Direct Debits: UK vs Estonia
Banking in the UK is painful. Most people I know agree with this. Amongst those who have encountered other countries’ systems, it’s pretty much unanimous.
Estonia’s banking systems, on the other hand, are a pleasure to work with. All I needed to open an account was my passport (unlike the UK where you need 18 pieces of ID, 15 of which have to show a current address, dated within the last 3 days, as well as the original long form birth certificates of at least 5 grandparents), almost everything is done electronically, and everything Just Works™.
My latest delight was when I paid my internet bill yesterday. This is actually the first time I’ve ever had to do this, as I’ve just switched to a new ISP, and the service is now in my name, rather than previously when it was in the landlord’s name and paid with my rent.
As always, payment was a simple task. Log on to my internet banking account, click New Payment, enter the account number and amount (accepting all the other defaults, like when the transfer should happen [default 'now']), confirm my authorisation code, and off goes the money — in real time, no less.
However, the surprise was in what happened next. On the confirmation page I was given a message telling me that this payment was to an account that the bank recognised as one that people tend to pay to monthly, so perhaps I’d like to set up a direct debit?
Similarly to the UK, Estonia has both Direct Debits and Standing Orders. There are a variety of differences between the two, but generally a Standing Order is good for regular bills that are for a fixed amount (e.g. your rent), whereas a Direct Debit is better for a variable bill (e.g. utilities). The online version of most UK banks only let you set up Standing Orders though — for a Direct Debit you need to get the company to send you a physical sheet of paper, fill in your banking details, sign it, and then post it back to them. Electronic versions do exist, but they’re still the same amount of hassle, as they are an authorisation for a third party to take money from your bank, and so have to be supplied to your bank by that company, rather than you.
In Estonia the process is much, much, much simpler. When I clicked through to the page suggesting I set a direct debit up for my ISP bill, it had all the company and account details pre-filled. I only had two boxes to fill: the date on which the direct debit would leave each month (defaulting to today’s date), and the maximum amount that the company could take each month. Then just enter my authorisation code again, and it’s done. Very simple, and very effective.
It’s the simple things like this that I enjoy so much about Estonia. The UK seems to have an inbuilt desire to make absolutely everything overly complicated. People raise all sorts of reasons as to why the simple version will never work, and slowly but surely all the edge-cases take over and suffocate the original idea. But no-one ever seems to really notice that it’s happening, and at the end everyone is proud of the robust system that they’ve created, convinced that it couldn’t be any better. For some reason that doesn’t seem to happen so much in Estonia: the simpler solution tends to win out against the complex one. And, curiously enough, I pretty much never hit any problems, whereas in the UK I’m constantly falling through some gap or other in the massively over-engineered version that’s supposed to cope with every contingency.
I can’t quite work out where the difference comes from though. I thought at first that it was because Estonia got to start pretty much everything again from scratch less than 20 years ago, whereas the UK has to cope with lots of legacy systems and a “Can’t get there from here” problem. But now I think it’s deeper than that: that there’s actually a different philosophical mindset that changes how people building these sorts of systems tend to approach the issues. But I don’t really know what it is, or even how to find out. Pointers welcome!
