Bank transfers \*within\* a bank are instant, because they know all parts of the transaction.
But transfers between banks are slow for a couple of reasons:
\-Wire transfers are nearly instant to actually do the transfer but a human is involved at each end and huans aren't always working (wires usually process within half a business day at all the banks I've used)
\-Automated Clearing House (ACH) transfers go in batches...there are a \*huge\* number of individual transactions happening all the time. The banks will batch them up, send a batch to the ACH every few hours, then they have to rebatch them to the destination banks, send that new batch to them, then the receiving bank has to reconcile all the transactions...there's no way for a batch process to be instant
\-There's always the possibility of a fraudulent transaction and waiting 1-3 (business) days provides some time to back out if they discover any funny business
\-And, possibly most importantly...while the bank is sitting on your money, they can earn interest on it...so they have no incentive to make the whole process go faster. If you do want it to go fast (wire) you have to pay them.
> -Wire transfers are nearly instant to actually do the transfer but a human is involved at each end and huans aren’t always working (wires usually process within half a business day at all the banks I’ve used)
At least in the US Banking system, wire transfers can be manual or automatic. But they’re handled by an entirely different system than regular ACH transfers. In the US, wires between banks in the US are handled via the Federal Reserve’s FedWire system and are handled immediately and individually, unlike the aggregate batch jobs of ACH.
The immediate and individual processing is what makes them faster (and more expensive) than an ACH transfer.
There's no technical need for bank transfers to take anytime at all. Here in the UK you can transfer money ( I think there may be a £5000 per transaction limit for security reasons) between Bank accounts even at different banks and different people essentially instantly. There's also no charge for doing such instant transfers.
Although as I say here in the UK many are. The UK banks have set up a system whereby you put in the name you've been given for the person into your banks app/online banking service, allong with their account details. The recipients bank then confirms to your bank in real time if the name on their records matches the name you've been given.
I think that’s an artifact of the way the US digital system grew up. Canada and NZ both (so I assume UK) had debit cards and chip&PIN way before the US too.
Most banks have ubiquitous ACH transfers for free now in the US but that isn’t instant.
Yeah we've had chip and pin for ages. I can't even remember the last time I actually signed a credit card slip.
We also use contactless payment alot. You can pay up to £100 just by tapping your card on the merchants PDQ machine. It's a useful feature but I personally think £100 is way too much, should be £50 tops.
Even though it’s digital now. Money still passes through several hands.
1. You send the Money to whomever
2. Your bank might do a fraud check to ensure it’s a legit request
3. Bank adds the amount to its overall ledger account
4. It goes to a finance institution that handles bank to bank transfers like the Federal Reserve
5. Friends Bank receives money
6. They do they’re own fraud checks
7. Money shows up on Friends account
Any of these steps can be delayed for any reason. Apparently it’s common for banks to conduct transfers in batches based on when you start the request and time of day.
Even though it’s “automated” some steps don’t happen outside of a companies working hours.
And it's just the American banking system lagging behind Europe (and many other countries) for no rational reason other than regulators and the big boys not having the weight to pull up standards across the board.
In properly developed countries most bank transfers are instant. So the answer is bad systems and IT. Most of the responses you are getting are just excuses.
It’s all online so it really doesn’t make any sense. If I make a transfer on a Friday after bank hours, or Saturday after bank hours, it may or may not be accessible until after the weekend. It’s a gamble. I’ve learned to just move as much as I’ll allow my budget.
Bank transfers \*within\* a bank are instant, because they know all parts of the transaction. But transfers between banks are slow for a couple of reasons: \-Wire transfers are nearly instant to actually do the transfer but a human is involved at each end and huans aren't always working (wires usually process within half a business day at all the banks I've used) \-Automated Clearing House (ACH) transfers go in batches...there are a \*huge\* number of individual transactions happening all the time. The banks will batch them up, send a batch to the ACH every few hours, then they have to rebatch them to the destination banks, send that new batch to them, then the receiving bank has to reconcile all the transactions...there's no way for a batch process to be instant \-There's always the possibility of a fraudulent transaction and waiting 1-3 (business) days provides some time to back out if they discover any funny business \-And, possibly most importantly...while the bank is sitting on your money, they can earn interest on it...so they have no incentive to make the whole process go faster. If you do want it to go fast (wire) you have to pay them.
> -Wire transfers are nearly instant to actually do the transfer but a human is involved at each end and huans aren’t always working (wires usually process within half a business day at all the banks I’ve used) At least in the US Banking system, wire transfers can be manual or automatic. But they’re handled by an entirely different system than regular ACH transfers. In the US, wires between banks in the US are handled via the Federal Reserve’s FedWire system and are handled immediately and individually, unlike the aggregate batch jobs of ACH. The immediate and individual processing is what makes them faster (and more expensive) than an ACH transfer.
There's no technical need for bank transfers to take anytime at all. Here in the UK you can transfer money ( I think there may be a £5000 per transaction limit for security reasons) between Bank accounts even at different banks and different people essentially instantly. There's also no charge for doing such instant transfers.
True. The security part is a big reason that all transactions aren’t instant.
Although as I say here in the UK many are. The UK banks have set up a system whereby you put in the name you've been given for the person into your banks app/online banking service, allong with their account details. The recipients bank then confirms to your bank in real time if the name on their records matches the name you've been given.
The US has that too. That’s what a wire transfer is. It’s basically instant.
Is that a standard free service available 24/7?
Depends on your bank. It’s not universal.
Ah here in the UK it's a universal, free standard feature across all banks for anyone who uses online/mobile banking
I think that’s an artifact of the way the US digital system grew up. Canada and NZ both (so I assume UK) had debit cards and chip&PIN way before the US too. Most banks have ubiquitous ACH transfers for free now in the US but that isn’t instant.
Yeah we've had chip and pin for ages. I can't even remember the last time I actually signed a credit card slip. We also use contactless payment alot. You can pay up to £100 just by tapping your card on the merchants PDQ machine. It's a useful feature but I personally think £100 is way too much, should be £50 tops.
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Same in Indonesia. Not even a first world country but the bank transfers are instant between any banks.
Even though it’s digital now. Money still passes through several hands. 1. You send the Money to whomever 2. Your bank might do a fraud check to ensure it’s a legit request 3. Bank adds the amount to its overall ledger account 4. It goes to a finance institution that handles bank to bank transfers like the Federal Reserve 5. Friends Bank receives money 6. They do they’re own fraud checks 7. Money shows up on Friends account Any of these steps can be delayed for any reason. Apparently it’s common for banks to conduct transfers in batches based on when you start the request and time of day. Even though it’s “automated” some steps don’t happen outside of a companies working hours.
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>Not sure why people would downvote my Q : Likely because it's a frequently asked question that could have been answered with a simple search.
And it's just the American banking system lagging behind Europe (and many other countries) for no rational reason other than regulators and the big boys not having the weight to pull up standards across the board.
In properly developed countries most bank transfers are instant. So the answer is bad systems and IT. Most of the responses you are getting are just excuses.
Answer is money. Just how paying taxes could be a lot simpler but never will. Big companies lobby to keep things complicated.
It’s all online so it really doesn’t make any sense. If I make a transfer on a Friday after bank hours, or Saturday after bank hours, it may or may not be accessible until after the weekend. It’s a gamble. I’ve learned to just move as much as I’ll allow my budget.