Where does the money go?

snowqueen555

I doubt withdrawing money costs that much, thinking about economies of scale here...

noh

snowqueen555 wrote: »

I doubt withdrawing money costs that much, thinking about economies of scale here...

I would say that the figures given by opinions4u look to be about right.

dunstonh

The point I'm trying to make here is that If I sent an e-mail across to Australia, someone would get this e-mail almost immediately.

It would do but it will pass through a number of computers to get there and anyone with access to those computers could read your email. You cannot compare the passage of email to the passage of money.

I was told by my bank (Halifax) that if I paid a fee of £25 the money would be transferred within 2 hours. Not sure if this is BACS or not.

That is CHAPS.

I was under the impression that electronic banking is easier and cheaper. Yes it is. But only for the banks!

The process until the faster payments system was like trying to build an extension on a grade 1 listed building. There is also legislation in place.

There needs to be more transparency in the financial industry.

Lets go for it. From now on you get charged for every transaction you make and for any contact with your bank.

I can't believe that there are billions of pounds swirling around the system and not doing anything.

You dont have billions of pounds (one assumes!). So, why are you worried about it?

Where do you think all these hedge fund managers make their millions?

Not on BACs transfers via the Halifax!

There is only so much money in circulation so us poor old sods are loosing precious days each in lost interest whilst they gain. Yet another scam!

With respect, do you actually want to learn and understand or is it more convenient to act like a Daily Mail reader?

I hesitate to disagree with you, dunstonh, but are you saying that interest is not paid on non-banking days?

What the banks give consumers and what they get themselves may be two different things. However, Saturday and Sunday are not clearing days so anything linked to that will not earn money explicitly. I am going to give a little caution as its nearly two decades since I did my chartered institute of banking exams and things change.

Milarky

There is money made from the banks holding transfers of money which is not received the same day - it's fondly referred to as 'float' (or is that money on which the customer receives no interest itself?)

It's amusing that dunstonh refers to legislation as the reason why banks must still hold our money (whilst not paying interest on it) - presumably the 1871 Banking Act, which Charles Dickens only just missed seeing enacted in his lifetime. There is no [justifiable] reason why bank settlement cannot be increased from the mere 252 days a year (under 70%) at present up towards 365 days. Just because 'child labour laws' once meant children were used to help with harvest time in 19th century (=six weeks school holidays) or because the German Kaiser did put his clocks (='daylight saving') forward in summer to make more munitions to shell tommies on the Western front shouldn't form the basis for how we do things now. [Except that it does]

dunstonh

It's amusing that dunstonh refers to legislation as the reason why banks must still hold our money (whilst not paying interest on it) - presumably the 1871 Banking Act,

I now regret chucking out my books on banking a few years back. It brings back memories of going to college three nights a week after work to learn about what court cases and acts from decades or often centuries earlier still dictated why something was done a certain way.

rb10

redragon wrote: »

I contacted my current account bank and they said that it would take 3 working days to reach the new account. Nowhere on the transfer page does it say this!

redragon wrote: »

my bank (Halifax)

Next time you send an electronic payment, read the screen a little more carefully. You will see that before you confirm the payment, it will say:

Halifax_online_banking wrote:

Your payment will be sent on dd/mm/yyyy using our bill payment service. Please allow up to 3 working days for your payment to be received.

... if it'll take 3 working days, or, if it'll go straight away, ...

Halifax_online_banking wrote:

Your payment will be sent immediately and should reach the recipient within 2 hours*. We'll advise you of the outcome after submitting the payment.

* In a small number of cases your payment may take longer than 2 hours however the payment cannot be stopped, amended or retrieved.

anna42hmr

Not to mention that it may not even be halifax's fault the funds cant be applied immediatly, as the receiving account may not be set up to accept faster payments, and that its not guarenteed anyway?

Details of payment processes can be found here http://www.ukpayments.org.uk/payment_options/

VT82

anna42hmr wrote: »

Not to mention that it may not even be halifax's fault the funds cant be applied immediatly, as the receiving account may not be set up to accept faster payments, and that its not guarenteed anyway?

Details of payment processes can be found here http://www.ukpayments.org.uk/payment_options/

Correct answer. Most building societies only have an internal account number for the customer. When a customer or another bank sends them money, they send it to the Building Society's own bank account, and the customer's account number is used as a reference. It takes a day or two for this to be correctly applied to that particular customer's account.

Halifax offered to make the payment apply the same day. For this to happen, they would need to send the money by CHAPS or Telegraphic Transfer. When the Building Society receives one of these, someone in their Accounts department looks at it manually and applies it to the account immediately.

Whatever the rights and wrongs of the system, Halifax aren't the ones gaining from it OP.

P.S. banks and building societies DO benefit from interest on non-working days. If they invest their float 'overnight' on a Tuesday, they get one day's interest. If they invest their float 'overnight' on a Friday, they get three day's interest. But they pay interest on their liabilities in the same fashion, so it is once again swings and roundabouts.

P.S. Dunstonh, that post about banks' costs was :beer:

ERICS_MUM

snowqueen555 wrote: »

I doubt withdrawing money costs that much, thinking about economies of scale here...

Don't forget that each transaction (e.g. clearing a cheque, processing an ATM withdrawal etc) has to cover a minute fraction of the bank's fixed costs such as premises, computer systems, telephone bills, stationery, electricity, health and safety/fire regs, disaster contingency measures, on-going upgrade and maintenance of systems, membership of the clearing systems etc etc etc). They also need to maintain a lot of collateral and liquidity with the BOE so that their CHAPS payments can be made. On top of that are staff costs - wages, NI, pension contributions, insurance, training, sick leave, maternity leave. Finally it needs to make a profit !

Going back to the OP - did you pay the £25 so that the money would arrive within 2 hours - this is a CHAPS payment although I'm surprised your bank/branch could confirm a 2 hour deadline. CHAPS payments mean that the money reaches the other bank before close of business that day but doesn't guarantee it gets to the recipient's account then - depends on that bank's policies and processes.

Hope this helps.

jamesd

redragon wrote: »

The money left my account yesterday but has not reached the Building Society account. I contacted my current account bank and they said that it would take 3 working days to reach the new account. Nowhere on the transfer page does it say this!

Some banks will now say whether the money will be sent with faster payments or not. Santander doesn't, RBS does, for example.

New systems can be much faster. A couple of weeks ago, in the middle of the night, I made a payment from First Direct to a Santander credit card and it had arrived in my credit card account before I had time to log in there to check if it had arrived yet.

Takes time to roll all of this out and it may take longer for places with old systems to upgrade.