Large payments

There are two main challenges with making large payments:

  • Fees and charges: Fees and charges are small in absolute terms for small payments (such as buying groceries) but can be quite significant for large payments and transfers.
  • Anomaly detection and payment-blocking: Anomaly detection algorithms may incorrectly classify your large payment as fraudulent, so you’ll need to get around that.


Here is a comparison of different payment methods based on fees:

  • Credit card: Transaction fees vary based on the nature of the merchant and the card provider (Visa or Mastercard). Card-not-present transactions (such as online transactions) are more expensive. See (US-centric explanation)
  • Debit card: Transaction fees vary based on the nature of the merchant and the card provider (Visa or Mastercard). PIN debit is cheaper than signature debit for large transactions, and card-not-present transactions are the most expensive. See (US-centric explanation) and
  • Automated Clearing House (ACH): Free, but works only within the same country. Not immediate (takes 1 to 2 business days to clear)
  • Wire transfer: Fees varies based on the transaction amount; wire transfer between accounts in the same bank may be free. Not immediate, though it may be faster than ACH
  • Check: Free; money may not be released to recipient account immediately upon the recipient presenting the check to the bank (a release schedule may be set that releases the money gradually).
  • Cash: Free, but requires physical proximity.

Thus, the fee-minimizing order is roughly: ACH or check or cash if feasible ~ Wire transfer if there are no fees (e.g., it is the same bank) > PayPal or Debit card if feasible > Wire transfer with fees > Credit card if feasible

Anomaly detection

Fraud and card theft are common occurrences, and payment systems are built to catch suspicious transactions. Unfortunately, the anomaly detection methods they use just aren’t good enough.

For instance, let’s say that, like a true effective altruist, you live frugally throughout the year, so that your typical debit card or credit card transactions are less than $50 per transaction and less than $200 per week. Then, in the penultimate week of December, you decide to give a donation of several thousand dollars to a charity. In your mind, this might be very consistent behavior. What the anomaly detection algorithm sees, however, is a sharp increase in the amount, both in terms of amount per transaction and in terms of amount per week. Moreover, it also sees that the money is being sent to an entirely new recipient. So it blocks the transaction.

Now what happens when the transaction is blocked? Your first attempt might be to retry it. But the retried one would again be blocked. In fact if you retry often enough it’s even possible your card will get blocked entirely. Most banks will not even email or SMS you informing you of the block, though a few banks are reasonably good about being proactive in informing you about blocked transactions.

The best course of action when attempting to make a large payment through a card or payment device that you do not use to customarily send large payments is to do one of these:

  • Call up the bank or card provider beforehand to tell them of your intention. They will temporarily allow a payment of that large amount to the recipient(s) you specify (or in general). Make the payment within that timeframe.
  • Don’t use a card at all. Instead, use a cheaper and more reliable method such as wire transfer or electronic funds transfer. For amounts of $3,000 or more, it’s generally a bad idea to use a card anyways.

Don’t rely on PayPal

PayPal is good at what it does when you don’t stretch it to the limits, but start trying to send a few hundred dollars to friends and family, and it will start blocking you regularly enough to no longer be reliable. I have written about my experience with PayPal here.

Basic information