I remember when I lived in the Canada the system seemed insane. Checks would be used for so many things where you’d just make a bank transfer instead in Finland. I’d actually never seen a check...
I remember when I lived in the Canada the system seemed insane. Checks would be used for so many things where you’d just make a bank transfer instead in Finland. I’d actually never seen a check before going to America. Another crazy thing in North America was the preference for credit cards over debit. At least they’d accept card almost everywhere (same can’t be said for Germany).
The use of credit cards in the US is heavily incentivized. You will receive significantly worse interest rates for loans, or be denied, if you do not have a long-standing history of borrowing and...
The use of credit cards in the US is heavily incentivized. You will receive significantly worse interest rates for loans, or be denied, if you do not have a long-standing history of borrowing and credit cards are the easiest method for establishing that history. It can take till your late 20s or early 30s before you're considered a top-tier borrower.
Credit cards are integrated into the US consumer credit reporting system. Making on-time payments for loans and credit cards improves your credit worthiness, aka credit score, in the credit system. Having a good credit score encourages lenders to provide you better interest rates on any borrowing you do, as you've demonstrated you're a low risk borrower. That can yield HUGE savings on large loans, like for a house or a car. The interest differential between a good credit score and even a mediocre one can be tens of thousands of dollars over the life of a mortgage. There's a decent breakdown on the math here.
I guess it is. I have a credit card but have literally never used it (except abroad). My bank offers the same level of consumer protection against fraud for both credit and debit cards anyway....
I guess it is. I have a credit card but have literally never used it (except abroad). My bank offers the same level of consumer protection against fraud for both credit and debit cards anyway. Maybe if I wanted to buy something for more than I have in my account it would be useful but I don’t really run into that situation.
Yeah, I mean my philosophy has just been to use my credit cards in the same way I would a debit card anyway, paying the full balance off each month. The other benefit, besides more consumer...
Yeah, I mean my philosophy has just been to use my credit cards in the same way I would a debit card anyway, paying the full balance off each month.
The other benefit, besides more consumer protection, is the points/discount reward schemes credit cards tend to have.
That definitely makes sense from a consumer’s point of view, although I wonder what the incentive is for credit card companies to offer reward schemes as opposed to other payment methods.
That definitely makes sense from a consumer’s point of view, although I wonder what the incentive is for credit card companies to offer reward schemes as opposed to other payment methods.
I assume the whole shtick is to get more people using your card so that if they DO fall behind and owe interest, you male the money off them. It takes a fair amount of discipline to use a credit...
I assume the whole shtick is to get more people using your card so that if they DO fall behind and owe interest, you male the money off them. It takes a fair amount of discipline to use a credit card responsibly, so there's always gonna be some amount of people who can't pay it off right away and owe interest.
They get a percentage each time the card is used so presumably they want to encourage higher volumes of transactions. Also as Sparksbet pointed out, to encourage overspending
They get a percentage each time the card is used so presumably they want to encourage higher volumes of transactions.
Also as Sparksbet pointed out, to encourage overspending
The basic idea is that payment methods are also marketing. A store that accepts more payment methods gets more customers. Just like a store may be willing to pay for advertising to get more...
The basic idea is that payment methods are also marketing. A store that accepts more payment methods gets more customers. Just like a store may be willing to pay for advertising to get more customers even though that cuts into its profit margin, it also might be willing to pay a small transaction fee to get customers who prefer a certain payment method. (For example, this might be a way to appeal to big spenders) They might even be willing to give some preferred customers a discount, and credit card rewards are an indirect way to do that.
The stores in Germany who only accept cash might lose business to other stores that are more flexible, if there were any. It's up to them how much of a risk they're willing to take to make a sale. It also depends on the preferences of German customers: how strongly do they prefer certain payment methods and how flexible are they about doing something different?
Accepting cash also has costs, and it's also a way of appealing to customers who prefer cash.
The blog post starts off with: Includes some interesting comparisons of how payment systems vary between countries. (This is actually from a couple years ago so it might be dated.)
The blog post starts off with:
Most transfers of money in the economy are made via bank-to-bank transactions. Most payments are currently not. There is substantial innovation happening in bank transfers, especially outside the U.S., and they will be a larger portion of the payment mix in a few years. It’s worth understanding why, and why it hasn’t already happened.
Includes some interesting comparisons of how payment systems vary between countries. (This is actually from a couple years ago so it might be dated.)
As a 40 year old Western European, I've never used a check in my life (No, that's not true. I used a check once, when I was in the US. I received a student grant of 500 dollars on a conference. I...
As a 40 year old Western European, I've never used a check in my life (No, that's not true. I used a check once, when I was in the US. I received a student grant of 500 dollars on a conference. I have never been more on my edge as I was walking from the bank to the hotel with 500 dollars cash in my pocket.) Everything I do is payed through bank-to-bank transfer. In shops/bars, obviously, but also just settlement between friends. Rents, wages, (tax) reimbursements, ... just wired directly to (or from) your bank account. I've never known it differently.
ATMs are different here (AU) as well. First time I used one it didn't seem to work so I walked away. Person behind me was calling to me as I was walking down the street, my money had actually come...
ATMs are different here (AU) as well. First time I used one it didn't seem to work so I walked away. Person behind me was calling to me as I was walking down the street, my money had actually come out, it just comes out at the end after returning your card etc.
im 41, we were given a cheque book upon opening a savings account in the 90s by default. No card! Hardly used them even then, it was all cash. Except the few weeks when nobody had any cash as...
im 41, we were given a cheque book upon opening a savings account in the 90s by default. No card! Hardly used them even then, it was all cash. Except the few weeks when nobody had any cash as students so we bounced them in the local takeaway until they stopped us. Took about a week and half while the bank worked out what was going on. Our names were on a list behind the counter at the petrol station, the kebab place and the corner shop
In the UK? Because I'm older than you and I don't think I've ever used a cheque. I had a book with my very first bank account in my early teens, but it also came with a card and why would I carry...
In the UK?
Because I'm older than you and I don't think I've ever used a cheque. I had a book with my very first bank account in my early teens, but it also came with a card and why would I carry around a weird little book when I could just put a card in my pocket? Lots of cash too, of course. But no cheques.
As a student we used to do something with electronic payments which meant the payment cleared despite not having enough funds in our accounts, but I can't remember what it was. Might have been cashback? Maybe back then the EPOS checked you had funds for your purchase but if you added cashback on it didn't check again? That sounds vaguely memorable. It wasn't a way of getting free money, you just ended up over your overdraft, but it did mean cash in your hand that day/night.
in the Uk yes. When I set up a business account with Barclays for my company in 2019 they sent a cheque book as well! we didnt have widespread card payments in shops until the late 90s. You had to...
in the Uk yes. When I set up a business account with Barclays for my company in 2019 they sent a cheque book as well!
we didnt have widespread card payments in shops until the late 90s. You had to swipe the card and sign the receipt with a pen, most transactions were still cash. I worked in a bowling alley and generally larger groups would card pay. When chip and pin came along the game changed, id say 2007? I havnt carried cash since then, unless on holiday using euros or whatever.
what I find frustrating even now is when invoicing you have to wait 30 working days. You can send billions of pounds to Hong Kong in a split second but you cant pay my invoice. You’re telling me that my invoice is printed out and sits in someones in-tray for approval, then the bank is processing for another indeterminate period.
I think I got my first card in 1992 and I don't recall having much trouble using it in shops in the tiny market town I grew up in. It was signatures but that wasn't a problem really. Still lots of...
I think I got my first card in 1992 and I don't recall having much trouble using it in shops in the tiny market town I grew up in. It was signatures but that wasn't a problem really. Still lots of people using cash, of course. My first job was on a market stall and there was no way for any of the traders to take cards then, but my local market now is all card-friendly, certainly since covid (Square et al really capitalised on that!).
I had a look and turns out the first debit cards in the UK were in 1986, which is earlier than I thought. Chip and Pin arrived in 2004 and became mandatory in 2006.
I haven't really carried cash since the turn of the century if I could help it. Especially not on holiday, my credit card gives me a better exchange rate than most over the counter exchanges, is fee-free and works worldwide - even in remote huts in Thailand, which was quite surprising. Except Japan, where weirdly it's almost exclusively cash. I spent a week in Iceland in 2015 and didn't even see a króna!
As an American who moved to Germany, I honestly didn't use checks much in the US either. I think the only time I used checks was to pay rent, and that was just because our landlord charged you...
As an American who moved to Germany, I honestly didn't use checks much in the US either. I think the only time I used checks was to pay rent, and that was just because our landlord charged you extra for other payment methods. I've received plenty of checks for things like pay, though I think that's mostly direct debit (just like here in Germany) most places now.
I will say I've never paid in a shop/bar via bank transfer. It's always either card or cash (and it's Germany so surprisingly often cash). But I do generally love how easy bank transfers are overall. Sometimes friends will use paypal instead but using IBANs is also crazy easy and it's frustrating using my US bank by comparison.
I'm in my 30s in western Europe. Cheques are this thing I remember my parents occasionally dealing with when I was a small child but they were well and truly out of common use by the time I...
I'm in my 30s in western Europe. Cheques are this thing I remember my parents occasionally dealing with when I was a small child but they were well and truly out of common use by the time I reached adulthood.
In Singapore our own bank transfer service is called PayNow. It works based on your mobile number or a unique ID (for businesses) and they've made it interoperable with India's UPI and a similar...
In Singapore our own bank transfer service is called PayNow. It works based on your mobile number or a unique ID (for businesses) and they've made it interoperable with India's UPI and a similar system in Thailand.
It's very common here in the Philippines. Many shops, and even some restaurants, accept bank transfer payments. As a seller myself, I prefer it because there are no transaction fees to receive...
It's very common here in the Philippines. Many shops, and even some restaurants, accept bank transfer payments. As a seller myself, I prefer it because there are no transaction fees to receive bank transfer payments (compared to credit card or Paypal, for example). Many customers can already do it conveniently on their phone, so it's fast and easy for them too. For the customer though, it's usually only free if it's a transfer within the same bank. It's common for sellers to maintain accounts in multiple major banks-- in order to cater to customers who may be using those same banks.
The most common e-payment method here though might be Gcash. It's an e-wallet linked to your mobile number and also includes functions for bill payments (utilities, credit cards, etc). Gcash usage skyrocketed during the pandemic and now it's available almost everywhere here, at least in Metro Manila. It's probably so popular because it's free to send and receive money between Gcash accounts, and all you need is the recipient's mobile number. (There are fees for transfers between Gcash and banks / other e-wallets.)
Yeah, I moved from the us to Thailand a few years ago. I think the us is way more credit card based though than checks. Thailand is all "scan this qr code to open your banking app" at this point...
Yeah, I moved from the us to Thailand a few years ago. I think the us is way more credit card based though than checks.
Thailand is all "scan this qr code to open your banking app" at this point (mostly). I'm a cash person though. It almost always works. I can even use it for food delivery or amazon. None of the others are reliable. And I can budget with it.
I remember when I lived in the Canada the system seemed insane. Checks would be used for so many things where you’d just make a bank transfer instead in Finland. I’d actually never seen a check before going to America. Another crazy thing in North America was the preference for credit cards over debit. At least they’d accept card almost everywhere (same can’t be said for Germany).
The use of credit cards in the US is heavily incentivized. You will receive significantly worse interest rates for loans, or be denied, if you do not have a long-standing history of borrowing and credit cards are the easiest method for establishing that history. It can take till your late 20s or early 30s before you're considered a top-tier borrower.
Credit cards are integrated into the US consumer credit reporting system. Making on-time payments for loans and credit cards improves your credit worthiness, aka credit score, in the credit system. Having a good credit score encourages lenders to provide you better interest rates on any borrowing you do, as you've demonstrated you're a low risk borrower. That can yield HUGE savings on large loans, like for a house or a car. The interest differential between a good credit score and even a mediocre one can be tens of thousands of dollars over the life of a mortgage. There's a decent breakdown on the math here.
To be fair I think the willingness to use credit cards is one of those surprising differences between the Anglosphere and Eurosphere.
I guess it is. I have a credit card but have literally never used it (except abroad). My bank offers the same level of consumer protection against fraud for both credit and debit cards anyway. Maybe if I wanted to buy something for more than I have in my account it would be useful but I don’t really run into that situation.
Yeah, I mean my philosophy has just been to use my credit cards in the same way I would a debit card anyway, paying the full balance off each month.
The other benefit, besides more consumer protection, is the points/discount reward schemes credit cards tend to have.
That definitely makes sense from a consumer’s point of view, although I wonder what the incentive is for credit card companies to offer reward schemes as opposed to other payment methods.
I assume the whole shtick is to get more people using your card so that if they DO fall behind and owe interest, you male the money off them. It takes a fair amount of discipline to use a credit card responsibly, so there's always gonna be some amount of people who can't pay it off right away and owe interest.
They get a percentage each time the card is used so presumably they want to encourage higher volumes of transactions.
Also as Sparksbet pointed out, to encourage overspending
I get this but the same applies to debit cards. Sparksbet makes a good point though.
The basic idea is that payment methods are also marketing. A store that accepts more payment methods gets more customers. Just like a store may be willing to pay for advertising to get more customers even though that cuts into its profit margin, it also might be willing to pay a small transaction fee to get customers who prefer a certain payment method. (For example, this might be a way to appeal to big spenders) They might even be willing to give some preferred customers a discount, and credit card rewards are an indirect way to do that.
The stores in Germany who only accept cash might lose business to other stores that are more flexible, if there were any. It's up to them how much of a risk they're willing to take to make a sale. It also depends on the preferences of German customers: how strongly do they prefer certain payment methods and how flexible are they about doing something different?
Accepting cash also has costs, and it's also a way of appealing to customers who prefer cash.
The blog post starts off with:
Includes some interesting comparisons of how payment systems vary between countries. (This is actually from a couple years ago so it might be dated.)
That was a huge change I noticed when moving to AU from US over a decade ago. So many things paid for via bank transfer, and no checks.
As a 40 year old Western European, I've never used a check in my life (No, that's not true. I used a check once, when I was in the US. I received a student grant of 500 dollars on a conference. I have never been more on my edge as I was walking from the bank to the hotel with 500 dollars cash in my pocket.) Everything I do is payed through bank-to-bank transfer. In shops/bars, obviously, but also just settlement between friends. Rents, wages, (tax) reimbursements, ... just wired directly to (or from) your bank account. I've never known it differently.
ATMs are different here (AU) as well. First time I used one it didn't seem to work so I walked away. Person behind me was calling to me as I was walking down the street, my money had actually come out, it just comes out at the end after returning your card etc.
Yeah, they do that here too - it's to make sure you actually do remember to take your card.
Ah yeah this is a thing in Europe too. As someone who's generally forgetful, I definitely prefer it since I'd have totally lost my card by now lol
I had no idea card before cash wasn't universal!
im 41, we were given a cheque book upon opening a savings account in the 90s by default. No card! Hardly used them even then, it was all cash. Except the few weeks when nobody had any cash as students so we bounced them in the local takeaway until they stopped us. Took about a week and half while the bank worked out what was going on. Our names were on a list behind the counter at the petrol station, the kebab place and the corner shop
In the UK?
Because I'm older than you and I don't think I've ever used a cheque. I had a book with my very first bank account in my early teens, but it also came with a card and why would I carry around a weird little book when I could just put a card in my pocket? Lots of cash too, of course. But no cheques.
As a student we used to do something with electronic payments which meant the payment cleared despite not having enough funds in our accounts, but I can't remember what it was. Might have been cashback? Maybe back then the EPOS checked you had funds for your purchase but if you added cashback on it didn't check again? That sounds vaguely memorable. It wasn't a way of getting free money, you just ended up over your overdraft, but it did mean cash in your hand that day/night.
in the Uk yes. When I set up a business account with Barclays for my company in 2019 they sent a cheque book as well!
we didnt have widespread card payments in shops until the late 90s. You had to swipe the card and sign the receipt with a pen, most transactions were still cash. I worked in a bowling alley and generally larger groups would card pay. When chip and pin came along the game changed, id say 2007? I havnt carried cash since then, unless on holiday using euros or whatever.
what I find frustrating even now is when invoicing you have to wait 30 working days. You can send billions of pounds to Hong Kong in a split second but you cant pay my invoice. You’re telling me that my invoice is printed out and sits in someones in-tray for approval, then the bank is processing for another indeterminate period.
I think I got my first card in 1992 and I don't recall having much trouble using it in shops in the tiny market town I grew up in. It was signatures but that wasn't a problem really. Still lots of people using cash, of course. My first job was on a market stall and there was no way for any of the traders to take cards then, but my local market now is all card-friendly, certainly since covid (Square et al really capitalised on that!).
I had a look and turns out the first debit cards in the UK were in 1986, which is earlier than I thought. Chip and Pin arrived in 2004 and became mandatory in 2006.
I haven't really carried cash since the turn of the century if I could help it. Especially not on holiday, my credit card gives me a better exchange rate than most over the counter exchanges, is fee-free and works worldwide - even in remote huts in Thailand, which was quite surprising. Except Japan, where weirdly it's almost exclusively cash. I spent a week in Iceland in 2015 and didn't even see a króna!
As an American who moved to Germany, I honestly didn't use checks much in the US either. I think the only time I used checks was to pay rent, and that was just because our landlord charged you extra for other payment methods. I've received plenty of checks for things like pay, though I think that's mostly direct debit (just like here in Germany) most places now.
I will say I've never paid in a shop/bar via bank transfer. It's always either card or cash (and it's Germany so surprisingly often cash). But I do generally love how easy bank transfers are overall. Sometimes friends will use paypal instead but using IBANs is also crazy easy and it's frustrating using my US bank by comparison.
I'm in my 30s in western Europe. Cheques are this thing I remember my parents occasionally dealing with when I was a small child but they were well and truly out of common use by the time I reached adulthood.
In Singapore our own bank transfer service is called PayNow. It works based on your mobile number or a unique ID (for businesses) and they've made it interoperable with India's UPI and a similar system in Thailand.
It's very common here in the Philippines. Many shops, and even some restaurants, accept bank transfer payments. As a seller myself, I prefer it because there are no transaction fees to receive bank transfer payments (compared to credit card or Paypal, for example). Many customers can already do it conveniently on their phone, so it's fast and easy for them too. For the customer though, it's usually only free if it's a transfer within the same bank. It's common for sellers to maintain accounts in multiple major banks-- in order to cater to customers who may be using those same banks.
The most common e-payment method here though might be Gcash. It's an e-wallet linked to your mobile number and also includes functions for bill payments (utilities, credit cards, etc). Gcash usage skyrocketed during the pandemic and now it's available almost everywhere here, at least in Metro Manila. It's probably so popular because it's free to send and receive money between Gcash accounts, and all you need is the recipient's mobile number. (There are fees for transfers between Gcash and banks / other e-wallets.)
As these systems grow I wonder if international payments will soon get easier and cheaper than having to use SWIFT.
Yup, over the past year, for example, Singapore's PayNow system has synced up with India's UPI and a similar system in Thailand.
Yeah, I moved from the us to Thailand a few years ago. I think the us is way more credit card based though than checks.
Thailand is all "scan this qr code to open your banking app" at this point (mostly). I'm a cash person though. It almost always works. I can even use it for food delivery or amazon. None of the others are reliable. And I can budget with it.