TL;DR – If Bitcoin sets your expectations, international wire transfers as a banking consumer are an absolute joke, and when you hear people question the value or usefulness of BTC, transfers should be a case in point. For an international wire transfer as a consumer, you have to go in person to get a human banker to analyze your account to give permission to send money and then set up the transfer, and you have to do this before 2pm on a weekday, pay $50, wait 2-3 weeks, and only then is your transfer complete. With BTC, the process takes minutes, can happen anytime, you can do it from home, you don't need anyone's permission, and it costs virtually nothing.
I just returned home from the bank, more certain than ever that we need to move away from centralized banking and towards a trans-national system founded on math, not a system that's been cobbled together by a hodge-podge of for-profit corporations over the last 100+ years and under the thumb of government at every turn. Here's the story:
There's a business in Taiwan that I'd like to purchase a product from, and if the product is as good as I think it is, I'd like to purchase more for resale, in which case I would hang out a shingle here in the US, file an LLC, etc. For now, though, I just want one unit of their product for myself in order to evaluate its quality and marketability. I've had many rounds of communication with the owner of this company, they have a small but persistent presence in the American market (for about 20 years), this product line lacks any American distributors (the opportunity I'm after), and I'm confident they're not about to scam me. So, I asked for an invoice for one unit, at a cost of around $5000 USD.
The business on the other end is a small business with a deplorably ancient website, and so doesn't seem to have any facility for processing credit cards from the US. Instead, as is common, they use either PayPal or bank wire transfers. I've used PayPal for dealing with similar overseas businesses before, but always with lower dollar values which would incur lower fees.
I looked into PayPal first. The list of fees it would require to move $5000 from the US to Taiwan was so long and complex, I couldn't actually figure out what the fee would be. However, it seemed like it would have worked out to around 4-6% (including multiple flat fees and multiple proportional fees, like their main fee, the currency conversion fee, etc.) In other words, it was going to cost around $250 (as near as I could tell) to use them for a transfer. This story isn't really about PayPal, so let's just say I ruled them out.
So, I asked my counterpart in Taiwan to make out the invoice for a wire transfer, because the fees would be lower and neither of us would have to take a major hit to do the transfer. If you've done international wire transfers before, you'll recognize the long list of fields necessary to make that transaction: Their business name, the name of their bank, their bank's SWIFT code, the SWIFT code of the intermediary bank, the mailing address of the bank, the business's A/C number (which I believe is comparable to a routing number?), etc.
Because I didn't yet want to do this under the umbrella of a business, I decided to simply make the transfer from my personal checking, which I have with US Bank. So, I got in the car and drove downtown to the nearest US Bank location, walked in, waited in line, and eventually sat down with a banker. To be clear, this banker did a fine job, and I mean no criticism towards her – she has no way to change anything about the policies of her bank, the international banking system, etc.
I explained to her what I wanted to do, and that although I'd be happy to have her make this wire transfer for me, I'd really like her to teach me how I could do it on my own. She said she'd be happy to do that, took my driver's license, and pulled up my account. Then came the first roadblock.
"Oooh, I'm sorry to mention this, but we just missed the wire transfer cutoff for today – it ended 10 minutes ago. So we can do this, but I'll need you to come back on Monday, well before 2pm so we have time to start the transfer before the cutoff."
I guess their computers are off for the weekend, and quit a little early on Fridays. I asked whether there was some way we could at least get the wire transfer all set up today so that it would process on Monday.
She helpfully said, "Well, I know there's a process for doing that, but… let me call the other branch and see if they have someone who's familiar with that."
It turns out, to queue the wire transfer meant to fill out a bunch of physical paperwork in pen and ink that would authorize them to do the transfer on my behalf at another time (Monday morning), and to do that, I'd have to drive across town to the other branch and sit down with a banker there to do the paperwork.
I said no, I think I'd just drive back to town again on Monday. So she set up an appointment for Monday and sent me an invitation.
Then I asked a little about what we would be able to do on Monday, and I was a little shocked. First, she said that although she'd like to be able to show me how to do this on my own, I couldn't. That is, US Bank doesn't allow its customers to do international wire transfers without either coming in person to have a banker do it for them, or with a commercial account, subscribing to a service that charges a monthly fee, signing a bunch of disclosures, and only then being able to set up wire transfers through their third party service.
Having a banker perform the transfer, there would be a flat $50 fee to do the transfer. That beats PayPal, but still more than seems necessary. Each time I made a transfer, they would have to confirm that the funds had been in my checking account for several weeks, or else it wouldn't be allowed. And then the most surprising part to me: international wire transfers take between 2-3 weeks to process. Not minutes or hours, but weeks.
Ultimately I thanked her and left, and still have an appointment for Monday to go to town, visit the banker in person, and start a 2- to 3-week long transfer that costs $50.
Contrast this process with Bitcoin. I want to send a business in Taiwan some money. I can instantly buy the BTC or use BTC I already own. They send me their wallet address. On my end, I paste in their wallet address, type in the amount I want to transfer, and with a couple clicks, sign and broadcast that transaction. In 3 minutes, it has a few confirmations so that we can see it's working, and in half an hour, it's complete and indelibly part of the blockchain. On the other end, if they're worried about market volatility, they can turn around and sell that BTC instantly and be subject to no more than minutes worth of market fluctuations. We could go from USD to TWD in under an hour, and if we had to buy and sell the BTC on either end, it would still cost us less than the bank wire transfer fee. Not counting those exchange fees, for the actual transfer, I pay a mining fee of less than a dollar. I don't need to drive anywhere. I don't need to have my account analyzed to get permission to send my money. I don't have to be doing it at just the right time of day on the right day of the week.
This infrastructure for moving money exists and is available to most people, so why aren't we using it? The main answer lies in the fees the banks get, and the time they spend holding your money on their books. Banks don't want to lose that business; and banks and governments should be considered to be essentially synonymous in this regard – that is, governments also don't want people out there just sending money around, outside of the banking system which they exclusively regulate.
submitted by /u/HungryLikeTheWolf99