Drunken Bungle Whore

Whilst it's tempting to turn this into a rant thread, I'm genuinely curious as to the (non bank bullsh1t) explanation for this.

I have telephone banking and called them to make a transfer from my current account to clear off my credit card. I was told the money would leave my account today (Monday) and would arrive at my credit card account on Wednesday. The current account and the credit card are with the same bank.

I am genuinely curious to know why, in this electronic age, it takes 3 days for the money to get from A to B. I'm also keen to find out where the money is on Tuesday....?

All genuine answers would be greatly appreciated.

Reffro

Its in a holding account earning interest for the bank.........

Freak

lol
same with paypal.
7 days to transfer to a bank!!

chiark

Day 1 (Monday) - request made. Your bank sits on the money for a day, playing with the interest they can earn on it as it's open to earn money. This is surprisingly large when you take into account all that bank's transfers out on one day...

Day 2 - transfer made to other bank. Clears.

Day 3 - Bank sits on money prior to releasing to you, using same rules to use money on the markets.

Yes, the banks make money out of this. However, the amount made per transaction is absolutely tiny and, if they didn't make that money, they'd need to recoup the cost of the transaction somehow. After all, the transaction does cost money to process...

Cheers,
Nick.

Suresh

The bank deliberately keeps the money to gain two days interest benefit. Nothing you or I can do about it. The Fin Services regulator could easily forbid them from doing this.


The way it works is something like this :

Value date today, debit your account and credit internal suspense account. The bank then keeps this money for two days and gains interest for itself.

Value date Wednesday the bank debits the internal suspense account and passes a credit across the payment nostro for the beneficiary.


Suresh
Financial Services

Drunken Bungle Whore

Thanks for the replies - I see kind of see how it makes sense. It's not a major problem on this occasion as I'm not being penalised anywhere along the way, but I was just curious.

Thanks!

Tiggs

how much did you bank charge you for the transaction........nothing? well theres your answer!

imlach

It isn't ideal, but then most banks don't generally charge you anything for all these services you use of theirs, do they.....

If the alternative was a 0.5% fee on every transaction, which would you rather have at the end of the day? Free, but slower, banking, or faster but with a fee?

Anyway, I think they offer faster processing, if you pay for it.

matt85

I think there is a way you can transfer and have it the same day called CHAPS. Not sure what the acronym stands for and it costs about £20 i think.

Suresh

Retail and Corporate banking margins are in fact more than fairly healthy at the moment.

Bid / offer speads achieved on savings vs mortgage accounts is more than lucrative enough for banks to stop making excuses and taking profits where no or little extra value is added.

Automation through internet banking probaly cost financial institutions a packet initially, but benefits through reduced branch network costs are being realised every day. Ripping off customers through unjustifiably holding on to their money is far from honest and should stop.

One thing that confuses me if that I have no idea where all the banking apologists on this thread have come

Suresh

imlach

...and we live in a world of free & healthy competition, so if one bank should choose to speed things up, they are free to do so....

...but why should they? If YOU were running a profitable business, why would you choose to reduce your profit margin (obviously to capture market share in one instance)....however, they're still offering you free banking are they not

Drunken Bungle Whore

I didn't pay for that specific transaction - but I do pay an annual fee for my bank account which (in theory) means I get a better service.....

imlach

You didn't fall for that sales pitch did you?

Suresh

Ahem. We do not live in a world of free and healthy competition as evidenced by Microsoft's obscene cash pile. Interbank payments are run by an association or rather cartel of banks, so don't be expecting any altruistic gestures just yet.....

Suresh,
Getting free banking and a massively subsidised mortgage as a perk, so doesn't really care anyway.

imlach

.....Microsoft is not a good example. It's their good business acumen & a fair bit of luck from the outset that caused them to dominate the PC world - nothing else.

OS X, Linux, OS/2, etc etc have all had their chance to dominate in a free & healthy market.

blair

Well they could - but that would upset the other clearing banks in the BACS cartel and would result in the other banks introducing charges for processing transactions with the bank looking to speed things up, refusing to meet their timetables and who knows what else

IIRC something similar happened recently when one of the banks tried to introduce charges for using cash machines for people who weren't their customers.

No excuses for transfers from one part of a bank to another part of the same bank though. That is definitely a rip off.

imlach

^^^^^

ahem, it's attitudes like that as to why things will not change
That's business....

chiark

One bank cannot realistically do anything about speeding up clearing times. BACS as a whole organisation needs to move.

Cruickshank has given the banks until 2008 to sort this out or face regulation...

But as has been said, the CHAPS (Clearing House Automated Payment Service) is available if you want to pay for it, and guarantees same day value date if you submit by 1pm. The fee is quite frankly ludicrous, but it's normally used for high value stuff anyhow, so 20 quid extra on your house move isn't terribly noticable. Doesn't justify it though!

Anyone want an enterprise payments management solution
Cheers,
Nick.

Mark Miwurdz

Maybe not, but then again, they don't share the spoils of sitting on your money gaining collosal amounts of interest either.