Bank transactions: why not instantly?

[MaxManus]

Why does not my money flow instantly from one account to another(in a different bank), when it is all digital money?

 

[Evo]

Why does not my money flow instantly from one account to another(in a different bank), when it is all digital money?

It has to be confirmed, most likely.

 

[MaxManus]

It has to be confirmed, most likely.

But what do they confirm?

 

[Evo]

But what do they confirm?

Between banks that the funds are actually available and the authorization is valid. Within my bank, there is no waiting, to another bank, there is that validation.

 

[phinds]

My understanding is that with electronic transfers validation is instantaneous but the receiving bank wants to get the float on the money for a few days so they pretend that it has to take time.

 

[Evo]

I find that sometimes, several days after I make a transfer, the money remains in my old account, and I have to keep remembering that it shouldn't be there. That used to cause problems when Evo Child would borrow my debit card, because she'd check my account balance, and see all of this money in it, that had already been transferred, and withdraw it.

 

[Borek]

It also depends on the way the system is set up. In Poland we have two systems now, as far as I know both using a central intermediate agency (called Krajowa Izba Rozliczeniowa).

In an older system each bank has outcoming and incoming sessions at least once a day. During outcoming session bank sends the information about outgoing transfers and they are stored in the agency. During incoming session bank connects to the agency and receives information about all incoming transfers. Net effect is that after sending a transfer I have to wait till first, my bank has an outcoming session, second, receiver banks has an incoming session. This rarely takes more than 24 hours. (Compare session list http://biznesowy.bloog.pl/id,5053380,title,Bankowe-Sesje-Elixir-sesje-wchodzace-i-wychodzace-zestawienie,index.html?ticaid=610a62 - wychodzące means outgoing, przychodzące - ingoing). I believe the older system was built in early nineties and it was implemented to be robust using technology that was available then.

In the newer system transfers are almost instant - they take 10-15 minutes. But as of today it is an expensive novelty and not all banks use it yet.

Bottom line is: what you observe can be a result of the internal system mechanics.

 

[256bits]

Your account might have automatic debits abd credits that your bank will need to verify for that day before the transfer transaction would be completed. What if you have automatic payroll deposit or automatic mortgage deduction at your bank for that same day that you wish to make a transfer transaction. What if someone inadvertantly adds extra zeroes ( which has happened ) to your payroll deposit so rather then a $1000 increase in funds it becomes $1,000,000. You, saying wow lucky me jackpot, just might be tempted to make a transfer to your bank account in the Cayman Islands, leave the country in a fast private jet, withdraw the funds from the cayman Island bank before anyone realizes that the funds do do exsist. Would any of those banks plus the payroll bank be happy being giving you 1,000,000 of funds that do not exist.

So they do not squabble about transactions gone wrong, transactions of funds still go through a clearinghouse, though a lot quicker than the older days of cheque writing.

 

[MaxManus]

Your account might have automatic debits abd credits that your bank will need to verify for that day before the transfer transaction would be completed. What if you have automatic payroll deposit or automatic mortgage deduction at your bank for that same day that you wish to make a transfer transaction. What if someone inadvertantly adds extra zeroes ( which has happened ) to your payroll deposit so rather then a $1000 increase in funds it becomes $1,000,000. You, saying wow lucky me jackpot, just might be tempted to make a transfer to your bank account in the Cayman Islands, leave the country in a fast private jet, withdraw the funds from the cayman Island bank before anyone realizes that the funds do do exsist. Would any of those banks plus the payroll bank be happy being giving you 1,000,000 of funds that do not exist.

So they do not squabble about transactions gone wrong, transactions of funds still go through a clearinghouse, though a lot quicker than the older days of cheque writing.

Will the bank contact my employer if the employer sends me 100 times my usual salary?
Seems strange, the bank can't know what i am supposed to receive

 

[theChosen1]

Will the bank contact my employer if the employer sends me 100 times my usual salary?
Seems strange, the bank can't know what i am supposed to receive

No, your EMPLOYER will contact THEIR bank to move the decimal point over a couple of places in YOUR account before the transaction is final.

 

[MaxManus]

No, your EMPLOYER will contact THEIR bank to move the decimal point over a couple of places in YOUR account before the transaction is final.

Thanks that makes more sense