If I want to pay my electric bill in California, I mail a check to my electric company, which then pushes the check through the elaborate pipeline described. If I want to pay my electric bill in Germany, I instruct by bank to transfer the amount of the bill to an account of the electric company. My bank knows at the beginning of the process, not the end, whether or not I have the necessary funds. This bank-initiated, rather than payee-initiated, transfer system has other advantages. It permits me, for example, to have all my utility bills sent directly to the bank (for a small fee), which pays them by bank transfer--a great convenience and the system most Europeans use to pay most bills.
Returning from Europe in 1969, I asked my major California bank why the American banking system did not adopt the bank-initiated payment approach. A senior vice president wrote, granting the advantages and indicating that it would be implemented in the future.
A. ROSS JOHNSON