Monthly Archives: December 2013

Mysteries of the banking system

Or: Why is the banking industry still stuck in the nineteenth century?

  • When I use my debit card to authorize a transfer of funds from one bank account to another, the transaction is completed in seconds. But when I transfer money from my bank account to a “linked” account of mine with another bank in the same town, it takes two working (or up to SIX total) days?
  • Why do totally automated transactions (such as transferring money between savings and checking accounts in the same bank) have to wait for the next working day? Why can they not clear immediately?
  • Why is it that when I deposit a check into my account I have to sign the back of the check? Nobody inspects the signature, and it is not compared with a signature on file? They do not do this in England. The best explanation that I have heard is that it makes check fraud easier to prove.
  • If that is the case, then it is for the bank’s protection, not yours. If so, here is a suggestion” why not take a picture of the person depositing the check and store it electronically with the transaction?
  • PayPal looks like a bank, walks like a bank and quacks like a bank. So why is it not a bank? Apparently it is because they do not participate in “fractional reserve banking”, whatever that is. Which is exactly the way that PayPal wants it; none of those pesky banking regulations means that they can get away with murder. Which is precisely whey they should be regulated.
  • Ever wondered what happened to those credit cards that had the owner’s picture on them? Turns out that the couple of bucks it cost to put the picture on the card was more than the ongoing cost of Credit-card fraud (the cost of CC fraud is mostly borne by the merchants). So the banks decided to “ditch the pix” and save a few (million) dollars.
  • Ever noticed that point-of-sale terminals across the US tend to steer you towards (PIN-authorization) debit card transactions and away from Credit-Card transactions (signature authorization)? This is intentional. Debit card transactions clear immediately, have much lower fraud and cost the merchant a lot less than Credit Card transactions.
  • The advantages are all one-sided though – there is no advantage to you. Indeed, the opposite is true – the CC companies are offering points and bonuses for signature transactions. So my advice is reject PIN and use signature wherever possible – at least until the merchants start offering discounts for cash/Debit payments.
  • Ever wondered why the rest of the world has gone “chip-and-pin” and the US is “stripe-and-signature”? While chip-and-PIN is the most secure method, it turns out that the cost of upgrading everything is more than the banking system is willing to bear. So yah, boo, and sucks to you.
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ObamaCare: My Predictions

Here are my predictions over the next twelve months. Some are good, some are not so good. I leave it up to you, Dear Reader, to decide which is which…

  • Most people will end up paying more for healthcare. (easy one, this)
  • Now that more people have to pay full price for their prescription drugs, there will be calls to rein in the “greedy” drug companies.
  • Health Insurance companies will announce record profits.
  • People will start shopping around for cheaper healthcare and will start asking Medical Professionals lots of awkward questions that they would prefer not to answer.
  • Doctors who offer cut-price fee-for-service (or subscription-based) no-insurance medical care will suddenly find themselves in great demand.
  • People will start actually reading their medical bills.
  • Someone in Congress will suggest that the Big Food/Processed Food/Fast Food industries should put something in the ObamaCare pot, on the very sensible grounds that they are the ones who made made America fat and sick.
  • Taxes will have to go up to finance this debacle. This is an easy prediction, as taxes always go up (unless we have a Republican president).
  • Congress will find a creative way to make the money disappear (easy one, this).
  • Young/skinny/healthy folks will continue to eschew medical insurance, preferring to pay a penalty rather than subsidizing the old/fat/sick population. Nobody will complain until someone goes to jail for refusing health insurance coverage.
  • The Democratic politicians who rammed this bill through Congress will spend most of next year trying to pretend that they and nothing to do with it
  • The electorate won’t fall for it; they will be seeking new employment at the end of the year.