Why do cheques take 5 days to clear?

Paddy Cow · 07-11-2018 10:36PM #1

Why do they take 5 days to clear? It's not like the old days when computers didn't exist and one bank had to contact another to confirm the money was in the account. I can go to any bank with my pass card and withdraw money and they always know whether or not I have sufficient funds to make the transaction. Same with using my debit card - once the funds are gone, it's not going to work (I know there is some time delay with that but it's usually just a few hours, not 5 days).

I get paid by cheque which I lodge using a lodge ATM. The machine is smart enough to read the amount of money on the cheque. My boss is AIB. I'm BOI. In this day and age is there any reason for it to take so long to clear, apart from an interest money grab?

Capt'n Midnight · 07-11-2018 11:07PM

So banks can profit from using your money for 5 days.

Really.

martinedwards · 07-11-2018 11:19PM

its getting shorter.

Using the photo clearing on the mobile AP, it takes 48 hours.

I think it MAY be part of the move away from cheques. why bother invest in a technology that is hopelessly out of date?

Paddy Cow · 07-11-2018 11:19PM

Capt'n Midnight wrote: »

So banks can profit from using your money for 5 days.

Really.

I was talking about this on another thread and that's pretty much the only reason I could come up with.

It's so annoying but as a peasant who needs their services, there's pretty much nothing I can do about it except whinge on AH :pac:

Harry Palmr · 07-11-2018 11:24PM

Because it takes a working week to build the machinery required to process one in 2018.

"What's this box, will this do it?"

"That's a fax machine"

etc

Dr. Bre · 07-11-2018 11:25PM

To cheque everything is ok

Mrs OBumble · 07-11-2018 11:32PM

To encourage you to get your boss to move to the late 20th century and pay you by bank deposit.

meeeeh · 07-11-2018 11:39PM

I can have 20k in the account and write 25 cheques for 1000. Until the cheque is actually processed by the payers bank you can't know I have enough money to cover your cheque. That being said transfer from Irish bank to another Eu bank can be faster than transfer between two Irish banks. I suspect they do take longer than necessary but chq will take longer than electronic transfer because in case of electronic transfer money leaves the payers account straight away.

jester77 · 07-11-2018 11:50PM

People still use cheques

I'm over 40 and have never seen or gotten one, I remember my dad having to deal with them in my younger days.

namloc1980 · 08-11-2018 12:01AM

Capt'n Midnight wrote: »

So banks can profit from using your money for 5 days.

Really.

Nope. The cheque money doesn't hang around in a banks own account or any such stuff. Cheques have to go through clearing.

Customer from Bank A gives a cheque to customer in Bank B. Bank B customer takes it to their bank to be lodged. Some banks will give you credit immediately for small cheques. In the meantime overnight the cheque is physically sent to Bank Bs cheque internal processing unit. The next day they process it and then send the cheque to Bank A to be confirmed. Bank A get it again overnight and either corfirm the cheque is valid with enough funds in the account to cover it and release the money which will arrive then in Bank B sometime after or return the cheque "refer to drawer" i.e. bounce it. It's actually more complicated than that but that's the general gist. Cheque clearing is actually an expensive process for banks to operate as it's highly inefficient and takes days to physically move cheques around the place.

igCorcaigh · 08-11-2018 12:03AM

And online bank transfer can still take days... What's with that?

I had to cancel my atm card recently, so had to transfer money to my revolut account yesterday via bank transfer. Still waiting for it to come through.

namloc1980 · 08-11-2018 12:05AM

Paddy Cow wrote: »

Why do they take 5 days to clear? It's not like the old days when computers didn't exist and one bank had to contact another to confirm the money was in the account. I can go to any bank with my pass card and withdraw money and they always know whether or not I have sufficient funds to make the transaction. Same with using my debit card - once the funds are gone, it's not going to work (I know there is some time delay with that but it's usually just a few hours, not 5 days).

I get paid by cheque which I lodge using a lodge ATM. The machine is smart enough to read the amount of money on the cheque. My boss is AIB. I'm BOI. In this day and age is there any reason for it to take so long to clear, apart from an interest money grab?

The bigger question here is why is your boss using cheques to pay people in 2018??

namloc1980 · 08-11-2018 12:07AM

igCorcaigh wrote: »

And online bank transfer can still take days... What's with that?

I had to cancel my atm card recently, so had to transfer money to my revolut account yesterday via bank transfer. Still waiting for it to come through.

Transfers to revolut are instantaneous - mine are anyway and those I know who use it. Something else gone wrong there I'd say.

dreamers75 · 08-11-2018 12:08AM

Until the Revenue finally stop using them they will exist.....7 years they have been knocking them on the head......

in the civil service thats like 15 minutes.

meeeeh · 08-11-2018 12:10AM

namloc1980 wrote: »

Nope. The cheque money doesn't hang around in a banks own account or any such stuff. Cheques have to .

I get the process and why it takes longer than electronic transfers but I don't buy the whole 5 day process or two days for the electronic transfer from one bank to another. If payments through Europe can be processed in one day so can payments between two banks in the same country.

DEFTLEFTHAND · 08-11-2018 12:10AM

Still very commonly used in my business.

dotsman · 08-11-2018 12:17AM

Paddy Cow wrote: »

Why do they take 5 days to clear? It's not like the old days when computers didn't exist and one bank had to contact another to confirm the money was in the account. I can go to any bank with my pass card and withdraw money and they always know whether or not I have sufficient funds to make the transaction. Same with using my debit card - once the funds are gone, it's not going to work (I know there is some time delay with that but it's usually just a few hours, not 5 days).

I get paid by cheque which I lodge using a lodge ATM. The machine is smart enough to read the amount of money on the cheque. My boss is AIB. I'm BOI. In this day and age is there any reason for it to take so long to clear, apart from an interest money grab?

"It's not like the old days when computers didn't exist.."???
You mean - "it's not like the old days when people used cheques"

OP. If you want to use antiquated methods of payment, that's your business. Cheques always take days (or weeks if international) to clear as they have to be batched, processed, posted, batched, processed, verified, archived and interbank money transfered to suspense account before the money transferred to your account.

igCorcaigh wrote: »

And online bank transfer can still take days... What's with that?

I had to cancel my atm card recently, so had to transfer money to my revolut account yesterday via bank transfer. Still waiting for it to come through.

You can blame SEPA for that. It allowed banks to continue to use ancient IT systems for inter-bank payments (basically, the same 1-2 batch payments per day that go from account to account taking 1-2 business days to get all the way through the systems that they have been using since the 80's instead of modern real-time payments like intra-bank which are instant)

namloc1980 · 08-11-2018 12:18AM

meeeeh wrote: »

I get the process and why it takes longer than electronic transfers but I don't buy the whole 5 day process or two days for the electronic transfer from one bank to another. If payments through Europe can be processed in one day so can payments between two banks in the same country.

Day 1 you lodge it.
Day 2 your bank processes the cheque and sends it to the other bank.
Day 3 the other bank gets the cheque and processes it and posts it to the drawers account.
Day 4 the money is released from the drawers account.
Day 5 it arrives in your account. This may happen day 4.

SEPA transfers made before 2pm are credited on the same day. After that it's next morning. I know as that's what it is for AIB anyway and I use that.

Zaph · 08-11-2018 12:18AM

I worked in the clearing department of Bank of Ireland over 30 years ago. In those days if someone lodged a BoI cheque to a BoI account it would be cleared and the money was in their account in 3 days. I think it took an extra day if it was a non-BoI cheque. Now the standard is 5 days, regardless of what bank the cheque is drawn on or what bank it's lodged into. I'm always bemused as to how "technology" has actually gone backwards in the last 30 years when it comes to cheque clearing.

igCorcaigh · 08-11-2018 12:20AM

namloc1980 wrote: »

Transfers to revolut are instantaneous - mine are anyway and those I know who use it. Something else gone wrong there I'd say.

Yeah, but this is BOI to revolut.

JustJoe7240 · 08-11-2018 12:21AM

igCorcaigh wrote: »

Yeah, but this is BOI to revolut.

Transfer from BOI OR AIB to Revolut or Skrill is. Instant for me.

namloc1980 · 08-11-2018 12:22AM

igCorcaigh wrote: »

Yeah, but this is BOI to revolut.

AIB to Revolut is instantaneous. Literally press the button and 2 seconds later I get the notification that it's arrived in my Revolut account.

igCorcaigh · 08-11-2018 12:22AM

JustJoe7240 wrote: »

Transfer from BOI OR AIB to Revolut or Skrill is. Instant for me.

OK... Odd then.

igCorcaigh · 08-11-2018 12:23AM

And I've had similar delays doing interbank payments online. I did expect the payment to revolut to be faster...

Zaph · 08-11-2018 12:24AM

namloc1980 wrote: »

AIB to Revolut is instantaneous. Literally press the button and 2 seconds later I get the notification that it's arrived in my Revolut account.

Same with Bank of Ireland. I topped up my Revolut card several times in the States during the summer and never had to wait longer than a couple of seconds for the notification.

JustJoe7240 · 08-11-2018 12:26AM

igCorcaigh wrote: »

OK... Odd then.

Actually on rereading, you said you cancelled your card recently and tried to transfer yesterday, are you transferring by bic and iban?

Fann Linn · 08-11-2018 12:27AM

namloc1980 wrote: »

AIB to Revolut is instantaneous. Literally press the button and 2 seconds later I get the notification that it's arrived in my Revolut account.

Same here with PTSB to revolut.

igCorcaigh · 08-11-2018 12:27AM

Just to make it clear... I used online banking to transfer to my revolut, not the revolut app, because my card was reported lost. Bank transfer to my revolut IBAN.

Greyfox · 08-11-2018 12:30AM

Paddy Cow wrote: »

Why do they take 5 days to clear?

Because there outdated relics, paying by cheque is as backwards as using a vcr, floppy disc or dial up internet.

JustJoe7240 · 08-11-2018 12:34AM

igCorcaigh wrote: »

Just to make it clear... I used online banking to transfer to my revolut, not the revolut app, because my card was reported lost. Bank transfer to my revolut IBAN.

It was afterwards I was thinking that was what you meant, no experience with that, only card deposits, as I'm sure the rest of the posters here are also referring to.

fritzelly · 08-11-2018 12:42AM

Pass card, did I just venture on to a thread from the 90's?

Why anyone would want to still trade in cheques is beyond me bar delaying payment to the payee
Instant electronic transfers are on the way by law - no excuse for banks saying it takes 3 days for an intra-EU money transfer. Probably take less time for your boss to transfer the money electronically than writing cheque signing it/waiting for it print out.

Why do cheques take 5 days to clear?

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