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Money for nothing – the business of delay in banking

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#41

Whats even worse is when the payment is an international transfer. When the currency hits your bank the exchange rate will have changed in the 3-5 day wait. I have personally lost thousands when this has happened most recently over the time of the Brexit vote when I lost $3000 due to the delay in processing!


#42

The flip side of the wait is the xrate could go either way, and for those with routine transfers they win some and lose some, but the constant is that whenever possible check the xrates at the sending side and have the funds wired to Australia in $AUD not the native currency when possible. The xrate is usually better, sometimes much better, on the other side.

My experience with the US is that there is usually a 3-5% (!!) difference in my $AUD if I get the $USD converted to $AUD and then sent to my bank versus sending $USD for conversion here.


#43

This article is behind a Fin Review paywall


#44

I have my Citibank Visa paid automatically each month from my Citibank Cheque account. If I check my accounts on line, it shows that my cheque account has been debited on the due date, but it takes 3 days before my Visa account is credited. This takes place all within the one bank, which can obviously see that funds are available. As I say, this transfer IS ALL WITHIN THE ONE BANK!!! How can it take it 3 days to effect a transfer. It should take milleseconds!!!


#45

The .community site won’t bring up your reference but I presume it was the link to afr. My apologies, when I posted the link it did not seem to be firewalled but it certainly is now.

An alternative
http://thenewdaily.com.au/money/finance-news/2016/09/26/new-payments-platform/

and from Choice,


#46

The answer probably includes antiquated systems, overemployed executives (from the customer view) who get bonuses for maximising profit (the bank’s KPI!), and the wonderful world of what is called ‘batch processing’ that is done overnight, on a schedule, one step during a batch, hence multiple nights, and they treat all transactions as if they were from another bank to avoid having to special case internal transfers.


#47

Citibank certainly do seem to have some antiquated processes. My wife used to bank with them until they made a serious blunder. She ordered a bank cheque online. To be made payable to herself. The cheque arrived, with her name misspelled. :unamused:
This indicated to us that at some point, there was manual intervention, to (wrongly) re-type the name that was already in their system.
To add insult to injury, they demanded that she go into their city office with the cheque to obtain a replacement. At opening time, there was no-one at their front counter, and she ended up going into their office maze to find someone - most were in a meeting in a conference room, and were surprised that no security staff had stopped her. :thinking:
I remember thinking, what if that cheque had been needed to settle a property purchase, or something equally time-critical ?


#48

Let’s get something clear here … that is exactly what you used to have to wait for a stock trade to settle. Not so long ago (1999) it was T+5. At that time it changed to T+3. Fairly recently (2016) it changed to T+2. (This is all “business days”, so the actual numbers of days are all potentially greater.)

So this is a bad comparison and, no, there won’t be a demand for a Royal Commission.


#49

We all know that Bank Bashing is a national sport but for balance there are reasons not to have instantaneous transactions.

  1. Stuff-ups

If you do a BPAY or other transaction and you added a zero to the end of the number of dollars by accident then right now you can contact your bank and do something about it. If all transactions were instantaneous then the money could be irretrievable.

  1. Government Surveillance

The government expects banks to conduct surveillance for suspicious transactions. If all transactions were instantaneous then all the dodgy transactions might have been completed before any further action happens.

Does this sound familiar (ahem CBA ahem)?

Quoting from a recent news article:

[CBA’s] broader focus on technology innovation might have been prioritised over its legal and regulatory obligations

This case has therefore exposed a tension at the heart of banking: the more life is made easier for customers, the higher is the risk of fraud.


#50

Why would that change? You can still contact your bank and as long as the funds remain in the destination account you can usually get them back. If you zeroed your own account by a ‘transfer now’ Bpay or EFT that is another issue, but the banks will not necessarily rectify it immediately. If ‘you’ mindlessly click OK OK OK ‘you’ have approved ‘your own’ error. If ‘you’ are worried about ‘your own’ errors you could still set a transfer for a future time. It is a matter of choice (no puns intended) to be able to join the electronic age, or to be happy shuffling logical paper and transferring ‘tapes’ on a schedule.

A banking filter should be instantaneous. If you have ever had a suspicious charge blocked you know how that works, and works well. Sometimes too well.


#51

At the very least it is more difficult to rectify a mistake because two banks are involved rather than one.

There have been cases where a transaction has been done erroneously and the destination has noticed the error before the source and by then the funds are out of the country.

Except it won’t be a matter of choice, will it? If this did ever change, banks aren’t going to do the transactions for some customers in overnight batches while doing the transactions for other customers instantaneously.

I would be happy if all inter-bank transactions were done overnight for next calendar day. I agree with the original complaint that “3 business days” in 2017 is a bit ridiculous. Happy with virtual tapes.


#52

The original complaint included mention of cheques. Surely the solution to getting timely clearance of cheques is to abolish cheques? Problem solved?


#53

Without getting into semantic games if you select send now it would be instantaneous, and if you select send tomorrow it isn’t. That would be the customer’s choice.


#54

I agree. Recently I gave someone ‘cash’ for a combination of product and service. The transaction cleared almost instantaneously and prompt delivery of both ensued … :wink: Even with banks, I’ve heard tell if you are with CBA you can transact big amounts of cash without the feds finding out !! although maybe they’ve tightened up on that a little of late …


#55

Sorry @person , but I don’t think that stuff-ups and government surveillance are a good excuse for banks not doing their jobs in a timely manner. Both of them occur regardless of how quickly transactions are processed.

As for stock trading, no it is not something I do very often. I just sit back and listen to stories about day traders, or about the amount of money spent on getting a transaction between New York and Chicago 3 milliseconds faster. The fact that it takes three days both here and in the US for a trade to officially clear does not stop people from trading what they just bought within that time, and if it did you would most definitely have people demanding their money! “Day trading” would not be an occupation.

Yes, there have been instances when money has left the country before the error was noticed; these were not stopped by the current delay between requesting the transfer and processing it.

I am just not clear what you think banks currently do with the time between a transaction going in at one end and going out of the other - it’s not as if they check anything.


#56

Change is on the way:


#57

But do they actually? Or is this just the CYA figure that the banks quote?

Late yesterday I transferred from an account at one bank to an unrelated account at another unrelated bank. Today the money is there. Real-time it aint but nor is it 3 business days. If it were real-time, I wouldn’t get too excited because there isn’t much additional convenience.

I can’t recall ever doing a transfer between accounts at different banks that was not “overnight”. So if your bank is really taking 3 days then maybe you need to find a better bank.

I think the whole thing about “lost interest” is a furphy. The receiving bank will pay interest from the date of the transaction by the user (and conversely the sending bank will stop paying interest from that date). So even if the transfer does take 3 days, you don’t lose any interest while the money is in the void.


#58

While 9 months old and filtered by a reporter, this covers it, including the interest (yes, apparently a furphy in the discussion, as @person wrote), noting new features are due shortly as referenced in some earlier posts.


#59

Here’s a link to a recent (October, 2017) report from the ABC.


#60

Had two interesting cases personally in the last week.

Case 1 - transfer from another party to me where we both use the same bank - a four figure sum under 5k$ - other party’s balance depletes immediately and mine increases immediately but while my account shows a balance of the right amount, the “available funds” is zero, and remains zero for 36 hours. I was told the money was “waiting to clear” for “security reasons” - so from the perspective of the party who sent it to me, its gone - from my perspective it’s coming but not available, and for 36 hours neither of us can use it. I wonder who is taking advantage of that? The bank has since been unable to explain what security processes are in place over this period and how that benefits the customer.

Case 2 - transfer from me to another party at a different bank - four figure sum under 5k$. I receive a ‘paid in full’ tax invoice via email a couple of hours later the same day from the other party, and my shiny new motorcycle parts from Germany are on their way.

Makes perfect sense …