May 08, 2010
Who’s xooming who?
Posted by Erik Gerding

My efforts to prepay my summer rent in Berlin have been a fascinating tour of modern payment systems and foreign currency risk. Here’s the scoop: my rent is due in full June 1st. My landlord would like the money early and agreed to pay the transfer fees if I could prepay. One additional complication, I need to use my University’s credit card.

I first tried Paypal – but the transaction got dinged based on a paypal algorithm that tries to detect fraud. Setting up a wire transfer takes time (and further navigating the University bureaucracy) not to mention higher fees than Paypal. I then ran across this alternative for foreign currency transfers: xoom. It worked like a charm, although having taught payment systems once I did carefully read the terms of use to figure out what my recourse would be should the money go into the wrong German account, or should there be no apartment when I arrive in Berlin.

Xoom is just one of a bevy of new payment systems that have emerged in the last several years. Glompetitor Tim Zinnecker has already pointed out the great article in Wired magazine two months ago on the future of payment systems. When I agreed to prepay, I thought the fees I saved would more than offset the time value of money. What I didn’t anticipate was that little ‘ole me would also be subject to foreign currency risk; I guess I need to read Kim Krawiec’s posts over at the Glompetition on the Greek debt crisis on a more regular basis.  In all seriousness, I do feel blessed though that my personal stakes in the foreign currency swings are so trivial (so far) compared to what many in Europe are going through.

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