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Why do cheques take 5 days to clear?

Paddy Cow

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?

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EdgeCase

YFlyer wrote: »

Took me to get paid from Barkleys to AIB electronically from Friday afternoon to yesterday, Wednesday.

A lot of the SEPA rules are not applicable outside the Euro zone. The UK banks don’t use SEPA for domestic payments at all. So it’s still a bit of an “add on” there.

In Ireland SEPA replaced the domestic payment infrastructure except for cheques, which aren’t covered by the SEPA system at all as they’re considered legacy stuff that’s to be phased out anyway.

[Deleted User]

If you're giving someone a wedding present, cheques are much more better than cash.

Reason - even if the congratulations card gets separated from the cheque, your name is printed on the latter. Not the case with cash. Nothing worse than getting a present and not knowing who gave it to you.

SEPT 23 1989

murpho999 wrote: »

Yes, but they would not be cleared and available.

Once there is enough In my account it goes through

Grandeeod

murpho999 wrote: »

Yes, but they would not be cleared and available.

Actually not quite true. My missus has an AIB account since the 80s and all cheques lodged are there immediately as funds available. Its a legacy thing. But if she uses the funds and a cheque bounces, she's over drawn if there's not enough to cover it. Hasn't happened and she doesn't get many cheques these days anyway.

murpho999

SEPT 23 1989 wrote: »

Any cheques lodged into my business account are credited immediately

Yes, but they would not be cleared and available.

amacca

jester77 wrote: »

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.

There are some businesses/business people that still use cheques....its the only way to pay certain people that don't have card readers on them and probably won't have...and they are definitely not the sort of people that would trust and EFT

unless of course you want to give them a lovely big ball of cash.

Posy

Zaph wrote: »

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.

It's still 3 days BOI and 5 days non BOI. That hasn't changed.

I'd be driven mad if I was paid by cheque. It's not the 1980's!

Alun

SEPT 23 1989 wrote: »

It's still nice to lodge a few cheques far more satisfying than any transfer

No it isn't, it's a pain in the arse. The only time I ever have to go to the bank is to lodge a cheque someone has sent me. Never have to set foot in the place otherwise.

SEPT 23 1989

BarryD2 wrote: »

You're obviously not running a small business. I'd reckon about 10% of our invoices are paid by cheque and no sign of that changing anytime soon.

It's still nice to lodge a few cheques far more satisfying than any transfer

BarryD2

jester77 wrote: »

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.

You're obviously not running a small business. I'd reckon about 10% of our invoices are paid by cheque and no sign of that changing anytime soon.

robbie67

I lodged a crossed Sterling cheque into PTSB last week and was told it will take 21working days to clear I should have the 22€ at the end of the month

meeeeh

Alun wrote: »

How do the supporters of cheques suppose people, including farmers, manage to do business in other countries where cheques haven't existed for decades?

It used to be cash where I come from. The most likely people to pay with 500 Euro note where I come from were farmers. Internet is better in more densely populated countries so I presume bank payments are more common.

I don't like cheques but they are necessary in certain circumstances in Ireland.

Alun

How do the supporters of cheques suppose people, including farmers, manage to do business in other countries where cheques haven't existed for decades?

SEPT 23 1989

ToddyDoody wrote: »

Giving a post-dated cheque is a handy way of appeasing your creditors. This is very important for small businesses working carefully with their cash flows.

It was all the rage during the crash

Lest we forget

meeeeh

SEPT 23 1989 wrote: »

Any cheques lodged into my business account are credited immediately

They are credited but they are debited again in couple of days time if they bounce. I have one customer whose cheques I had to lodge again a week or so later a few times after they bounced. He was told to pay by credit card.

ToddyDoody

Giving a post-dated cheque is a handy way of appeasing your creditors. This is very important for small businesses working carefully with their cash flows.

SEPT 23 1989

Any cheques lodged into my business account are credited immediately

[Deleted User]

Electric Sheep wrote: »

That must be convenient for "creative" accounting.

There is almost always receipts as they are needed for tax returns just not always invoices. There would be no receipt or invoice for some things though only the cheque as a record.

YFlyer

Took me to get paid from Barkleys to AIB electronically from Friday afternoon to yesterday, Wednesday.

Grandeeod

So why do bank drafts take 5 days to clear, when years ago they were credited to your account upon lodgement. Drafts are paid for on the spot. I asked my bank when this started. Fraudulent drafts was the answer.

But why can't they check it's validity at the lodgement stage instead of a clearing system taking days? If I pay someone with a draft, the money is gone from my account and even if they lodge it to their account the same day, its days before the money appears in their account. Wheres the money during all this?

meeeeh

Electric Sheep wrote: »

That must be convenient for "creative" accounting.

We do a little bit work for farmers, they want invoices most of the time because they can get hit with income tax otherwise or need to claim vat back. And the type of work we do would be easily hidden from the revenue. However every so often I get a call or email from their accountants to send them statements and copies of invoices to match the cheques paid out.

Electric Sheep

Harry Tight Technician wrote: »

I just don't think you understand how things work in farming and thats why you are finding it difficult to understand. The fact you said "no business would pay without an invoice shows that". You will pay many bills and receive money without any invoice in farming. Amounts are often just word of mouth on the spot amounts that you write a cheque for.

That must be convenient for "creative" accounting.

Steve F

Quote The only way they could check they were paid is by going into a bank (many of which no longer have someone behind a counter) and check their balance thus allowing the person leave with what they have bought the person has no idea if they have been paid. Where as a cheque can be handed to them for the amount agreed on the spot. Also even for the person paying, you may have poor reception etc and if you want to pay the person on the spot so you cant even do a transfer if they are set up so a cheque just makes sense.

I just don't think you understand how things work in farming and thats why you are finding it difficult to understand. The fact you said "no business would pay without an invoice shows that". You will pay many bills and receive money without any invoice in farming. Amounts are often just word of mouth on the spot amounts that you write a cheque for.

If you sell at the mart you are paid by the mart sending you a cheque, thats the only way you can get paid by many marts and its certainly the case with my local mart. If you wont accept a cheque you can't get paid

As an example when we pay our silage contractor we call to the house to find out how much we owe which we are told by word of mouth and we write a cheque on the spot for the amount hand it over, job done.

I know its not complicated, I use online banking everyday but I can tell you for a fact that its not suitable yet anyway for many day to day on the spot farm business transactions.

As for multiple invoices as above, farming tends to paying paying here and there its rarely you even have an invoice never mind multiple to pay at one time. A large percentage of payments are on the spot in person payments. There are of course some areas where you are invoiced and if you wished could use bank transfer (if they accept it) or call in and pay by debit card but it would be less than 20% of transactions and its often as handy to just write a cheque.

Not a chance will they stop processing cheques anytime soon, they are far far more used than many realise (such as yourself) so no longer accepting them is not going to happen for a long long time.[/QUOTE]

I was surprised when I found out a few years ago that NCT centres won't take cheques
I hate the bloody things anyway.That's Cheques not NCT centres

jack presley

5 days to clear is a luxury to KBC customers, cheques lodged with them take 10 days to clear (as they’re not a clearing bank or something the bloke told me).

namloc1980

Harry Tight Technician wrote: »

In farming you are dealing with a lot of older people or people who are not computer savvy. The only way they could check they were paid is by going into a bank (many of which no longer have someone behind a counter) and check their balance thus allowing the person leave with what they have bought the person has no idea if they have been paid. Where as a cheque can be handed to them for the amount agreed on the spot.

The person handing over the cheque can ring their bank two minutes after handing it over and cancel the cheque. It's completely worthless until it actually clears.

[Deleted User]

murpho999 wrote: »

How would somebody not understand a bank transfer?

If they have a business then they have a bank. Vast majority of businesses, small or large, nowadays put their bank transfer on their invoices.

If you have a business you won’t pay any bill without an invoice.

In farming you are dealing with a lot of older people or people who are not computer savvy. The only way they could check they were paid is by going into a bank (many of which no longer have someone behind a counter) and check their balance thus allowing the person leave with what they have bought the person has no idea if they have been paid. Where as a cheque can be handed to them for the amount agreed on the spot. Also even for the person paying, you may have poor reception etc and if you want to pay the person on the spot so you cant even do a transfer if they are set up so a cheque just makes sense.

I just don't think you understand how things work in farming and thats why you are finding it difficult to understand. The fact you said "no business would pay without an invoice shows that". You will pay many bills and receive money without any invoice in farming. Amounts are often just word of mouth on the spot amounts that you write a cheque for.

If you sell at the mart you are paid by the mart sending you a cheque, thats the only way you can get paid by many marts and its certainly the case with my local mart. If you wont accept a cheque you can't get paid

As an example when we pay our silage contractor we call to the house to find out how much we owe which we are told by word of mouth and we write a cheque on the spot for the amount hand it over, job done.

murpho999 wrote: »

A one-time set up for bank transfer which is not as complicated as you make out is all that is required. Their bank will accept it. No need for verification.

Then,when you login to the bank account you can pay multiple invoices at once. It really is very easy, quicker, cheaper and safer. Cheques can get lost, frauded etc.

I know its not complicated, I use online banking everyday but I can tell you for a fact that its not suitable yet anyway for many day to day on the spot farm business transactions.

As for multiple invoices as above, farming tends to paying paying here and there its rarely you even have an invoice never mind multiple to pay at one time. A large percentage of payments are on the spot in person payments. There are of course some areas where you are invoiced and if you wished could use bank transfer (if they accept it) or call in and pay by debit card but it would be less than 20% of transactions and its often as handy to just write a cheque.

murpho999 wrote: »

I’d say banks will stop processing cheques in the next few years so the problem will disappear. Payment will be done by phones which will be instant and quicker than any bank transfer.

Old age and death will look after those that do not want to change.

Not a chance will they stop processing cheques anytime soon, they are far far more used than many realise (such as yourself) so no longer accepting them is not going to happen for a long long time.

meeeeh

murpho999 wrote: »

How would somebody not understand a bank transfer?

If they have a business then they have a bank. Vast majority of businesses, small or large, nowadays put their bank transfer on their invoices.

If you have a business you won’t pay any bill without an invoice.

A one-time set up for bank transfer which is not as complicated as you make out is all that is required. Their bank will accept it. No need for verification.

Then,when you login to the bank account you can pay multiple invoices at once. It really is very easy, quicker, cheaper and safer. Cheques can get lost, frauded etc.

I’d say banks will stop processing cheques in the next few years so the problem will disappear. Payment will be done by phones which will be instant and quicker than any bank transfer.

Old age and death will look after those that do not want to change.

Yes but before the internet will have to be better. If you expect people in the middle of nowhere do transfers for large amounts then you should better supply decent internet. It's not like all people who use cheques don't want to change but if it takes half an hour to log into online banking or when the connection breaks three times while you are processing payments then people will use cheques. This kind of stuff especially affects farmers or business that need to be outside towns and cities.

murpho999

Harry Tight Technician wrote: »

Most cheques are handed over in person so you aren't posting stuff and these transactions are often done standing in a yard or calling over to the house of the person you are paying (only finding out when you get there what the bill is). Some of the people you would only be paying as a once off and many would not accept a bank transfer as they wouldn't understand it.

I don't see how writing you name and the amount on a cheque and handing it to someone is less handy than having to get their details, log on to the online banking, get them set up and verified and then transfer the money and thats if they accept it.

On the receiving side most people, even other business only pay by cheque thats how they do it.

How would somebody not understand a bank transfer?

If they have a business then they have a bank. Vast majority of businesses, small or large, nowadays put their bank transfer on their invoices.

If you have a business you won’t pay any bill without an invoice.

A one-time set up for bank transfer which is not as complicated as you make out is all that is required. Their bank will accept it. No need for verification.

Then,when you login to the bank account you can pay multiple invoices at once. It really is very easy, quicker, cheaper and safer. Cheques can get lost, frauded etc.

I’d say banks will stop processing cheques in the next few years so the problem will disappear. Payment will be done by phones which will be instant and quicker than any bank transfer.

Old age and death will look after those that do not want to change.

jester77

Harry Tight Technician wrote: »

Did you not get cheques when you got married (if you are married). About 20 guests gave us a cheque rather than cash. Even aside from the farming I mentioned cheques are still very popular with my parents generation and they use them all the time for things.

I’m 33 and have regularly received personal cheques troughout my life for various different reasons (totally aside from farm business cheques). Last one I got was last week for example.

I really do think they still have their place and are handy for paying larger amounts of money on the spot than the other options and while I’ve not got a personal cheque book I keep considering getting one as every now and then I really feel it would be useful.

Not married, but I left Ireland around 17 years ago, but even before that I never got a cheque. I'm probably not the typical finance person. The last time I was even in a bank was late 90's or early 00's when I had to go with some ID so that they could enable online banking for me. I didn't even have to go to a bank when I got my mortgage.

I do everything online, invoices come in the post, do a quick transfer. Do most of my shopping using payment through my phone. My current bank doesn't even have branches.

the_pen_turner

at least 75% of my invoices are paid by cheque . the rest cash. bank transfers are so rare that i doubt it would even hit 1%

cheques are a pain in lots of ways but are handy for the customer. especially older people and farmers.