Wait...I thought it was 2005...? (rant warning)

Wertz

*looks at calendar*
Oh wait... it IS!

So can anyone tell me why, in the 21st century, with the advent of EFTs, internet banking and online payments, that we in Ireland are still at the mercy of banks and their dinosaur-like clearing policies?

What I'm really looking for is someone in the financial sector, be it banking or whatever, to try and explain the whole clearing thing...(I won't hold my virtual breath).

Here's my scenario;
I have an American Express credit card account, issued under license by one of the big Irish banks. Now, I use it as a debit card, never leave it in the red for long enough to attract interest penalties, and use it a fair bit for online buying.
So this weekend I paid off my owing amount in full, and proceeded to bid on an expensive item on eBay for which the seller only accepts Paypal.
I subsequently won the item.
Now for the science bit...I attempt to pay the seller through paypal and get a transaction denied warning message. I thought it was a watchdog (see other thread) and tried a few more times just to be certain.
Next I phone the card issuer and they tell me that although I may have made the payment, that it hasn't yet gone through. Okay, I say, but I paid it on Friday. The lady tells me that I need to wait till today (tuesday) for it to go through due to the holiday w/e.
Grand, says I and tell the seller I'll pay him by close of business tuesday.
So I get in from work this afternoon, open paypal and send the money....denied again :mad: :mad:
At this stage I'm livid and call my bank directly. Why hasn't my payment (made on their internet service) gone through and been credited to the CC account?
"I'm sorry sir but due to holiday w/e...etc."
Yes, but I paid on Friday, today is Tuesday...
"No I'm afraid it takes 3 business days...this is only the first business day since Friday".
Can my payment be expedited? The account is in the black, I've been with them forever, any excuse I can think of...
"No, no way at all, sorry"
Bu your bank ISSUES the CC!
"Yes but we are only agents in this country for them"
...
"Good day to you sir"

F**k this.
I get back on to my CC issuer and ask them is their anyway it can be pushed through from their end. "No sorry, you would need to apply in writing to have your limit revised upwards"
But the payments been made ( I even credited the account with another payment to see if that would help), so where is it?
"It takes 2-3 days to clear".

Clear. There's that word again. As far as I'm aware, clearing was used back in the days of paper-only transactions to ensure against fraud, mistakes and to make sure that there was always enough currency in a bank to cover out going payments.
But these days the vast majority of transactions (and I'm not talking just banks here) are made electronically.
Why is it that I can pay a complete stranger on the other side of the world instantaneously without ever having to meet him, but when I attempt to move money between two in-credit accounts with the one bank, that it takes "2-3 business days" ?
It's nothing short of a travesty.

The cynic in me can think of only one reason that this practice still takes place, and that's sheer profiteering.
Say there are 1,000 cases like mine every day with just my bank. Now say that each transaction is worth €500 average. For those "2-3 business days" (and however many weekend ones) the bank has that money in neither the account it is being paid from, nor the account it is being paid to, but instead sitting in some financial purgatory of the bank's own making.
Do the maths and you come up with 500 grand (the real figure I can only guess at) sitting for up to a week, earning not the owners of the money, but the bank, interest...


I'm sorry but for anything else as scandalous in this country we spend millions on tribunals, send politicians to jail, and splash it all over the media.
Yet this practice is on-going and seems unlikely to stop, unless it IS stopped.
Who do the banks answer to and why have they not resigned yet?
Where is the government standing on this? Isn't it an election year?

This is not a new issue; it's been plaguing the country for decades, but the excuse for it has worn thin in the past 5 years or so. I've only been made fully aware of it by sheer bad timing.
My case isn't special and only a few hundred euro is involved but it still pisses me off no end.
I'm sure there are plenty of proper horror stories involving mortgages etc (feel free to post yours)

Anyone from any of the banks post here? Care to enlighten us? Or am I right in my cynical assumption?





Sorry for the long post...I have 2 days to kill

BuffyBot

Search this forum for clearing, there have been quite a few threads on the matter - and some good posts.

The IBF's explantion is here http://www.ibf.ie/pdfs/ff9.pdf

bounty

875 word rant :eek: ... im not reading that

at least summarise your problem to a sentence or two, so us lazy people can understand

StonedParadoX

how'd u know it was 876?.. i hope u didnt count??

Wertz

bounty wrote:

875 word rant :eek: ... im not reading that

at least summarise your problem to a sentence or two, so us lazy people can understand

OK for Bounty, other ADHD sufferers and the ones down the back who weren't listening...

Basically I said that banks are holding onto our money for too long between transactions; a process called clearing, that has no reason for existing in the age of electronic fund transfers, and that their huge profits we read about every financial quarter are created on the back of this clearing process (some of them anyway).

In the time I took to summarise and reply you could have skim-read the post.



[edit] Having reread my original post I could see how a moderator might interpret the tone as troll-ish. This is NOT my intention.

Dizzyblabla

I saw them do it on that show, ehh, rogue traders or one of those, the mother tried to transfer £5 to her son using telephone banking. The presenter took £5 and hitched a lift to her son (who was a few hundred miles away) and got there before the money did. can't remember the excuse they gave though when they contacted the bank...

boa-constrictor

Any self respecting banker would talk you out of believing that the banks make money out of delaying your payment but I dont give a sh1t anymore. The simple answer is yes of course they do. They have use of the funds for 3 days. Sure they have to reconcile the account that your payment is credited to (debit it and apply it to the credit card), but it doesn't take 3 days.

Thats only a tiny scandal though. If you imagine all the foreign payments floating around. Alot of these are for very large amounts (sometimes hundreds of millions). They're meant to take 2 days to make but in reality they could be done in 20 minutes (except where different time zones prevent it). The bank make a sh1tload out of all them funds using them to earn interest nightly on the money markets. And what will Carmel Foley do about it - nothing cos she wouldn't know where to look.

Sponge Bob

THought paypal would only take max USD500 or USD700 from a credit card anyway even a verified one

eth0_

Why did someone delete my post on here?

I queried your use of the term 'debit card'. How can you be using this card as a debit card when you are obviously near or over your limit when you had to ask for it to be increased in order to buy something online?

Also, you obviously don't really care about the banks f*cking you in the ass if you have an AMEX card with their obscene interest rates!

Sponge Bob

An Amex is a charge card, it must be cleared in full each month Eth0. THere is a constraint on Paypal all the same.

hussey

I had a problem with BOI before - where I double paid a S.O., I asked them to transfere the (over paid) money to my Current account, they did
according to my online account I had a balance of 156.56 euro - when I tried to transfere this it told me I had a balance of 3.56euro - I rang them up and they couldn't explain to me why 3.56 euro of 156.56 had been cleared (I was told BOI - BOI transferes are cleared within minutes) it took another day to see my extra 153euro ... nobody has still explained it to me

Zaph0d

old thread about clearing times
http://www.boards.ie/vbulletin/showthread.php?t=206236

Wertz

eth0_ wrote:

Why did someone delete my post on here?

I queried your use of the term 'debit card'. How can you be using this card as a debit card when you are obviously near or over your limit when you had to ask for it to be increased in order to buy something online?

Also, you obviously don't really care about the banks f*cking you in the ass if you have an AMEX card with their obscene interest rates!

Sorry eth0_...
Just to clear up what I meant...I have an American Express Blue card (the credit card issued under license from my bank, NOT the charge card as someone mentioned), which I use as a month to month debit card; ie I spend on the card and pay it off at the end of the month.
Two reasons for doing this:
1) my bank charges me 28c per transaction on Laser and cheque so f**k that,
and 2) Amex pay you back 1% of your total spending amount every september. That helps ease, or cancel ou,t the €40 stamp duty (more rip offs but not the bank's fault).

Your point on interest rates may be true, but then, since I don't let the balance go into the red outside of the interest free period, it doesn't really concern me.
As for "caring about banks f**king me in the ass", yeah, that's my point: They're doing the whole country without lube.

Using the card as normal last month I paid my bill 3 days after it issued (friday as usual) and proceeded to try and send funds with paypal (using my amex) on the monday. My last month's owing balance was large and the purchase was pretty large so the two combined to over-max my card (which I thought had been paid off).

Thanks for anyone that posted links...gonna go read em now.

Oh and to whoever said Paypal users are limited...I have a seller's premier account (free service) which covers me, past my card's limit (as useless as that is lol).

Moral of the thread. Banks, especially Irish ones, are only bastards. Thieving ones. God forbid the day I need to actually get a loan or a mortgage off one of them...

BuffyBot

Banks, especially Irish ones, are only bastards. Thieving ones. God forbid the day I need to actually get a loan or a mortgage off one of them...

Ireland or abroad, you'll find few ones who don't like making as much money as possible

Blackjack

boa-constrictor wrote:

Thats only a tiny scandal though. If you imagine all the foreign payments floating around. Alot of these are for very large amounts (sometimes hundreds of millions). They're meant to take 2 days to make but in reality they could be done in 20 minutes (except where different time zones prevent it). The bank make a sh1tload out of all them funds using them to earn interest nightly on the money markets. And what will Carmel Foley do about it - nothing cos she wouldn't know where to look.

Large Cross Border payments are usually made for same day value. It's very unlikely (and also incredibly dumb) that someone making a payment stretching into the hundreds of Thousands let alone millions would make a payment using a method that means the funds are not cleared for same day value. In reality, they are done in seconds, money leaves account A and is credited to account B on the same day, provided the payment is instructed properly.

De Rebel

I had this argument on a regular basis with Ulster Bank in the past. I have a UB Mastercard, which I clear in full every month. I never allow a balance to roll over, therefore I never pay interest on the account. At one stage a few years ago, Ulster used to print “please allow 4 working days for payment to clear and 7 days for payments by cheque” on their statements. I always pay by eft from one of my UB current accounts, and I always schedule the payment for the day prior to the due date. As I see it, the transfer is from one bit of UB to another bit of UB, the money never leaving their domain. And more importantly they have value and beneficial use of my money throughout the entire transaction/delay. As you say it’s electronic and should therefore be instant. On a regular basis, they would end up charging me a month’s interest (often in the €200-€300 range since I use my card a lot for business purposes). I never failed to get this interest charge quashed. It always took an argument, but I always got it sorted. The basis of my argument is that if it takes them 3 days to move money from one part of the bank to another that’s their inefficiency, not mine, and there is no reason which I should be liable for it. Of course they never conceded this point, always saying that the refund of interest was “a gesture of goodwill” or “in recognition of your long standing relationship” blah blah blah


Regarding the interest etc. on all the money in the black hole you talk in terms of 500 grand. The reality is a lot different. The amount in the Irish Inter bank clearing system at any one time is in the order of 3+ billion euro. This is a constant. Therefore than banks have this huge pool of your money and mine to use for their own purposes thanks to their sloth lethargy and gross inefficiency. And it costs them nothing. This is a hugely profitable asset for them and believe me they make a killing on it.

Wertz

De Rebel wrote:

Regarding the interest etc. on all the money in the black hole you talk in terms of 500 grand. The reality is a lot different. The amount in the Irish Inter bank clearing system at any one time is in the order of 3+ billion euro. This is a constant. Therefore than banks have this huge pool of your money and mine to use for their own purposes thanks to their sloth lethargy and gross inefficiency. And it costs them nothing. This is a hugely profitable asset for them and believe me they make a killing on it.

Yeah, bear in mind that I was just pulling numbers out of my ass (hey, if the banks can do so can I!) to try and prove a point. Obviously the numbers invloved are a lot bigger when you combine all their transactions, especially internationally

On a sidenote I've noticed no-ones posted here that claims to work in any financial service sector. Wishful thinking on my part I 'spose...

BuffyBot

On a sidenote I've noticed no-ones posted here that claims to work in any financial service sector. Wishful thinking on my part I 'spose...

Why? Do you think that when someone gets a job in a bank, they're suddenly told all the mysteries of life such as the whys and hows of clearing?

Wertz

BuffyBot wrote:

Why? Do you think that when someone gets a job in a bank, they're suddenly told all the mysteries of life such as the whys and hows of clearing?

No but I'd expect them to have more of an insider's knowledge than the average man on the street. I'm not asking them to defend it or to demand their employers to abolish it....just for them to give their views.

Anyway, my payment has finally cleared (and it only took 6 days! ) so I am free to do what I like with my money for another month.
I teh future!

bounty

Wertz wrote:

No but I'd expect them to have more of an insider's knowledge than the average man on the street. I'm not asking them to defend it or to demand their employers to abolish it....just for them to give their views.

well i worked in a branch for a while, and when some annoying customer started complaining about cheque clearing times, i told them it was to allow time for the cheque to transfered to/from and processed at the central clearing centre, which is the short answer my manager told me

but then i noticed that they started to argue about this, being the whiner customer type to complain in the first place i should have known :rolleyes:, i mean its like arguing about the weather, no amount of complaining is going to change this bank policy

so then i started to just say i didnt know anything about cheque clearing times , and gave the customer an address to write a letter of complaint to

Wertz

Thx for that Bounty.
TBH I haven't that much of a problem with cheque clearing times, even though all cheques are essentially EFTs since they are machine-read these days.
My qualm is with online banking (especially in-branch) where no physical transaction ever takes place yet clearing times are similarly lenghty...

As for giving off to bank staff about stuff like this: what's the point? I know that they have no control over those systems and that they're just doing a job.
This whole mess should be tackled from the head down by IFSRA (?) or what ever regulators are in charge of the finance sector.
They won't be, but they should...

Blackjack

boa-constrictor wrote:

I beg your pardon mate! If you went into the bank in Ireland and did a Credit Transfer to a bank a mile down the road, are you telling me it would "be done in seconds", no. So do you expect anyone to believe that if they were sending 100k to Singapore it would be done in seconds - rubbish. Payment in two days is called 'spot value', its the cheapest payment method. You cant make a payment out of a fixed deposit account and if its sitting in a non interest bearing current account as most currency accounts are, it makes no difference whether it takes 1 or 2 days. Also how the f**k would you make a payment in seconds to a bank anywhere in Asia or Australia for instance if its the middle of the night there or even to the US if its morning time, as they would still be in bed. The different time zones all over the world mean its only practical to make payments for spot value to some countries but the bank use this to their advantage when it suits. Get your facts right you dumb f**k.

Ok, first of all, spot value is a term used to define soonest available value on Foreign Exchange transactions, not a simple tranfer of cash in any particular currency. Generally Spot is T+2, however there are facilities that allow you to do it sooner than this. T in the above case means Trade or Transaction date, meaning if I instruct or trade on Tuesday, payment or settlement is made on and for value Thursday.

Secondly, if I have a singapore Dollar account, and wish to pay SGD to someone else, there is nothing to stop me from making a payment from my account to theirs for same day value, given that I instruct the payment within the cut offs required.
To clarify (given that you have indicated that I need to explain, by call me a "dumb f**k") - I instruct the payment within the given cut off time to the bank with which I hold the SGD account. For Far eastern currencies, this tends to be one day before value, sometimes more depending on the currency, and if indeed I am allowed to do so. More on this later.
My bank will then therefore instruct the payment to be made within a timeframe which will allow them to instruct a payment from their account (also known as NOSTRO account) to the recipients account or the recipients correspondant bank locally. The recipients Bank will then credit to the recipient, or the recipients Correspondant Bank as the case may be. Bear in mind that to make a payment in any currency, this needs to be done in the local currencies timeframe. E.G. when the Punt was still in existance, Punts could only be moved during times when Irish Banks were opened and making payments.
So, should I wish to pay an amount from my Singapore Dollar account to some elses Singapore Dollar account, it all really happens between local banks at a local time, and the Foreign banks really only reflect this by a simple method of Double entry book keeping. To further explain, if I hold my SGD account with Bank of Ireland, and I need to make a Payment to Joe Bloggs who has their SGD account with AIB, the process is as follows:
I instruct to pay to Joe Bloggs SGD account.
Bank of Ireland either arrange to fund this by an FX transaction for which I will pay, or use existing SGD I already have on my SGD account with them (which I would expect them to have invested in the Markets and have earned interest for me).
Their funding will ensure that their account with their Correspondant Bank in Singapore pay the funds from BOI's SGD account (generally via MT202, given that they are a Bank) to AIB's account in Singapore. AIB will hold said account with a correspondant bank, and Joe Bloggs will have advised AIB in advance that the funds are due (this is called a pre-advice, or to give you another technical term, an MT210). AIB will fund accordingly, and credit Joe Blogg's SGD account with them. AIB will probably put said money on deposit or exchange it otherwise with whichever organisation will give them the best rate they believe to be available, and tell Joe that the money is on their account, all the while putting the money out into the Market in order that they can earn a return, and pass said return less a spread to Joe, in the guise of Credit Interest.
Given that the same time constraints will apply to most organisations within a specific time zone and also that their treasury or Cash management business will be planning their payments will in advance, it's not inconceivable that business A will arrange to receive money from business B on a specific date, on which date Business A are due to pay Business C for services received.

The above example (from a cut off point of view) applies only to currencies where the time zone means that you need to instruct well in advance. In the case of Sterling, Us Dollar or Canadian Dollar, generally these can be instructed the same day, as the process is quite fast, as the movement of the funds take place in either the same time zone or a later time zone) and the actual movement of funds (in any location) takes place in, literally, seconds.

There are numerous banks (and in Ireland, the IFSC is where most of this activity occurs) which will allow you to hold a foreign currency account, depending on various different circumstances.
First of all, you will need to have established yourself as an organisation or individual that requires such a currency account, depending on their requirements or the requirements of the regulator of the currency you wish to hold. Secondly, some currencies have restrictions that will forbid you from holding an account unless it's for a specific purpose. In certain cases, you are not allowed to hold various different currencies (largely Asian Currencies) overnight if you are a foreign investor. Examples of this are KRW (Korean Won), INR (Indian Rupee) or with a somewhat restrictive policy dependant on reason for payment, IDR (Indonesian Rupiah). Other currencies are so restrictive that you need to have specific reasons or criteria before they will allow you first of all to buy the currency, and second of all to actually use the money to buy anything. LKR (Sri Lankan Rupee) would be a good example of this. Generally in these instances you need to get permission from the local Central Bank to either Buy or sell this currency.

So, in conclusion, it is possible to make payments for same day value in any currency where the facilities and Banking infrastructure allows you to do so.

In the case that you are making a payment from a Bank in town A to Bank B down the road, the same method of double entry book-keeping applies, and the actual transfer of the funds is actually done in seconds. This is because Banks in the domestic Environment have centralised accounts, and therefore if you wanted to transfer from Ulster Bank Clonmel to Ulster Bank New Ross, the transfer of funds takes place at Ulster Banks Central office, but by transferring from UB Clonmel's account to UN New Ross'. This transfer, again, only takes seconds.

I've had a few pints this evening, so if I've missed a few minor intricacies, so be it. It has been a long explanation after all. However, if you have information or evidence to the contrary of what I have explained above, I would really like to see it. Otherwise, please retract your accusation that I don't have my facts straight, and also please retract the accusation that I'm a dumb f**k.

Our man in Havana

Best one ever, It took PTSB 3.5 weeks to clear a €150 cheque from SKY TV because it was drawn on a UK bank even though it was demoninated in euro.

Anyone care to explain?

Blackjack

Did Boa Delete his own post, or was it done by a Mod?. If the former, was that the retraction of the accusations levelled at me?.

nlgbbbblth

De Rebel wrote:

I had this argument on a regular basis with Ulster Bank in the past. I have a UB Mastercard, which I clear in full every month. I never allow a balance to roll over, therefore I never pay interest on the account. At one stage a few years ago, Ulster used to print “please allow 4 working days for payment to clear and 7 days for payments by cheque” on their statements. I always pay by eft from one of my UB current accounts, and I always schedule the payment for the day prior to the due date. As I see it, the transfer is from one bit of UB to another bit of UB, the money never leaving their domain. And more importantly they have value and beneficial use of my money throughout the entire transaction/delay. As you say it’s electronic and should therefore be instant. On a regular basis, they would end up charging me a month’s interest (often in the €200-€300 range since I use my card a lot for business purposes). I never failed to get this interest charge quashed. It always took an argument, but I always got it sorted. The basis of my argument is that if it takes them 3 days to move money from one part of the bank to another that’s their inefficiency, not mine, and there is no reason which I should be liable for it. Of course they never conceded this point, always saying that the refund of interest was “a gesture of goodwill” or “in recognition of your long standing relationship” blah blah blah

I think you'll find that payment of an bill, be it Credit Card, Eircom, ESB, Gas - whether done manually by going to a bank and using the tear-off portion of the bill, or by posting them a cheque or electronically - is not an instantaneous process. The funds are initially paid into a general collection account and then posted individually to the customer's credit card/eircom/whatever account. This process usually takes 3 to 4 working days.

By insisting on making the payment on the day before it is due as opposed to the recommended four days beforehand (which is still printed on the statements), you are setting yourself up to be charged interest and by extension, hassle in trying to get the interest charges refunded.

bounty

yea De Rebel is just being an asshole customer in that case

As he sees it.... "the transfer is from one bit of UB to another bit of UB, the money never leaving their domain"

how do you know this for certain?

maybe ulster bank have to send the money to an external bank's collection account for clearance, maybe they are just reselling another bank's mastercard

nlgbbbblth

bounty wrote:

maybe ulster bank have to send the money to an external bank's collection account for clearance, maybe they are just reselling another bank's mastercard

Mastercard and Visa are two brands of credit card which are used across the world. Banks issue cards bearing one or the other or both. Any disputes with the card are taken up with the Bank's credit card dept, not Visa or Mastercard.

Anyone remember Access? Your flexible friend. Now taken over/assimilated into Mastercard.
That was the coolest.

BuffyBot

Banks issue cards bearing one or the other or both

In some cases - some banks and building societies have cards issued by other (outside organisations). The new card from EBS for example, is provided by MBNA

nlgbbbblth

nlgbbbblth wrote:

Banks issue cards bearing one or the other or both.

as in some banks issue Mastercard and Visa
others Visa only etc

De Rebel

bounty wrote:

As he sees it.... "the transfer is from one bit of UB to another bit of UB, the money never leaving their domain"

how do you know this for certain?

maybe ulster bank have to send the money to an external bank's collection account for clearance, maybe they are just reselling another bank's mastercard

The technical operation of the system is not my concern. As it stands, I have an Ulster Bank Mastercard, and an Ulster Bank Current Account. That they choose to either outsource or contract in part of these operations is their lookout, not mine. As far as I know, the entire transaction remains within the RBS network, UB traditionally used NatWest CC processing facilities. And so far as I know, the bits are actually joined up, e.g. when I am in the UK, I can access my UB balances from the NatWest ATM network. This being the case, I can reasonably expect them to transfer money from my UB CA to my UB CC, even if it is elsewhere in the RBS system. If they choose to allow it to take 4 days, that is their lookout. I am not prepared to pay for their sloth.


Regarding your calling me an Asshole, I think that is unwarranted and reflects more on you than it does on me.

De Rebel

nlgbbbblth wrote:

I think you'll find that payment of an bill, be it Credit Card, Eircom, ESB, Gas - whether done manually by going to a bank and using the tear-off portion of the bill, or by posting them a cheque or electronically - is not an instantaneous process. The funds are initially paid into a general collection account and then posted individually to the customer's credit card/eircom/whatever account. This process usually takes 3 to 4 working days.

By insisting on making the payment on the day before it is due as opposed to the recommended four days beforehand (which is still printed on the statements), you are setting yourself up to be charged interest and by extension, hassle in trying to get the interest charges refunded.

I'm not talking about third party payments, or payments via manual systems. I am talking about electronic transactions within a single organisation.

Funny that an ATM debit to my Current Account appears on my on line account seconds after the transaction, and the money is gone from my account on the overnight run. I see no reason why they should be allowed to operate with such efficiency when it is to their advantage, but take 4 days when the advantage is reversed.

RainyDay

When I pay my NIB Visa Card from my NIB current account via a 'funds transfer' on their Internet Banking service, the payment hits my Visa account immediately. Same when I make a transfer to my wife's NIB account in the same branch.

It's only when you start going outside the branch that you hit the 3 day limit.

boa-constrictor

Apologies Blackjack. I wouldn't say that to your face so I shouldn't say it here either. I would still contend that banks make money out of clearing times (had I not destroyed my own argument by resorting to language).

MrPudding

Wertz wrote:

Thx for that Bounty.
TBH I haven't that much of a problem with cheque clearing times, even though all cheques are essentially EFTs since they are machine-read these days.

This is my favorite. I am with NIB. If I lodge a cheque in a branch other than my "home" branch they post it to my home branch to be lodged by a member of staff there.

MrP

RainyDay

De Rebel wrote:

This being the case, I can reasonably expect them to transfer money from my UB CA to my UB CC, even if it is elsewhere in the RBS system. If they choose to allow it to take 4 days, that is their lookout. I am not prepared to pay for their sloth.
.

This used to happen me with NIB, until they advised me to use the 'funds transfer' option instead of the 'make payment' option - Do UB have anything similar to 'funds transfer'?

antoinolachtnai

The thing about the bank holding on to your money - that's definitely not the reason. How am I so sure? Well, because the bank gets to hold on to your money anyway, especially if it is one of the big two. It doesn't really give a damn whether you have the money, or eircom has the money, or if Sir Anthony has just blown it on a big lunch for the board in Conrad Gallagher's restaurant. The chances are that it will just move from one bank account to another within the same bank. The bank has exactly the same level of access to it. In fact the faster it moves around the sooner the recipient gets to spend it. And everytime you spend it or otherwise transfer it somewhere, the bank gets a little bit of commission, so the faster things happen, the better things are for the bank.

Someone in one of the banks explained the 'three day' thing to me once. The idea is more or less as follows:

The first day, you lodge the item. It has to be keyed or scanned. It doesn't go anywhere until the batch job runs that night. This has to do with the way the computer systems are set up.

Assuming the item has made its way into that batch job, on the second morning (i.e., the morning after you thought you made the lodgement) the bank manager of the debited bank account (i.e., your bank manager) has the opportunity to have a look at it. He may decide to refuse the transaction, or to call you about it, or anything else. Obviously, if your account is seriously overdrawn, he isn't going to allow this item go forward. On the other hand, if it's only a hundred euros and you haven't messed him around in the past, he may decide to allow you a little leeway. Also, if an unusually large item payable to an unfamiliar account shows up that looks fraudulent, he may decide to delve a little deeper.

The satisfied manager now allows the item to go forward. Guess what? It won't run until the next batch job, which is that evening. So there is no chance that the money will be posted in your account until the third day.

OK, so I know what your thinking. My account is good to go. I'm even happy to sign a thing to say it's ok to clear items unconditionally without the manager checking them. Why do I have to wait the extra day? Well, two reasons.

1. Some of the systems are a little bit dim about knowing whether an account is overdrawn or not. This is really weird, but depending on the system, the batch will quite often deduct the money from the account regardless of whether there are funds or an authorized facility there to meet it. (This is what happened in the case of Ebeon, where the payroll was run even though a liquidator had been appointed that afternoon.) Why in this day and age would anybody running a bank buy software that can't tell whether an account has funds or not? I don't make this stuff up, I'm just telling you what seems to go on. Seriously though, part of the reason is that it isn't known at the start of the batch what your balance will be when all the batches (debits and credits) have been run. So the system gives you the benefit of the doubt and runs the transaction. As you can imagine this type of system has some serious drawbacks, and new more sophisticated systems have been developed since. As a result, batch systems are being phased out, but inter-bank transactions are still carried out through a batch-type system, so the old rules have to be followed.

2. The bank wants to treat all similar items presented at the same time as equally as possible. You can understand their point of view if you think about it. You wouldn't like it if your creditors were saying to themselves 'that guy's last cheque cleared on the third day instead of the second, we'd better be careful with him'.

And why are there certain types of items which don't seem to run into this issue? Well, that's because they're done entirely within the bank, and put through some sort of on-line system which doesn't depend on the batches, or the bank has some other sort of checking and authentication procedure for that type of transaction. This varies from bank to bank. My bank (BoI) will lodge to my credit card the next business day if I lodge before 2pm; your bank, it appears, doesn't.

Another issue is this thing about banking days. The long and short of it is that banks only do business on banking days. Running batches is a big part of banking business, and so they only do it on banking days (or at least on banking evenings). Of course, this doesn't quite ring true. They'll let you take 300 euros out of a drinklink machine or buy a fifteen grand car on your visa anytime, business day or Christmas day, but they won't pay your lousy credit card bill for 50 quid on a Monday morning. The whole thing is tied up with traditions and work practices and so on. Everything is held down to a lowest common denominator by the need to keep things harmonized between the banks. What else is new?

Of course, even if batches were allowed run 365 days a year, it would still take items 3-4 days to clear, because you would need to wait for a banking day for the branch manager to be available to look at any borderline items.

This is the reason I believe they pay on the third day or later. It certainly seems a lot more plausible to me than the explanation put forward by the IBF. If it is the truth, I can't see why they can't just come out and say so. There's no point in keeping it a big secret. It might not be the most sensible business practice in the world, but it is easy enough to understand how it came about. I'm pretty certain it isn't borne out of malice.

Wertz

Thx for the reply...My bank is BoI...the CC is issued (under license) by them...yet it takes 3 days for an online payment(no money or paper cheque ever changed hands) to be credited to my account.

Whilst your explanations go a little way to explaining things, the cynic in me remains unconvinced that this sytem is anything other than an archaic process that banks conveniently exploit in this modern age to their own ends.
Having said that, I've got to live within the system and in future will allow for this process.
Still bullsh*t though...

antoinolachtnai

Did you pay after two pm? Then it's going to be the third day. (That's what the lady in the credit card department told me on the phone anyway.) I find it hard to understand the 2pm thing myself. What can the bank do at 2pm that it can't do at 4pm? Bank of Ireland's processes could definitely do with some streamlining. It's as much in their interest as it is in yours to move money around as quickly as possible.

RainyDay

I don't know a whole lot about the clearing system, but I did read some time back that a rep from each of the clearing banks meet at a location in Dublin every afternoon in order to settle up with each other, e.g. AIB owe BOI x million & BOI owe UB x million etc. This manual settling up may account for part of the delay.

I guess it makes sense that there would be some offline manual controls in the process. If dodgy transactions managed to get through the automated system in some way, there would be howls of criticism on there boards about the banks screwing up your accounts. A fully automated system would leave them open to such abuse.

antoinolachtnai

RainyDay wrote:

I don't know a whole lot about the clearing system, but I did read some time back that a rep from each of the clearing banks meet at a location in Dublin every afternoon in order to settle up with each other, e.g. AIB owe BOI x million & BOI owe UB x million etc. This manual settling up may account for part of the delay.

Well, there does have to be settlement between banks at some point, but unless you are a very high-roller indeed, it is unlikely to cause any delay to you. In the Irish situation, there probably isn't as much settlement required as you might expect. In a lot of cases, the transfers between two institutions will more-or-less balance each other out.

In the ordinary course of events, you would expect this sort of settlement to happen post-facto, after your transaction has gone through, rather than before. It shouldn't be on the 'critical path'.

shoegirl

nlgbbbblth wrote:

I think you'll find that payment of an bill, be it Credit Card, Eircom, ESB, Gas - whether done manually by going to a bank and using the tear-off portion of the bill, or by posting them a cheque or electronically - is not an instantaneous process. The funds are initially paid into a general collection account and then posted individually to the customer's credit card/eircom/whatever account. This process usually takes 3 to 4 working days.

I agree here, but I've dealt with Irish Permanent (pre TSB), AIB, Bank of Ireland and National Irish Bank and find they all have utterly different times on different transaction types.

I found that National Irish Bank lodge cash lodgements almost instantaneously (or certainly within hours), are fairly quick for cheques also. However, if I use electronic banking to transfer directly from my NIB current account to my AIB cash account, it takes up to 4 working days, and this is a direct transfer. Likewise some Laser transactions can take a few days to post also. Posting to my NIB VISA takes no more than 24 hours usually.

AIB were usually the fastest - almost all cheques lodged I have found to be usually available by about 5-50:30pm on the same day. if lodeged before about 3pm in my own branch. This was regardless of account type.

Permanent were very slow to lodge cheques and cash, but also to post laser transactions.

And lastly BOI had to be the worst of all, because the clearing time seemed to depend on what kind of customer you were. When I had an ordinary cash account in the Swords branch, lodgements took up to a week. Yet when I opened a student account in College Green, mysteriously this whittled down to less than a day. This wasn't always consistent though - BOI are notoriously inconsistent.

This whole thing reminds me of our payday debacle at work which has gone on for the last 8 months. We had a new accountant who had never worked in Ireland before, last September. Ever since, we have been receiving our wages late. By late I mean that the money is not available to us in our accounts by 9am on payday. Well sometimes it has been, but everytime there is a bank holiday weekend we end up paid late. HR keep insisting (though I suspect know damn well what is happening) that the accounts are posted and authorised in time, but mysteriously this only started happening after this accountant started. And exactly the same for expenses payments (I noticed that I always got my expenses the day after this accountant told me I would receive them).

Our previous accountant often had us paid a day early, and sometimes up to 2 days early, so I suspect there is some knack about clearing that certain people are wise up to. (The bad accountant thankfully left a couple of weeks ago, fingers crossed, she is replaced with somebody who gets everybody paid on time, all the time).