Electronic Transactions - Three Day Clearance - Why?

Deefex

I've noticed that if you make an electronic payment from your current account to your credit card, the money is deducted from your account by the end of that working day, but it does not appear as a credit on your CC statement until 3 days later.

Why?

I can understand overhead involved with paper media such as cheques or postal orders, but if you're making an electronic payment what on earth takes three days to clear?

For that interim period the money is no longer in your current account, nor is it credited to your CC - that's three days you're missing interest payments on that sum of money.

Can anyone shed any light on this?

geordie_joe

There is nothing to stop these transactions being instant, although some will come in and talk about BACS payments and clearing houses and things that are done on paper. But my point is they COULD be done instantly, simply saying they are NOT done that way is no defence.

The simple fact is these are electronic transactions and could be done instantly. The reason they are not is the banks hold onto the money for 3 or 4 days and get the interest.

I have asked at several banks and each blame the other bank. They say "well we send the money the same day, the bank we send it to must be hanging onto it"

jonesMUFCforever

Electronic payments will be faster from May 27th.They will take a matter of hours.
Payment by paper bills through a bank counter will still take as long as now.

Mikeyorks

geordie_joe wrote: »

But my point is they COULD be done instantly, simply saying they are NOT done that way is no defence.

They are done instantly ..... if you use the manpower intensive system called CHAPS ... and pay up to £30 per transaction for the priviledge.

Otherwise the 3/4 days via BACS can't be shortened ... no matter what your opinion. 'It's electronic' doesn't do the Harry Potter bit and weave magic between the discordant systems the Banks have been operating for years. If they could make BACS fully operate at Day 1 .... they would do so. Fact, not opinion is ... they can't.

As it is they're having to spend millions on a new network and software at each end to accomplish this. It's called 'faster payments' and is scheduled for 27th May. It will handle SOs / bill payments and diarised payments. DDs and BACS Direct Credits (salaries) will continue to operate to the current timeframes as there's no 'float' (the interest the Banks make whilst the money is between accounts) involved with those.