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When moving to the US from Switzerland, I have been surprised by the difference in banking systems. One point that interests me particularly is the use of checks vs wire transfers.

In Switzerland, the default way of paying somebody is to transfer money to their account. This is free, can be done online, and the money arrives the next day. It's a bit like PayPal, except that payments cannot be undone.

In the US, from what I've learned so far, to pay somebody I write a check on their name. The payee then brings the check to a bank to receive the money. Wire transfers in the US seem to incur high fees.

From a newcomer's perspective, the US system seems more complicated, more expensive, and more prone to fraud. What are its advantages? Why are things the way they are?

Sjlver
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  • My answer in the question I linked to was redacted. The original wording of what now reads as "very slow to change" was retarded. – littleadv Apr 27 '15 at 06:15
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    Having lived and worked in Switzerland, I have to say that "more complicated" is all in what you're used to. The advantages of the US system, besides familiarity, are that you don't have to go on line (or know details about their bank account) to pay someone. The US is a much larger and more spread out country than Switzerland, and there are many area with no practical access. – jamesqf Apr 27 '15 at 17:30
  • @jamesqf Wire transfers don't require you to be online. In former days, in Europe (or at least in Germany), you filled out an order to the bank to tell it to pay the amount of XY to YX. At least (!) since the 1950es, completely without internet. – glglgl Feb 15 '19 at 08:27
  • @glglgl: Explain exactly how that "order to the bank" differs from a check :-) – jamesqf Feb 16 '19 at 18:16
  • @jamesqf The order to the bank goes directly to the bank. The check goes to the recipient, with all its consequences. – glglgl Feb 17 '19 at 08:37
  • @glglgl: But how is that different, except being perhaps a little less convenient for the users, in that you'd have to know the recipient's bank account details in order to make sure that the money goes to the right person. As opposed to writing a check, where you can even let the recipient fill in their own name... – jamesqf Feb 17 '19 at 22:25
  • @jamesqf A check can be lost, the processing is delayed, the recipient has to give the check to their own bank. A wire transfer is given/sent to the bank and that's it. The receiver gets the money automatically. – glglgl Feb 18 '19 at 07:26
  • There's another important difference. When you give a payment order to the bank, the bank will remove the money from your account and transfer it. If your account does not have the required balance, nothing happens. – Sjlver Feb 18 '19 at 20:21
  • With checks, the recipient decides when they cash in the check. If, at that unknown time, there is not enough money in the account, a complex system of rules and fees kicks in. From my perspective, that's a lot more complicated than wire transfers. – Sjlver Feb 18 '19 at 20:23

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