Internet Bank Transfers

The Mad Rapper

The Mad Rapper

The Mad Rapper

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Why does it take 3-4 working days for money to transfer between UK banks when paying someone by Internet Banking?

A Swift transfer arrives the same day, so why the delay? It's all electronic so I don't see the bottle neck - unless of course the banks are helping themselves to 3-4 days interest on your cash?

It's annoying TBH :mad:
 
You've got it ;)

Retail transactions are bundled into interbank transactions, then are sorted once received. The process has to go through a clearing system called CHAPS.
 
I suppose it depends which bank your transfering from and to. When i transfer money to my mum (for rent!) using online banking it goes through straight away! because we are both with the bank of scotland.
 
afaik the cash goes to a holding account where the bank does gain interest

i have no idea why it can take 4 days though
 
its obnly between diffrent banks tho so if your both with the same bank then they dont bother
 
Internet Transfers are basically BACs payments... So the money leaves your account day 1, sits in a holding account at your bank for 2 days and then the instruction is sent to the corisponding bank on day 3. If you bank with a building society can take an extra day as a lot of building societies use holding accounts at the large banks, so this then takes another day for the money to be transfered from the holding account into your account
 
It's the biggest legal scam around, courtesy of the banks :).

The Mad Rapper said:
My point is that why does it need to sit in a holding account at all? And even though it may have to, why 2 days? Why not seconds?
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Money and profit.

Although this did make me ponder an interesting situation (well, it interested me :p). I wonder, if I get a bank charge or something similar that requires me to pay via cheque or in person - if I could transfer it to my savings account first, for 4 days.
 
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platypus said:
Although this did make me ponder an interesting situation (well, it interested me :p). I wonder, if I get a bank charge or something similar that requires me to pay via cheque or in person - if I could transfer it to my savings account first, for 4 days.
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That is interesting ;)

Thanks to all for the replies - I still think it sucks, but I have a better understanding of the processes now.
 
I take it out the cashpoint and physically pay it in over the counter at the other bank.

Why should the banks help themselves to some of my interest? Greedy SOBs. :mad:
 
ok

Bank transfers, cheques etc still have to go through intermedaries before the cash is posted to your account. All you see on-line is a front end system that tells you what's expected.. but behind the scenes the transfers are batched up into interbank transfers called NOSTROs.

It would be a bit like you owing me £10, £40 and £50.. You would give me £100 and you'd write a note telling me what each item is for my records.

The receiving bank receives the batched up cash through it's own NOSTO account but has no idea where this cash is going. This is the holding area.

While this is happening, the individual transactions are sent for clearing and validation and sorting.. a bit like the post office. Once the receiving bank recieves this information, the amounts, the money can be taken off the NOSRO account and posted to the respective account as a cleared balance.

Funds that are lost in the process are sent to a suspense account, which bears no interest because the banks can't risk using this on the over night rates.

The delay in the process is purely in the hands of the clearing house because the interbank transfer are claculated over night and sent next day via SWIFT.
 
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And this is all done by computers through wires yes? There is no good reason for a 3-4 day wait to transfer funds. But thanks for explaining the process. :)
 
i paid some of my credit card payments off last night, same bank, and yet, the display still says the same as it did the night before. its taken the moeny out from my account, but it jst hasnt been updated yet on my CC account?! grrrr!!
 
tbs said:
i paid some of my credit card payments off last night, same bank, and yet, the display still says the same as it did the night before. its taken the moeny out from my account, but it jst hasnt been updated yet on my CC account?! grrrr!!
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They take 4 days too unfortunately.
 
Admiral Huddy said:
ok

The delay in the process is purely in the hands of the clearing house because the interbank transfer are claculated over night and sent next day via SWIFT.
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I agree with most of what you are saying, however this part I do not. SWIFT is an international system allowing bank to bank transfers, making use of the settlement accounts held at the central banks of the countries from which and to which the payment is being sent.

BACS on the other hand is a domestic payment system where the settlement is carried out by clearing banks on their accounts held at the Bank of England. Banks don't actually send each other money, they just credit or debit their accounts at the BoE.

It is a legacy system, the three day timescale is based on the fact that the banks used to work off magnetic tapes that were processed centrally before computers were networked. Reducing this would require a massive industry-wide initiative, more of this below.

As for CHAPS, this is a completely different system, allowing same-day settlement, where clearing is carried out on a per-transaction basis and not a per-bank basis. The high processing charges mean that the transactions carry relatively high customer fees. CHAPS is typically used for high-value or important payments, where non-repudiation is a key requirement.

In the future, the Faster Payments service is being launched - basically this will allow near-realtime settlement of payments valued under GBP 25,000. The tagline being used is 'Faster than BACS, cheaper than CHAPS'. This is going live between now and next year, different banks have different timescales to accepting these payments.
 
sr4470 said:
They take 4 days too unfortunately.
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doesnt that suck, seeing as i checked the box that said "immediately" instead it takes it out but doesnt show in the CC account:rolleyes: banks ay?! might as well keep it in a safe in the basement
 
tbs said:
doesnt that suck, seeing as i checked the box that said "immediately" instead it takes it out but doesnt show in the CC account:rolleyes: banks ay?! might as well keep it in a safe in the basement
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Not much choice...almost all businesses pay wages into bank accounts.
 
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