Why it should cost much less

The cost of moving money, which has become as easy as moving “bits” on the internet,  should be much lower than the fee banks and card companies presently charge for the service. The banks have been slow to pass these saving on to their customers in an attempt to protect legacy pricing revenues. The current rate to move money by bank wire service, as a business, remains stubbornly high at $30-$45 even as the banks offer more competitive fees of $19-$15 to individuals due to increasing competition by non-bank financial service companies. There is absolutely no justification or need for such high fees and if banks attempts to justify these fees by citing regulatory compliance costs it is time to reexamine money movement regulatory frameworks.

In particular the cost and burdens of collecting and protecting client information, the so called Know Your Customer (KYC) regulations should be eliminated. I advocate totally scrapping KYC for any money movement under a reasonable amount and reasonable frequency. Any money transfer under USD10 K per day, or its foreign value equivalency, should be free of current KYC regulatory oversight, and KYC should be replaced by strong authentication of individuals which can both authenticate and at the same time provide 100% protection of individual privacy and thus the threat of identity theft.  The technology exists and moving money at the true costs of moving the bits representing the money benefits society at large. In particular moving money on a non-profit basis can play major role in financial inclusion and alleviation of poverty world wide. Essentially replace KYC by Know Your Merchant (KYM) and use anonymous multi-factor authentication of individual clients.

Here is an excellent paper on the impediment of innovative practices, mostly mobile money practices,  that arcane regulations fosters.    When a physical device is required to move money such as a mobile phone, it becomes one key or one token in a multi-factor authentication regime. Add a bio-token able to authenticate but not uniquely identify, and a knowledge token (PIN) and you have an acceptable secure method for authenticating and moving money without KYC.

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