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Where does the money go
I was having coffee with a Census Financial client recently, when she asked me a question that had been bugging her for some time....years, in fact. She wondered why, in this modern age of instantaneous information transfer, it still takes numerous days (usually around four, but sometimes up to seven working days) for banks to transfer money from one account, or from one bank, to another? Surely, she reckoned, from the moment she clicked the send button on her payment, the money should be in the other bank account? With everything done electronically and no physical action needed, it should be just like sending an email?
She has a point. Debit cards allow us to withdraw money at the touch of a button, and online account management systems allowed us to view these withdrawals and other transactions in real-time. This makes it even more mind boggling that a transfer between one account and another can take days to complete.
I’ve been doing some research on the subject and it seems that the most plausible reason (i.e. ‘Excuse’) given by the banks is that when you transfer money between two accounts, or with a different online bank account held with a different institution, the funds are not transferred the way you would expect. Rather, the transfers move in a series of steps which are slowed down in order to reduce the possibility of fraud.
You may have seen money “pending” in your account, but unavailable for withdrawal. It is because all transfers for a bank are done in batches during the day, to an automated clearinghouse. The clearinghouse sorts them out and moves them to the receiving bank some two to four hours after they’re received. The receiving bank usually gets the transfer on the same day. So, if you transfer money early on a Wednesday morning, it should be available by Thursday afternoon. But this is rarely, if ever, the case!
Which brings us back to the question....where does the money go? If you can tell us, please share the information. We’d all love to know.