A giro (/ˈdʒaɪroʊ, ˈdʒɪəroʊ, ˈʒɪəroʊ/), or giro
transfer, is a payment transfer from one bank account to another bank
account and instigated by the payer, not the payee. Giros are
primarily a European phenomenon; although electronic payment systems
such as the
Automated Clearing House
Automated Clearing House exist in the
United States and
Canada, it is not possible to perform third party transfers with them.
United Kingdom and in other countries the term giro may refer
to a specific system once operated by the post office. In the UK,
the giro service was originally known as National Giro. In due course
"giro" was adopted by the public and the press as a shorthand term for
the girocheque, which was a cheque and not a credit transfer.
Meanwhile, there were
Giro Credits, which were instructions to
credit a particular bank account: these were not instructions to debit
another account, so they had to be accompanied with cash or cheques,
and they could be used both for bill payments and as paying-in slips;
when used for paying bills they were often free-of-charge to the payer
when used at the payer's or payee's bank but with an administration
charge at other banks.
The use of both cheques and paper giros is now in decline in many
countries in favour of electronic payments, which are thought to be
faster, cheaper and safer due to the reduced risk of fraud.
2 History and concept
4 Electronic bill payment
5 Cultural significance
6 See also
Look up giro in Wiktionary, the free dictionary.
The word "giro" is borrowed from Dutch "giro" and/or German "giro",
which are both from Italian "giro" meaning "circulation of money".
The Italian term comes via
Latin "gyrus" meaning "gyre" from the
Greek "gyros" meaning "circle".
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
Giro was a common method of money transfer in early
The first occurrences of book money are not known exactly. The giro
system itself can be traced back to the "bancherii" in Northern Italy,
especially on the
Rialto (a financial center, resembling the modern
day Wall Street). Originally these were money changers sitting at
their desk ("bancus" = bench) that customers could turn to. They
offered an additional service to keep the money and to allow direct
transfer from one money store to another by checking the accounts in
their storage books. Literally they opened one book, withdrew an
amount, opened another book where the amount was added. This handling
was naturally a very regional system but it allowed the money to
circulate in the books. This led finally to the foundation of the
"Banco del Giro" in 1619 (in Venetian language, Banco del Ziro)
which gave the blueprint for similar banking systems. The usage in
German language can be seen in the Banco del
Giro founded in Vienna in
1703 (to extend the financing business that
Samuel Oppenheimer had
brought from Venice in 1670).
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 simply by the local bank
opening its own postgiro account.
By the middle of the 20th century, most countries in continental
Europe had a postal giro service. The first postgiro system was
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, and
very large and well used postgiro operations in most other countries
in Europe. Banks also adopted the giro as a method of direct payment
from remitter to receiver.
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 than that of a giro.
In the banking model, cheques are written by the paying party and then
handed or mailed to the payee, who must then visit a bank or mail the
cheque to his or her bank. The cheque must then be cleared, a complex
process by which cheques are sorted once, mailed to a central clearing
location, sorted again, and then mailed back to the paying branch,
which verifies that the funds are available and pays the payee's bank.
In the postal giro model, the paying party sends a request to pay the
payee (called a giro transfer) to the giro centre, which verifies that
the funds are available, debits the payer's accounts by the amount
requested, and credits that amount to the payee's account. The giro
centre then sends the giro transfer document to the recipient, and an
updated account statement to both the payer and payee. In the case of
large utilities receiving thousands of payments per day, statements
are sent electronically and incorporate a unique reference number for
each payment for reconciliation purposes.
In the United States, the rise of electronic cheque clearing (and
debit cards as preferred instruments of payment) has made this
difference less important than it once was. In some stores in the
United States checks are scanned at the cash register and handed back
to the customer. The scanned information is forwarded to a payment
processor, which transfers the money using the Automated Clearing
House (ACH) network.
Unlike the banking model, the postal giro model allows an individual
to transfer money directly into another individual's bank account,
provided the sender has the recipient's account details. The recipient
is not required to approve or acknowledge the transfer or visit the
bank to claim it. As a result, cheques are rarely used in countries
with extensive giro networks, such as Germany, the Netherlands,
Belgium and the Nordic countries.
Direct deposit systems such as those in common use in North America,
by contrast, require the recipient's explicit approval, typically
provided by filling out a form. Transferring funds from one personal
bank account to another typically requires either a physical check or
a wire transfer, which may incur a significant fee and require the
paying party to visit the bank.
The credit risk with respect to the actual transfer of physical
currency is assumed by the giro operators, such as banks, as interbank
credit risk. For the payer and payee, giro does not involve credit,
unlike cheques or credit cards. This is both an advantage and a
disadvantage. The creditworthiness of the payer doesn't need to be
evaluated, as he can initiate the transaction only if he already has
sufficient funds. As such, the payer doesn't have the benefit of
paying on credit. However, the disadvantage is that the transactions
are unsecured. The payer lacks the sort of protections against
dishonest payees that come with credit cards. Transactions cannot be
recalled or disputed after the fact. Thus, committing fraud in e.g.
interpersonal trade is relatively easy, and giro payments should be
only made to known and trusted payees. Also, even though intra-bank
transfer can be quick, interbank transfers can take several days, and
they are often executed only on business days.
Electronic bill payment
Modern electronic bill payment is similar to the use of giro.
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.
Banks may not even charge for the service at all; for example many
banks in the
European Union charge nothing for electronic payments
inside the SEPA (Single Euro Payments Area), provided the proper BIC
and IBAN account numbers are used.
The payment error rates and subsequent reconciliation issues are
In the United States, the
Automated Clearing House
Automated Clearing House (ACH), regulated by
NACHA 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 (ex: EPC QR Code
in the European Union), enters it to the form on the bank website, and
submits the form. The payment is immediately deducted from the account
Before the use of electronic transfers of payments became the norm in
United Kingdom the fortnightly "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, marked by the settlement
of small debts and a noticeable increase in drinking, partying, and
festive activities. It is the focus of the 1996 film Waiting for Giro.
^ "Definition of GIRO".
^ "RBI Committee suggests GIRO based Indian Bill
Bank of India. 7 May 2013. Archived from the original on 6
December 2014. Retrieved 29 November 2014.
^ Oxford English Dictionary (online)
^ Federal Reserve: Recent payment trends in the United States, 2008.
"In 2003 the number of electronic payments in the US exceeded the
number of cheque payments for the first time 
^ "Home : Oxford English Dictionary".
^ "Definition of GIRO".
^ Glyn Davies, National Giro
^ A Comparative Chronology of Money, Roy Davies & Glyn Davies,
1996 & 1999.
^ (ZDF), Zweites Deutsches Fernsehen. "Terra X - ZDF.de".