GIRO-IBAN, ELECTRONIC PAYMENT

2023apr3

  Introduction

We are not expert in American banks.
We know less about German banks.

  American checks

In America, people often pay by mailing checks to the recipient.
Barry in Bangor mails an envelope with a check
in it to Harry in Honolulu.
Harry gets the envelope.
He deposits the check with a deposit form in his Honolulu bank.
Eventually (probably after going through the Federal Reserve
system), the check is in Barry's bank in Bangor.
The check (a piece of paper) went from Bangor to Honolulu, then back to Bangor.

After the check is in Barry's bank in Bangor,
Harry's bank puts the money into Harry's account.
This trip of the check (Barry in Bangor,
to Harry in Honolulu, to Harr's bank in Honolulu,
to Barry's bank in Bangor)
delays Harry's receipt of the money.

  GIRO-IBAN payment

In Germany, people electronically do GIRO-IBAN transfers of monry.
Barry in Bremen signs a paper form telling his bank
to transfer moneey from his bank account to
the bank account of Harry in Hamburg.
On the form, Barry writes Harry's name
and IBAN (International Bank Account Number).
The IBAN contains  Harry's country, Harry's bank brach number, and Harry's account number
at that branch.  Barry's bank electronically transfers the money
into Harry's bamk account in Hamburg.
This is an easy, fast, cheap process for Barry and Harry.

  Discussion

Paying by check, which is common in America, is not as good.
It is unnecessarily slow and expersive that,
to transfer money
from someone in Bangor to someone in Honolulu,
a piece of paper (a check)
must first go from Bangor to Honolulu,
then back to Bangor.

Incidentally, American-style checks are availalbe in Germany.
If a customer of a German bank wants to,
he can get checks,
fill then out, and mail them to recipients.
A recipient deposits the check in his bank the same way he would in Anerica.

Many countries (for example, in Europe and the Middle
East) participate in the GIRO-IBAN system.
It is as fast and easy to send money from an account
in Bremen to an account in Helsinki, Milan,
Marseilles, or Dublin
as it is to send money to an account in Hamburg.

The German systen is cheaper and easier
to send money by
than is SWIFT.
When the German system and SWIFT are both available
to senders of money in Germany,
most senders use the German system,
as far as we know.
 
  Conclusion

The German system
(perhaps better described as the
international, GIRO-IBAN system which Germany participates in)
is better than America's check system.