In Europe “everyone” uses bank account numbers to move money.
* Friend owes you $20? Here’s my account number, send me the money.
* Ecommerce vendor charges extra for card payment? Send money to their account number.
* Pay rent? Here’s the bank number.
However, in the US people treat their bank account numbers like social security, they will violently oppose sharing them. In internet banking the account number is starred out and only the last two/four digits are shown. Instead there are these weird “pay bills”, “move money”, “zelle”, tabs, that usually require a phone number of the recipient, or an email. But that is still one additional layer of complexity deeper than necessary.
Why is revealing your account number considered a security risk in the US?
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Why use your bank account number when a phone number is much easier? I know my own phone number and can verify that it’s me on zelle/Venmo/Google pay/etc very quickly. I have no idea what my bank account number is because I only need to reference it like once every 5 years.
The US banking system was indeed stuck in the Stone Age for quite a long time, but not so anymore.
Im amazed nobody mentioned IBAN or swift in this thread, the real answer is the IBAN + SEPA system vs the archaic system ABA + SWIFT used in the US and Canada.
IBAN enabled the instant transfers.
I am pulling this info from deep in the recesses of my memory, so it may not be right.
BUT!
American banking establishments refuse to adopt the same SWIFT protocol as banks around most of the rest of the world. It has long been a source of consternation.
Others have mentioned that you can send money using account numbers, and most banks will have a SWIFT or IBAN service that you can use, but it is not free to use, or part of your account’s core functioning. It’s a premium add-on service. This is the big difference. SWIFT and IBAN transfers throughout the rest of the world generally incur zero processing fee and are immediate. In America, you’re likely going to be charged a heft sum to send AND receive money this way, and you’ll probably have to wait for a batch process overnight for the money to go through.
Most banks instead use Venmo or Zello. It’s the same thing OP describes except you can send to a username. It takes 3 seconds.
In canada we also direct send money to bank accounts. But we can do it via email. In my banking app (RBC), I go to the E-Transfer option and put in persons email, they get it, login to their bank, and get the money.
It is mostly because the US payments infrastructure was not set up to facilitate person to person payments, so all these third party apps formed to fill that need. The US is currently rolling out payments infrastructure that is better suited to the use cases you mentioned above, but it still isn’t fully adopted. That, plus the general monopoly credit cards have on commerce payments and frictionless experience they provide, lead to them being the method du jour for commerce.
All that being said, commodity services and large recurring transfers can be set up using ACH payments (the current standard money movement tool between banks). For example, a lot of people will authorize rent to be taken out of their accounts via ACH. Or they will set up bill pay (which is just money movement over ACH on some frequency) to pay their cell phone bill.
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