It is hard to live in the modern world without using banks; that is pretty much a given. We need them – or other financial institutions that offer banking services – for so many everyday tasks and activities; receiving payments, getting cash, paying bills, mortgages. Curious, then, how decidedly un-modern American banks are, how stuck in an old-fashioned and non-transparent system that would seem both costly and inefficient.
Take the checks. People actually write checks, all the time and for all kinds for purposes. If my kids have an activity at school, I need to send in a $4 check to pay for it. Now, the banks here don’t normally charge a fee for processing checks, so most people don’t actually think about the cost – all the costumer pays for is the printing of the actual check, and that is not very costly. When Norwegian banks decided that they needed to get people to start using electronic transfers instead of writing checks, they raised the fee on checks to pretty much cover the actual cost of processing it. If I remember correctly (this is more than 20 years ago now), the fee per check was set to about $8. When that is the case, nobody writes $4 checks anymore. Even for bigger sums you look for more cost-efficient ways of handling the payment. And so, within about a year, exit checks. (We could call it Chexit?) You’d be hard pressed to find people in Norway who still have a checkbook laying around, not to mention actually having written one the past 10 years. Or 20.
Sometimes I think one of the things holding Americans back from going all electronic on banking, is their paranoia about revealing their bank account number. Somehow people have this fear that if they give out their account number, someone can get to their money by fraud. The banks themselves are also cagey about the account numbers, so when you go on the website and log in to your own account, the account number is normally x-ed out, showing just the last four digits, and you have to go some convoluted backroads to get to a place where they show you the actual number. But the funny thing – and this is really hysterically funny – is that people who don’t want to give you their account number, never seem to have any qualms about writing you a check. And guess what? The account number is PRINTED ON THE CHECK! It is right there.
So, for fear of giving someone your account number, you take out a piece of paper, write some information on it, send it in the mail, then the recipient needs to photograph and submit a picture electronically, or, often, physically go to the bank and hand over the piece of paper, where a teller needs to interpret the writing and punch the numbers into her computer in order for the transfer of money to be done. To go back to my first example: When you have 1000 kids in a school who need these small checks maybe 6 times a year, that is 6000 checks to be processed. There are about 100000 public schools in the country, so now it starts to add up, doesn’t it? I don’t know how many man hours that represents for the bank, but it is quite a few, and for these small sums it is really ridiculous.
Any company in Norway has their bank account number printed on their stationary. If you go online to pay someone, you punch in the account number, and the system shows you their name and address. Or you can look up a company registration number, which is public information, and the system will find the account number for you. And unlike in the US, when you pay a bill electronically, on your computer, the money shows up in the other party’s bank account the next day, regardless. In the US, however, unless the company has registered a special kind of eBillpay, your bank will send an ELECTRONIC CHECK to the company’s bank, so that the online pay system mimics the old fashioned system of sending a check in the mail. And it takes even longer: It can be up to three weeks from you register an epayment until the recipient gets their money if it goes via electronic check. (Still, I guess that is better than having your check get lost in the mail – that is not just a cliché and a concealed lie; it still happens, all the time. After all, it is not like the American postal system is the safest in world.)
On another level, and this I find really disturbing, is the lack of system to the numbers that are used. An American bank account is identified by an account number and a routing number, which defines which bank the account number belongs to. Additionally, there is a BIC/SWIFT number which identifies the bank to international financial institutions. The account number itself has no built-in code which identifies the bank it belongs to; it is just a random number.
Any Norwegian bank account is identified to other banks by the first four digits in the account number, in the same manner that the issuing country of a credit card can be identified by the first digits. (For instance, all Visa card start with a 4. Those starting with 4925 are Norwegian Visa cards. Other banks and/or countries have their own defining numbers. This is just like the ISBN system for books: The first digits tell you which country the book is printed in. This is not a new idea.)
And where most of the rest of the world has adopted the IBAN system for making money transfers safer and cheaper, American banks has – of course – not done that. So American banks use routing numbers for domestic transfers and SWIFT for international ones. And here is where we are getting to my story, which I for instance could call The Long and Aggravating and Failed Attempt at Moving my Money into My New Bank Account.
I have been in the US for many years now, and in all this time I have been making my money in Norway and moving them here. I have made some small mistakes along the way, but had finally found the most cost-effective way of doing it: Receiving payment into my Norwegian account, waiting until the currency rate was fairly favorable (which it hasn’t been for a while now), and wire transferring a good chunk of money into my American account, a few times a year.
Then I discovered that my bank in the US not only charged an upfront $14 incoming wire fee, but additionally had a hidden $30 clearing house fee per transaction. If I do, say, 8 transfers a year, that adds up to $352 annually in incoming transfer fees (on top of the fees I pay in Norway to send the transfer), which is a fair amount. So I set out to find myself a new bank which didn’t charge anything for incoming wires, because they do exist.
(And here is a funny aside: In addition to banks, the US also has a type of banking institution called a credit union, which often offer better rates and service than banks. In order to join a credit union, however, you need to work at a certain company, live in a certain zip code, or belong to a certain club or organization. And talk about random – their lists must be comprised of whatever the board members have as their personal favorite. For instance I looked at Illinois-based Alliant Credit Union, which you can join if you belong to the Escapees RV Club, the Generational Blessings Family Worship Center, or Life Time Fitness. So, I don’t really think they are trying to be too exclusive, but somehow I am not able to join that credit union. Oh well, there’s always others. At least I am able to open a regular bank account, which for poor Americans is actually not a given. I can’t even begin to imagine how difficult it must be to not have a bank account at all.)
Anyway, after doing some research, I settled on an Internet bank which I figured would have at last fairly modern practices. They say on their website that they charge $0 for incoming wires. Nothing. Well, that’s wonderful! To make sure, I also called and asked if there might be hidden clearing house fees for incoming international wires. No, they said, there are no fees whatsoever. Well, good, that is a nice saving, I though, so I opened an account.
Then I started looking into moving some money over. On the website I found this: “Your wire should ONLY be routed through the ********* swift code if your international bank does not have a correspondent US Bank. Any attempt should be made by your bank to send directly to aba *********** as sending through the additional account may lead to delays in the processing of your wire.”
Okay, so I used the swift code and otherwise filled in my electronic wire form in exactly the same way that I had done for 9 years to my other American bank, without a problem. This was April 11th.
When a week had gone by and the money had not showed up yet, I started to investigate. And I learned that they do not accept international wire transfers into the checking accounts; for that you actually need a brokerage account. (Which they were not able to tell when I made that very phone call.) My original wire would be returned to Norway. So then I opened a brokerage account with my new bank and told my Norwegian bank that they could reroute the money to that account when it came back.
I thought, however, uh oh, this is a bad idea, because if the money is sent back, they will do the currency exchange back into kroner, and I’ll lose a lot on that back and forth exchange. So I checked with my Norwegian bank to see if they could send the money back to the US after the return, without exchanging it. Yes, they could (but of course there was a fee. There is a fee for a returned wire, plus there’s a fee for redirect. These guys don’t do anything for free.).
But the money didn’t get sent back to Norway. A week later, I had my Norwegian bank redirect the wire, thinking it was somehow stuck in a holding account at the intermediary bank. Which it probably was. And still is.
No, here I am entering a writer’s dilemma. I started writing down all the back and forths, and there are many. And it gets to be really boring reading; almost as boring as the real life experience is nerve-wrecking. I have a good chunk of my hard earned money floating around somewhere in cyberspace, while I am stuck in a He-says-She-says-situation with banks that don’t speak the same language and have not managed to unify their systems. There’s been many phone calls and many emails and service messages. I have finally learned that since the E*Trade bank uses another bank as an intermediary, the foreign bank needs to use both a SWIFT code and a routing number in order for the money to find its home. A month in, the US bank is still not able to find my money, even if they are able to tell my Norwegian bank that the wire is received and apparently was deposited into an account on April 13th. I just know that it wasn’t my account.
Now my new bank is telling me I need to get my Norwegian account to recall the wire. If it comes to that, I’ll be out a whole lot of money in fees and currency exchange loss, but at least the money would be back where it started. That is, some of it.
So, here is a piece of advice for you, American banks: Since you failed to incorporate a bank identifier in your account number system, why don’t you at least consider joining the rest of the free world in implementing IBAN? And, like, you know, enter the 21st century?