronic payment.
For example, when my house was painted, the painter just texted me his bank account number. I paid him by e-banking, and he had the money next day - faster than if I gave him a cheque.
The Irish Payment Services Organisation has said that Irish banks hope to phase out use of cheques by 2016. They may start to charge the true cost of processing a cheque, which is said to be several euro when all overheads and staff costs are included - quite apart from the waste of time for the drawer and payee of the cheque.
The Irish government is satisfied that cheque use is very detrimental to the economy. They now charge a tax of fifty cent on each cheque written, while they are gradually reducing their tax take on debit and credit cards. The tax means that it no longer makes sense to use cheques for small transactions. Most businesses are moving to electronic payments and online banking.
The UK Direct Debit system is strongly regulated by the banks to create trust in the system - companies that operate direct debit have to be authorised by the banks and must sign up to a code of conduct that includes reversing direct debits when requested. They are also responsible for checking that it was the account holder that authorised the direct debit. Thus, in the Jeremy Clarkson case referred to above, the prankster who set up the direct debits could not divert funds to his own account, he had to send the money to an authorised recipient (the charities in question). And the charities would have to return the funds immediately had Clarkson asked his bank for the money back. And the banks would be asking the charities to tighten up their online signup system to ensure that the actual account-holder was authorising the direct debit.
It is a convenient system, and works well.
The other system used in the UK that reduces the reliance on cheques is the GIRO. This is attached to most bills, and contains the billers bank account and the customers account reference. The giro can be taken into any bank or post office, and the funds transferred from the customer account (or cash) directly to the biller, without any other paperwork. Again, really convenient and it just works. You can also use the info on the giro to set up an online transfer from your bank. I should note that giros were used by the govt at one time to pay unemployment benefits - so giro has also commonly been used as an alternative to dole.
The fees change from bank to bank and are higher for international, but I just checked and my bank charged me €2.50 to transfer €550 for this month’s rent; national transfer to a different bank (same bank is cheaper). Setting up a transfer from that bank’s webpage requires:
logging in, using my national ID number (easy to get) and 4-6 characters password,
setting it up,
confirming, by mousing in a number read from a special card which is different for each account (the number changes every time),
and then they send a SMS to my cellphone, so I can yell if anything is wrong.
My other Spanish bank has a slightly different procedure to set up e-transfers:
log in (national ID number and moused-in password; if my national ID was the newer chipped model I could use a reader for it),
set up the transfer,
enter my secondary password,
and again there is a SMS to my cellphone.
Both setup pages have the option to pay all the costs, have the recipient pay all costs, or split in half. I haven’t tried setting up a transfer from their ATMs, which can also be done (but it has to be from an in-network ATM, there’s several networks - basically if you’re using an ATM which will charge you a fee for withdrawal, forget about using it for anything but withdrawal).
Paying anything from a webpage requires, for either bank, entering a code they SMS to my cellphone during the payment process, as well as either the number from the card or the secondary password.
My cellphone charger is an important part of my banking processes.
I don’t understand why posters say that you can clear an account with just an account number. Is there some problem in US banks?
In most countries, you can’t access an account just by knowing the account number. If you could, every cheque would be a free invitation to clear the account, as it contains the drawer’s account details.
In this country other ID must be supplied. Online, you need some form of electronic signature - in effect, a confidential means of identifying yourself. Offline, you need a signature or other agreed ID.
When accounts are cleared by a thief, it is usually because the account holder has been phished or otherwise acted in a dumb way. They have supplied personal identification numbers or other confidential ID to someone else, which enabled that person to pretend to be them.
I don’t believe you can actually walk into a bank and clean out an account with only a routing number and account number. I believe you can do some kind of mail-order fraud with just a routing number and account number. I believe sundry types of electronic “hackery” are also available to those with merely routing number and account number.
Given that, ISTM that a lot of the integrity of the U.S. banking system is based on the honor system. If you write checks a few times a month and hand them to real-life humans, there is a non-zero risk of inviting fraud, I suppose. Don’t think about it much. Thankfully, the various methods of fraud don’t seem to be common knowledge.
Here’s another factor – Americans who use checks love their “free” checking. Paper checks aren’t free, but they’re only 5 to 10 cents a piece. A preponderence of 30-cent fees would probably keep Americans away from a European-style banking system.
Debit cards have really taken off, however, in the U.S. since the mid-1990s … so maybe we’re beyond the looking glass now.
For my UK bank at least, transferring money in this way is completely free to any other UK bank account. I’ve never had to do an international transfer, so I don’t know what that would cost, but I’d be surprised if it was much more than a nominal fee (and maybe the customary gentle fleecing on the exchange rate).
As for the security aspect: to make an electronic transfer I need to log in to my bank’s online site, giving my user ID (which is not the same as my account number) and random characters from my password.
To make a payment to an account I have already made payments to in the past (e.g. friends, family, regular bills) I can just select it from a list, enter the amount and click “Pay”.
If I want to make a payment to a new account, I have to use my card reader which requires me to insert my debit card, type in my PIN then enter a code from the website, which then returns a second code that I have to enter on the website in order to proceed. This ensures that even if someone gains access to my account online, they won’t be able to transfer money to their account in this way unless they also have my debit card.
Occasionally, there will be an unscrupulous postal employee who looks for greeting card envelopes (they are fairly distinctive) and will swipe them, hoping that that they contain some money from grandma. As a result, standard advice is not to send cash through the mail. (Another reason is that of course there’s no insurance or recourse for lost cash.)
Oh … and I forgot to mention: to transfer money from my account to another private individual’s account, as I mentioned in post #39, I had to physically appear at the bank and fill out a form. It was not a thing I was able to do online or on the phone (IOW, it was not the same process used for now-common U.S. online banking services like Electronic Bill Pay).
My bank Banco Popular just started this for my checking account. It’s called direct transfer. If I want to send someone money, I send them the money using Banco Popular’s online site.
So that’s the first line of security. They can’t take money from my account I have to send it. So having the routing number and account number isn’t anything.
Then Banco Popular makes two small deposits in the account of the person I sent money to. (These are later reversed back). I have to have the person who sent me those tell me how much they are. I go back to Banco Popular’s website and enter the amounts.
Then if they are correct, Banco Popular asks if I want this to be a one time thing or to allow a transfer between accounts from now on without going through the formalities as described.
So I can choose one time, or on-going. For example I could send my landlord money each month as on-going.
If I don’t want to do it online, I can call Banco Popular and they ask me a series of three questions and then they approve the transfer via the phone.
In Norway most banks offer zero-fee banking. Some to all customers, some only to “value-customers”. With my bank I pay 250 NOK annually for my Visa/Debit card ($41 today, according to google), if I use the card abroad they’ll add %1.75, and for international transfers there’s a fee of between 0 and 100 NOK, depending on transfer method. Other than that, zero fees on any use of cards or any type of transfer. They also pay me 1.1% interest on the main account and 2.8% on my high interest account if I keep the balance over 100,000 NOK. ($16,000) I can transfer money from one to the other in seconds online.
Finnish here. The first cheque I ever saw were the ones I had to buy from my bank to pay for my ESL and SAT tests… and the last one I saw was the one paid my last rent in the US with.
I pay small things with cash, larger purchases with a card… I pay one-off bills online, and recurring bills are sent straight to the bank for them to deal with.
I’m in the US and hardly ever use checks, but if I want to give a friend or a relative some money, it is often the best way to do it. You don’t wire/e-transfer friends or coworkers money here, that’s just not how it works. Although, my one friend did set up a paypal account to recieve wedding cash - but that was the first I ever saw of something like that and I thought it slightly strange (but not that strange).
I pay all of my bills online, but I did need checks for earnest money when making offers on homes. I also had to get a certified check for my down payment to bring to my attorney’s office when I bought my place.
My brother runs a small business and only accepts checks as payment. He usually gets between 800 thousand and 1.2 million per year in checks, so apparently someone is still using them He also pays most of his vendors in checks - I think it is still pretty common in American small businesses (this is business to business - not business to consumer).
What exactly is the point of this kind of niggling? We Americans are free to use whatever spellings we like. In fact, from now on, I’ll only use British spellings when writing on this board, regardless of the topic.
Really? Faster for getting the money there I’ll agree, but it doesn’t seem like much less hassle than scribbling a bit on a piece of paper and sticking it in an envelope which would take no more than one minute.
Here in Peru personal check have (almost) completely disappeared. I have never written a personal check in my life and cannot imagine a situation that would require one.
Online transfers take almost no time in the “other” account is in the same bank and maybe an extra click if it is in another bank. Mind you that Peru has very few small banks and most banks have branches in several cities around the country.
Most person-to-person payments (maid, gardener, fridge repair guy) are cash.
Expensive stuff will be by debit card (very comon), credit card, online transfer (I always use it for hotel bookings) or cashier’s check.
Only companies use checks and usually for other companies. Salaries are paid cash (becoming less common) or money transfer.
Plus finding an envelope, then finding a stamp,* plus the trip to the postbox, then you have to wait two days for the cheque to arrive, plus the recipient’s trip to their bank, plus the 3 days for the cheque to clear.
The first payment for a new recipient takes a few mins longer as you need to enter the details (5 mins max end to end), but once that’s done it’s as quick as you can type the amount and click “OK”.
The phone call arrives literally as soon as you click “submit”, enter 4 digits and it’s automatically updated within 20 secs. So same time it would take to write the address on an envelope, but without the walk in the rain to the post box.
*We rarely send letters these days… almost all email so we don’t have stamps or evnelopes to hand.
He also pays most of his vendors in checks - I think it is still pretty common in American small businesses (this is business to business - not business to consumer).