[Closed] Where does my money go for 3 days?

I thought most banks had now gone to [almost] instant transfer?

You're worrying too much! As if a bank would go bust, pfft! 🙄

uplink - Member
I thought most banks had now gone to [almost] instant transfer?

Dunno. Bank A is nominally an Indian Bank (ICICI UK), but as the transaction has occured online, I can't see why it can't be a near as dammit instant transfer. Crap customer service from ICICI bank as well, they'd lost my linked (current) account off the system, so I have already waited a fortnight for them to re-establish the link.

there's no profit in transferring it straight away

elfin keeps it all in a high interest account, its how he can afford an internet connect despite living in london.

FACT

In other countries it happens immediately - here it takes 3 days because it's always taken 3 days and the banks can take 3 days interest on all that filthy lucre.

Payments services are highly regulated and protected. Your money isn't at risk.

Faster Payments scheme has been implemented in a number of banks but it is not yet mandatory, so all banks aren't in on it. Also if there is a service outage on the either bank's Faster Payments infrastructure then the payment will queue then revert to a slower route.

If a Bank loses the ability to process payments it is in deep doo doo from a regulatory perspective (in extreme cases banking license is under threat). It also can be made to pay large fines or interest payments to recipients. Banks do not muck about when ensuring the integrity of their payments systems.

I guess free personal banking has to be paid for somewhere along the line

I don't buy into this "so they can make money on it" rubbish. Surely they're constantly playing with your money and profiting from it anyway. They don't need to hang onto your transfers for 3 days in order to play on the stock market with it...

the bank staff take off all their clothes at lunchtime and roll about in the money. It takes a while for it to dry.

the bank staff take off all their clothes at lunchtime and roll about in the money. It takes a while for it to dry.

Who told you?

The first bank won't do the transfer til late at night, they run a [url= http://en.wikipedia.org/wiki/Batch_processing ]batch job[/url] on all the transfers. The second bank will receive it the next day, but won't process it until the night... 3 days.

"not inconsiderable sum of money"

That's part of it, FPS is designed for high volume lower value transactions, most banks cap it.

With 3 days your funds are probably going by BACS and in the meantime they're in a holding account. Here's why:

BACS clearing cycle:
Day one, send file. Depending on method it might hit VOCALINK immediately or might be held til later and batched into a larger file. In your case it'll be the latter.
Day two, file is processed
Day three, transmitting account is debited, receiving account is credited. NB in your case your account isn't the transmitting account, it'll be a bank suspense account.

Now if you're paying straight from your account, the payment is in the pipe by the end of day one and can only be recalled up until late afternoon on day 2 (times vary bank to bank but it's a largely manual process so reality means late afternoon at the latest, just practicality). But though the payment can't be stopped at this point under normal processes, your account still hasn't been debited. So, you could send a BACS payment and then draw the funds out by other means, then have the BACS payment go through on day 3 even though you have no funds to pay it.

So, banks generally protect themselves from this with fund sequestration- your money'll be debited on day one and put in a suspense account then that'll be debited on day 3. (NB companies or individuals with BACSTEL-IP access are different, but the banks use different methods to offset that risk)

If it's a problem, CHAPS is same day.

GaryLake - Member

"I don't buy into this "so they can make money on it" rubbish. Surely they're constantly playing with your money and profiting from it anyway. They don't need to hang onto your transfers for 3 days in order to play on the stock market with it... "

QFT. It's a zero-sum game, people think the bank are trying to profit from the extra 2 days but the exact same process means that they receive all funds sent to them 2 days later.

PS yes obviously I work for a bank but don't worry, I'm giving it up as a new year's resolution

damn! i read that as "where does my [b]monkey[/b] go for three days?"

disappointed now...

I know where yr monkey's bin

Northwind - a bank's treasury will sweep the suspense account and place it in the markets, interest on this account will be for their account and therefore profit.

mefty - Member

"Northwind - a bank's treasury will sweep the suspense account and place it in the
markets, interest on this account will be for their account and therefore profit."

The reason the money is in the suspense account isn't for profit though. And as I said in the last line of my post, slow out = slow in. The banks don't have money for longer on the 3-day regimes, it balances out across deposits and withdrawals assuming a fairly static balance book. And as's been pointed out up the page, banks are investing these funds all the time regardless of what's happening to them.

There's numbers available for this on Moneyfacts IIRC but the average industry BACS transaction loses a bank money- the tiny profit differential from the interest "gap" is outweighed by the cost of the transaction.

Cheque clearing and internal inter-account transfers are different though, many banks do design in profitmaking delays in those. Pretty sure my shower does.

But banks clear their positions daily at the BoE don't they? So there is in fact a two day window of opportunity as it were?

Afraid not, if a customer account is debited value t0 but the transferee is only credited t+3, then the interest earned on placing money into the markets during that period will be earned by the two banks involved. However what either will earn will depend upon when the transferor's nostro is debited.

I can quite believe that the income could be outweighed by costs especially with rates where they are.

Mefty - that was what I was alluding to - interbank transfers are same day so the banks have the use of the funds between the customer debit and beneficiary account credit.

Realistically though, do they actually place the funds on the Market or just use them to offset any overnight Libor borrowings?

The non clearers will have arrangements with their correspondent banks to sweep their accounts. Clearers will have arrangements within the system as it should be a zero sum game (subject to errors), I would have thought - I have never worked for a GBP clearer. You don't retire your LIBOR borrowings as they will already have been positioned earlier in the day, anyway no bank borrows at LIBOR per se that is just a reference rate, you borrow at the rate you trade in the market.

Northwind - Member
"not inconsiderable sum of money"

That's part of it, FPS is designed for high volume lower value transactions, most banks cap it

They do have a transaction limit, which I have not exceeded, but I have transferred exactly the limit which they allow in one transaction.

If it was my [b]monkey[/b] that wsa missing for three days, I'd wonder who'd been spanking him.

missingfrontallobe - Member

"They do have a transaction limit, which I have not exceeded, but I have transferred exactly the limit which they allow in one transaction."

Mmm, that's cheeky then. Although to be fair there's legitimate reasons why an FPS might fall back to BACS. It's a fairly unpredictable service in a lot of ways. But equally this could be them taking a bit of a lend, can't really say.

I have a bank account with the Halifax and a credit card with them. I paid a chunk off my cc by 'fast payment', 'scuse me while I laugh hysterically. The sum was taken from my current account but did not appear in my credit card account until the next day.

I have asked them by letter in the past what they do with my money. They have declined to reply.

The answer is of course that they put it on overnight deposit. So, not only do they earn money on the money in my current account, they earn money on my overdraft, they get interest when my cc is not paid in the same month (like, always!) AND they steal my money and put it on overnight deposit.

Karinofnine - Member
I have a bank account with the Halifax and a credit card with them. I paid a chunk off my cc by 'fast payment', 'scuse me while I laugh hysterically. The sum was taken from my current account but did not appear in my credit card account until the next day.

I have asked them by letter in the past what they do with my money. They have declined to reply.

The answer is of course that they put it on overnight deposit.

So, not only do they earn money on the money in my current account,

they earn money on my overdraft

they get interest when my cc is not paid in the same month (like, always!)

AND they steal my money and put it on overnight deposit.

I learned a long time ago that the best way of minimising the amount of money which went from me to the bank was to only use my own and to live within my means.

You know - maybe that last bit was a wee bit harsh. My apologies.

What I'm trying to get at is that I rather like the arrangement whereby I don't have to pay for banking services and if that means that I stay in credit and pay up when I have to, then that's just fine. I'd rather that than have to pay for [i]all[/i] banking services the way they do in most other countries.

In this particular example it's probably a lot to do with the HBOS systems being really pretty crap. The system that your current account runs on is fairly recent but really just a modernisation of the old Halifax system. But the system that your credit card works on is probably the old Bank of Scotland system, which is incredibly ancient. The 2 integrate like oil and water.

I think this is supposed to be getting fixed when they bring Halifax onto the combined Lloyds platform but I just pretty much sleep through those briefings as I'll have left before it happens 😉

Northwind - Member
But the system that your credit card works on is probably the old Bank of Scotland system, which is incredibly ancient.

Oi!!! I helped install that

Then congratulations, you're extremely well preserved

That is correct, I pay interest to borrow money. No problem there. As for paying to transfer it - it's not as if a little man goes to one bank and gets the money in notes and walks to another bank and pays it in. All that happens is that some numbers change. When I paid for my gear box by fast payment the man I paid rang me in a few minutes and said the money had arrived in his account. I think banks need people to borrow, that's one of their products. By the way, congratulations on always being in credit.