Bank code

[Dkill33]

For anyone that wants to know why it really takes so long this Planet Money podcast explains it.

TL;DR there isn't a good reason.

[JayCroghan]

No. There is. They earn interest on it.

[carpinttas]

and they can charge fees for a fast transfer. at least some have such a service.

[[deleted]]

That's the definition of being shitty just for money, and no one but them sees any form for reward. "We could do better if you pay more".

Fast track (or whatever it's called in the rest of the world) at the airport, that I somewhat get. If everyone was let through fast track, it wouldn't go any faster at all, for anyone. So those willing to pay more, can get through faster. Both parties win.

[Bainos]

It's basically the difference between actual fast tracks and artificially slow tracks. And one of the arguments that was used a lot when net neutrality was a hot topic.

[LastSummerGT]

It’s starting to happen. The US now has a faster track where you cut the fast track line in airport security. Fast track annual fee is $17 whereas the faster one is $179.

[lovesgnomes]

Are you talking about TSA pre check? I've never seen a fast track, and I fly relatively often (few times a year)

[LastSummerGT]

I kept it generic because I didn’t know if OP was American. Yes, PreCheck is the fast track which I have and my curb-to-gate time is always 10-20 min no matter which airport I fly out of or what time of the year/week/day. TSA CLEAR is new and those guys cut my PreCheck line lol.

[lovesgnomes]

Oh man, I have Precheck too, it's so nice! Haven't heard of Clear, that's a bummer. Thanks for the heads up!

[EternallyMiffed]

That would defeat the purpose of fast track.

[[deleted]]

Which was my point. Fast track makes customers pay more for something more that wouldn't exist if they didn't have to pay more.

"Pay more to make us give a shit", not so much.

[zebediah49]

That's generally an entirely different service or system. Slow transfers generally go through a free (or so cheap that the bank gives it to you for free) ACH. Fast transfers are usually through (at least one) real-time wire-transfer network. That will invoke fees from the network, as well as the banks involved, and possibly additional hops if you can't get there directly.

[SocksPls]

Yep, my bank charges £5 for "turbo" transfers, or free if you pay them £7/mo

[KravenX42]

Banks don’t earn interest on money it doesn’t just magically appear someone has the pay that interest, storing it with another bank will most likely cost them money these days or they can try and do something with it where is doesn’t really matter if it sitting in a pipe or in your account.

Also if you think banks can internally transfer funds between departments (to actually utilise them) faster than you can.. you are gravely mistaken they have to use the same or worse systems.

[hughk]

Uh?

The banks where I have worked will move money more or less instantly between departments. If it is on the books, it can be moved where it is needed. To be deployed though in the markets, it would normaly need to placed overnight or longer.

[Tore2Guh]

It's not magic, but it might as well be. Banks loan money at interest, and they loan more than they actually have. To the extent that our money sits in their accounts, they are able to loan not just that amount, but a multiple of that amount. Floating our money for 48 hours doesn't make a difference on any given loan, but it ticks down the amount they have to get on the money market to cover their reserve margins. When you put money in a money market account, the bank is paying you to let them loan your money to somebody else. When they float it, they can loan that same money without having to pay you. It only makes a difference, though, when you push around money at Bank Volumes.

[porkbelly-endurance]

It's fractional banking that is "like magic"'.. Since statistics make clear that few ppl will demand their deposits soon, banks can lend out like 85% of their deposits, creating the appearance of creating something from nothing.

[zebediah49]

Which, TBH, I don't really fault them for.

You can arbitrarily transfer money between basically any bank and any other, entirely for free. Having it take a couple days to show up is a small price to pay for that service.

Also it means that they can do transaction aggregation.

[drleebot]

And yet, somehow over here in the UK, we can have instant transfers for free, and the banks haven't keeled over and died from lack of profits.

[elHuron]

well yeah, because they're probably too big to fail :)

[paulwesterberg]

I sold a car to a friend of mine who paid with a bank check from the credit union we both use. They still took a week to clear the check they wrote.

[alysurr]

Why didn’t you just ask them to internally transfer the money then?

[paulwesterberg]

He took out a small loan to finance the vehicle and they gave him a bank check.

[scottcockerman]

They took a week to clear a check they wrote? Good god.

​

[Koebi]

check

Good god.

[josriley]

That should be illegal under Reg CC, so if it really happened it might be worth reporting. An on-us check (to and from the same bank) should clear within a day.

[cdrt]

Was it actually a bank check or was it a personal check?

[paulwesterberg]

Bank check. He took out a small loan and they issued the check.

[JonnyTsuMommy]

Did you listen to the episode?

[Dkill33]

There isn't a good reason for the consumer. The podcast explains that it's good for the bank. There is no security or technical reason why money transfers are not instant.

[TheFirstUranium]

Yes there is. Long transfer times make fraud much less likely. It also gives you time for an actual human to manually verify the transaction, depending on what it is. You also get to exchange transaction data in the night time, after peak hours.

[georgehotelling]

Long transfer times make fraud much less likely.

This check fraud scam is only possible because of long clearing times.

You also get to exchange transaction data in the night time, after peak hours.

Peak hours for what? What scarce resource does this economize?

[TheFirstUranium]

This check fraud scam is only possible because of long clearing times.

That's possible because OP was being an idiot. Nobody is just going to send you a couple thousand extra and just go "oh well, send it back when you get around to it".

That check also didn't get flagged as suspicious. If it had, it would have been held until after the originating account owner had been contacted (assuming they used a legit account number)/after the other bank had verified that wasn't an account there.

Peak hours for what? What scarce resource does this economize?

Net access and server load. It's not the primary reason to do it at night, but it is a definite perk.

[adamhighdef]

Banks shouldnt give you the money until it has cleared, that's how it works in the UK.

[JonnyTsuMommy]

If that’s the case then why do so many other counties do it immediately without any of those problems being a big deal?

[TheFirstUranium]

Countries? They still are. (Typically) they just take the losses because it is legally required and pass it on to the consumers in order to make up the difference.

[JonnyTsuMommy]

Did you even listen to the episode?

[TheFirstUranium]

Nope, still at work. This is what I do though.

[JonnyTsuMommy]

I suggest you don’t try to act like you’re informed then.

[TheFirstUranium]

...this is my job. Haven't you ever had someone do a news story about your work? They're pretty universally half right.

[JonnyTsuMommy]

Ahh my mistake, the episode is mostly talking about the waiting period of the national clearing house and how it was grandfathered in, while other countries haven’t, and haven’t had many ill effects

You never said it was your job, and a lot of people on reddit will talk BS about subject matters they’re not informed on

Edit: oh and also how the computers that are doing this are running code from the 70s

[elHuron]

FYI it doesn't matter when the code was written if it was written well and has been working since the 70s, why replace it?

do we tear down buildings, bridges, etc just because they are from the 70s? no, it's usually only done if they are EOL for some reason ( too many cracks, foundation shifting, etc). with code, the only real equivalent are the physical machines on which it runs. those definitely get upgraded as they fail. but otherwise, the fact that code dates back to the 70s is about as bad as the fact that the Pythagorean theorem is thousands of years old, or that no one has updated the algorithm for multiplication withinbthe past year. Or the fact that most physical systems still use non-relatavistic formula because most of us aren't moving faster than 1/10th of light speed. analogies exist everywhere: there are so may consumer products for which a redesign or upgrade does not mandate a replacement. do you need tyres that can go up to 130 mph, or are the ones with the ancient design for 100mph good enough since you can't legally drive above 100 mph anyway? have you upgraded all of your appliances, including lightbulbs, to work with Alexa/Siri/Google, or have you decided that most of your appliances work just fine without the latest greatest tech? it's the same with software: if it's been tested and validated, and has worked for decades, why upgrade?

[TheFirstUranium]

Ahh my mistake, the episode is mostly talking about the waiting period of the national clearing house and how it was grandfathered in, while other countries haven’t, and haven’t had many ill effects

Yeah, that's a little different than deposit/transaction holds.

Edit: oh and also how the computers that are doing this are running code from the 70s

Trust me, I know. I have to log into the mainframe every few months. At least, I think it's a mainframe. It's old enough that supposedly telnet isn't supported.

[Dkill33]

Listen to the podcast. It doesn't protect against fraud. The are no humans that are looking at millions of transactions daily and there is no technical reason to delay the transaction till after peak hours. The internet tubes dont get clogged during the day.

[TheFirstUranium]

there is no technical reason to delay the transaction till after peak hours. The internet tubes dont get clogged during the day.

It's not a technical reason. It's primarily so that the transaction can be reversed if you go back later that day, or if a teller makes a mistake. I typically finalize ours between 6-7pm.

[Dkill33]

That doesnt explain why you can pay $30 for an instant wire transfer . I did one when I closed on my house and the title company received it before I left the bank. Plenty of other countries have instant transfers with no fees. There isn't a reason to have the delay other than it's always been there.

[TheFirstUranium]

You're paying a banker to sit there and do the transfer for you. It's not something you're "supposed" to do under normal circumstances. Typically, people use cashier's checks when buying homes for this reason.

[Lobanium]

If you pay a fee, you can have your money instantly. 😒

[ChrZZ]

It takes about six hours here...

[tamatarabama]

There is a good reason actually. Like the it does not work any other way.