Giro


Giro

A giro is a method of payment. It is the opposite of a cheque, which is given to a payee who deposits it in a bank. A giro is given by the payer to his bank, which transfers funds into the payee's bank account. Giro is often used by post offices as well. Direct deposit is an electronic version of the giro system.

The difference is one of 'push' versus 'pull'. That is, a cheque is a 'pull'-initiated transaction: the presentation of the cheque by the payee causes the payee's bank to seek the funds from the payer's bank, which then takes the funds from the payer's account if the funds exist. If funds are insufficient, then the cheque "bounces" (i.e. it is returned to the payee with a message of insufficient funds). By contrast, a giro is a 'push'-initiated transaction: the payer directs a bank to transfer funds from the payer's account to the payee's bank, where the payee can then withdraw the funds. As a result, a giro cannot "bounce", because the bank will only process the order if the payer has sufficient funds to cover the payment. However, this also means that the payer receives no benefit of "float".

Giros are often used in large or periodic (e.g. monthly) money transfers, such as utility bills or taxes. In contrast, daily purchases with small and variable payments are typically paid by other means.

The use of both cheques and giros is now in decline in developed countries in favour of electronic payments, which are thought to be faster, cheaper and safer due to the reduced risk of fraud.Fact|date=February 2008 In the UK many large retailers, including leading supermarkets such as Tesco, Asda and J Sainsbury's, stopped accepting cheques from customers in late 2007 citing reasons of limited cheque usage, shorter checkout queues and increased security.Fact|date=February 2008 Other smaller retailers have since followed suit.Fact|date=February 2008

History and concept

Giro systems date back at least to Ptolemaic Egypt in the 4th century BC. State granary deposits functioned as an early banking system, in which giro payments were accepted, with a central bank in Alexandria. [ [http://www.ex.ac.uk/~RDavies/arian/amser/chrono1.html A Comparative Chronology of Money] , Roy Davies & Glyn Davies, 1996 & 1999.] Giro was a common method of money transfer in early banking.

Postal Giro or Postgiro systems have a long history in European financial services. The basic concept is that of a banking system not based on cheques, but rather by direct transfer between accounts. If the accounting office is centralised, then transfers between accounts can happen simultaneously. Money could be paid in or withdrawn from the system at any post office, and later connections to the commercial banking systems were established, often by the convenience of the local bank opening its own account at the Postgiro.

By the middle of the 20th century, most countries in continental Europe had a postal giro service. The first postgiro system was established in Austria on the early 19th century. By the time the British Postgiro was conceived, the Dutch Postgiro was very well established with virtually every adult having a postgiro account with very large and well used postgiro operations in most other countries in Europe and Scandinavia.

The term "bank" was not used initially to describe the service. The banks' main payment instrument was based on the cheque which has a totally different remittance model from the "Giro".

In the "banking model", cheques are written by the remitter and then handed or posted to the payee, who must then visit a bank or post the cheque to his bank. The cheque must then be cleared, a complex process by which cheques are sorted once, posted to a central clearing location, sorted again, and then posted back to the paying branch where the cheque is finally checked and then paid.

In the "Postal Giro model", Giro Transfers are sent through the post by the remitter to the Giro Centre. On receipt, the transfer is checked and the account transfer takes place. If the transfer is successful, the transfer document is sent to the recipient, together with an updated statement of account being credited. The remitter is also sent an updated statement. In the case of large utilities receiving thousands of transactions per day, statements would be sent electronically and incorporate a reference number uniquely identifying the remittance for reconciliation purposes.

The rise of electronic cheque clearing (and debit cards as preferred instruments of payment) has made this difference less important than it once was. For example in some stores in the United States checks are scanned at the cash register and handed back to the customer while the funds are removed from the customer's account.

Electronic bill payment

Modern electronic bill payment is similar to the use of giro.

Advantages include:
* Instant access to the funds via an ATM, debit card or cheque card.
* There is no paper cheque that can be lost, stolen, or forgotten.
* Payments made electronically can be less expensive to the payer; typically electronic payments may cost around 25¢ (US) whereas it could cost up to $2 (US) to generate, print and mail a paper cheque Fact|date=December 2007. Banks may not even charge for the service at all.

In the United States, the Automated Clearing House (ACH), regulated by NACHA-The Electronic Payments Association and the Federal Reserve Bank, handles all interbank transfers, including direct deposit and direct debit.

In entirely electronic bill payment, the payer receives a bill — either physically by mail or electronically from a website (electronic billing). Then, the payer reads in the information from the bill, either manually or by using the barcode on the bill, enters it to the form on the bank website, and submits the form. The payment is immediately deducted from the account balance.

Cultural Significance

Before the use of electronic transfers of payments became the norm in the United Kingdom the bi-weekly 'giro' payment was the normal way of distributing benefit payments. When unemployment peaked in the 1980s large numbers of people would receive their benefit payment on the same day leading the concept of Giro Day [http://www.urbandictionary.com/define.php?term=giro+day] . Giro day would be marked by the settlement of small debts and noticeable increase in drinking, partying and related activities. It was celebrated in the 1996 film by Ian Curtis Waiting for Giro [http://www.imdb.com/title/tt0496587/] .

References

ee also

*Payroll#Paycheck
*Pay stub
*Girobank
*Money order


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Look at other dictionaries:

  • giro — s.m. [lat. gȳrus, gr. gŷros ]. 1. [linea che limita una superficie: lo spiazzo ha un g. di 20 metri ; il g. delle mura ; cappello stretto di g. ] ▶◀ Ⓣ (geom.) circonferenza, Ⓣ (geom.) perimetro. 2. [atto ed effetto del girare, movimento… …   Enciclopedia Italiana

  • Giro — (italienisch: Kreis, Drehung, Umlauf, Rundfahrt von griech. Gyros) steht für: bargeldloser Zahlungsverkehr mittels Verrechnung von einem Konto auf ein anderes, siehe Girokonto ein US amerikanischer Sportartikelhersteller für Ski und Fahrradhelme… …   Deutsch Wikipedia

  • giro — sustantivo masculino 1. Acción y resultado de girar: La bailarina danzaba dando giros sobre sí misma. El coche dio un giro repentino. 2. Orientación o dirección que toma una cosa: El giro de la situación política nacional ya se esperaba. 3. Área …   Diccionario Salamanca de la Lengua Española

  • giro — gi‧ro [ˈdʒaɪrəʊ ǁ roʊ] noun [uncountable] also National Giro BANKING in Britain and some other countries, a system for sending money electronically from one bank account to another: • You can pay your gas bill by giro …   Financial and business terms

  • Giro — Sn erw. fach. (17. Jh.) Entlehnung. Entlehnt aus it. giro m., eigentlich Kreis, Umlauf , dieses aus l. gӯrus m. Kreis , aus gr. gỹros m. Bezeichnet wird damit der Umlauf der bargeldlosen Zahlungsmittel; geläufig vor allem das Kompositum Girokonto …   Etymologisches Wörterbuch der deutschen sprache

  • Girò B&B — (Катания,Италия) Категория отеля: Адрес: Via Antonino Di Sangiuliano 82, 95131 Катания, Ит …   Каталог отелей

  • giro — girõ interj. raginimo žodis gyvulius girdant: Girõ! girõ! Pg …   Dictionary of the Lithuanian Language

  • giro — Element prim de compunere savantă cu semnificaţia cerc , rotativ . [var. gir . / < fr. gyro , cf. gr. gyros]. Trimis de LauraGellner, 17.04.2005. Sursa: DN  GIRO elem. gir2(o) . Trimis de raduborza, 15.09.2007. Sursa: MDN …   Dicționar Român

  • Giro — »Überweisung im bargeldlosen Zahlungsverkehr; Übertragungsvermerk auf einem Orderpapier«, besonders in Zusammensetzungen wie »Girobank, Girokasse, Girokonto«: Das Wort der Kaufmannssprache wurde im 17. Jh. aus it. giro »Kreis, Umlauf (besonders… …   Das Herkunftswörterbuch

  • gīrō- — *gīrō , *gīrōn, *gīra , *gīran, *geirō , *geirōn, *geira , *geiran germ., schwach Maskulinum (n): nhd. Geier; ne. vulture; Rekontruktionsbasis: as., ahd.; Hinweis: s. *gīra ; Etymologie: s. ing. *g̑ʰē …   Germanisches Wörterbuch

  • giro — ► NOUN (pl. giros) 1) a system of electronic credit transfer involving banks, post offices, and public utilities. 2) a cheque or payment by giro, especially a social security payment. ORIGIN Italian, circulation (of money) …   English terms dictionary