Wait...I thought it was 2005...? (rant warning)

RainyDay

When I pay my NIB Visa Card from my NIB current account via a 'funds transfer' on their Internet Banking service, the payment hits my Visa account immediately. Same when I make a transfer to my wife's NIB account in the same branch.

It's only when you start going outside the branch that you hit the 3 day limit.

boa-constrictor

Apologies Blackjack. I wouldn't say that to your face so I shouldn't say it here either. I would still contend that banks make money out of clearing times (had I not destroyed my own argument by resorting to language).

MrPudding

Wertz wrote:

Thx for that Bounty.
TBH I haven't that much of a problem with cheque clearing times, even though all cheques are essentially EFTs since they are machine-read these days.

This is my favorite. I am with NIB. If I lodge a cheque in a branch other than my "home" branch they post it to my home branch to be lodged by a member of staff there.

MrP

RainyDay

De Rebel wrote:

This being the case, I can reasonably expect them to transfer money from my UB CA to my UB CC, even if it is elsewhere in the RBS system. If they choose to allow it to take 4 days, that is their lookout. I am not prepared to pay for their sloth.
.

This used to happen me with NIB, until they advised me to use the 'funds transfer' option instead of the 'make payment' option - Do UB have anything similar to 'funds transfer'?

antoinolachtnai

The thing about the bank holding on to your money - that's definitely not the reason. How am I so sure? Well, because the bank gets to hold on to your money anyway, especially if it is one of the big two. It doesn't really give a damn whether you have the money, or eircom has the money, or if Sir Anthony has just blown it on a big lunch for the board in Conrad Gallagher's restaurant. The chances are that it will just move from one bank account to another within the same bank. The bank has exactly the same level of access to it. In fact the faster it moves around the sooner the recipient gets to spend it. And everytime you spend it or otherwise transfer it somewhere, the bank gets a little bit of commission, so the faster things happen, the better things are for the bank.

Someone in one of the banks explained the 'three day' thing to me once. The idea is more or less as follows:

The first day, you lodge the item. It has to be keyed or scanned. It doesn't go anywhere until the batch job runs that night. This has to do with the way the computer systems are set up.

Assuming the item has made its way into that batch job, on the second morning (i.e., the morning after you thought you made the lodgement) the bank manager of the debited bank account (i.e., your bank manager) has the opportunity to have a look at it. He may decide to refuse the transaction, or to call you about it, or anything else. Obviously, if your account is seriously overdrawn, he isn't going to allow this item go forward. On the other hand, if it's only a hundred euros and you haven't messed him around in the past, he may decide to allow you a little leeway. Also, if an unusually large item payable to an unfamiliar account shows up that looks fraudulent, he may decide to delve a little deeper.

The satisfied manager now allows the item to go forward. Guess what? It won't run until the next batch job, which is that evening. So there is no chance that the money will be posted in your account until the third day.

OK, so I know what your thinking. My account is good to go. I'm even happy to sign a thing to say it's ok to clear items unconditionally without the manager checking them. Why do I have to wait the extra day? Well, two reasons.

1. Some of the systems are a little bit dim about knowing whether an account is overdrawn or not. This is really weird, but depending on the system, the batch will quite often deduct the money from the account regardless of whether there are funds or an authorized facility there to meet it. (This is what happened in the case of Ebeon, where the payroll was run even though a liquidator had been appointed that afternoon.) Why in this day and age would anybody running a bank buy software that can't tell whether an account has funds or not? I don't make this stuff up, I'm just telling you what seems to go on. Seriously though, part of the reason is that it isn't known at the start of the batch what your balance will be when all the batches (debits and credits) have been run. So the system gives you the benefit of the doubt and runs the transaction. As you can imagine this type of system has some serious drawbacks, and new more sophisticated systems have been developed since. As a result, batch systems are being phased out, but inter-bank transactions are still carried out through a batch-type system, so the old rules have to be followed.

2. The bank wants to treat all similar items presented at the same time as equally as possible. You can understand their point of view if you think about it. You wouldn't like it if your creditors were saying to themselves 'that guy's last cheque cleared on the third day instead of the second, we'd better be careful with him'.

And why are there certain types of items which don't seem to run into this issue? Well, that's because they're done entirely within the bank, and put through some sort of on-line system which doesn't depend on the batches, or the bank has some other sort of checking and authentication procedure for that type of transaction. This varies from bank to bank. My bank (BoI) will lodge to my credit card the next business day if I lodge before 2pm; your bank, it appears, doesn't.

Another issue is this thing about banking days. The long and short of it is that banks only do business on banking days. Running batches is a big part of banking business, and so they only do it on banking days (or at least on banking evenings). Of course, this doesn't quite ring true. They'll let you take 300 euros out of a drinklink machine or buy a fifteen grand car on your visa anytime, business day or Christmas day, but they won't pay your lousy credit card bill for 50 quid on a Monday morning. The whole thing is tied up with traditions and work practices and so on. Everything is held down to a lowest common denominator by the need to keep things harmonized between the banks. What else is new?

Of course, even if batches were allowed run 365 days a year, it would still take items 3-4 days to clear, because you would need to wait for a banking day for the branch manager to be available to look at any borderline items.

This is the reason I believe they pay on the third day or later. It certainly seems a lot more plausible to me than the explanation put forward by the IBF. If it is the truth, I can't see why they can't just come out and say so. There's no point in keeping it a big secret. It might not be the most sensible business practice in the world, but it is easy enough to understand how it came about. I'm pretty certain it isn't borne out of malice.

Wertz

Thx for the reply...My bank is BoI...the CC is issued (under license) by them...yet it takes 3 days for an online payment(no money or paper cheque ever changed hands) to be credited to my account.

Whilst your explanations go a little way to explaining things, the cynic in me remains unconvinced that this sytem is anything other than an archaic process that banks conveniently exploit in this modern age to their own ends.
Having said that, I've got to live within the system and in future will allow for this process.
Still bullsh*t though...

antoinolachtnai

Did you pay after two pm? Then it's going to be the third day. (That's what the lady in the credit card department told me on the phone anyway.) I find it hard to understand the 2pm thing myself. What can the bank do at 2pm that it can't do at 4pm? Bank of Ireland's processes could definitely do with some streamlining. It's as much in their interest as it is in yours to move money around as quickly as possible.

RainyDay

I don't know a whole lot about the clearing system, but I did read some time back that a rep from each of the clearing banks meet at a location in Dublin every afternoon in order to settle up with each other, e.g. AIB owe BOI x million & BOI owe UB x million etc. This manual settling up may account for part of the delay.

I guess it makes sense that there would be some offline manual controls in the process. If dodgy transactions managed to get through the automated system in some way, there would be howls of criticism on there boards about the banks screwing up your accounts. A fully automated system would leave them open to such abuse.

antoinolachtnai

RainyDay wrote:

I don't know a whole lot about the clearing system, but I did read some time back that a rep from each of the clearing banks meet at a location in Dublin every afternoon in order to settle up with each other, e.g. AIB owe BOI x million & BOI owe UB x million etc. This manual settling up may account for part of the delay.

Well, there does have to be settlement between banks at some point, but unless you are a very high-roller indeed, it is unlikely to cause any delay to you. In the Irish situation, there probably isn't as much settlement required as you might expect. In a lot of cases, the transfers between two institutions will more-or-less balance each other out.

In the ordinary course of events, you would expect this sort of settlement to happen post-facto, after your transaction has gone through, rather than before. It shouldn't be on the 'critical path'.

shoegirl

nlgbbbblth wrote:

I think you'll find that payment of an bill, be it Credit Card, Eircom, ESB, Gas - whether done manually by going to a bank and using the tear-off portion of the bill, or by posting them a cheque or electronically - is not an instantaneous process. The funds are initially paid into a general collection account and then posted individually to the customer's credit card/eircom/whatever account. This process usually takes 3 to 4 working days.

I agree here, but I've dealt with Irish Permanent (pre TSB), AIB, Bank of Ireland and National Irish Bank and find they all have utterly different times on different transaction types.

I found that National Irish Bank lodge cash lodgements almost instantaneously (or certainly within hours), are fairly quick for cheques also. However, if I use electronic banking to transfer directly from my NIB current account to my AIB cash account, it takes up to 4 working days, and this is a direct transfer. Likewise some Laser transactions can take a few days to post also. Posting to my NIB VISA takes no more than 24 hours usually.

AIB were usually the fastest - almost all cheques lodged I have found to be usually available by about 5-50:30pm on the same day. if lodeged before about 3pm in my own branch. This was regardless of account type.

Permanent were very slow to lodge cheques and cash, but also to post laser transactions.

And lastly BOI had to be the worst of all, because the clearing time seemed to depend on what kind of customer you were. When I had an ordinary cash account in the Swords branch, lodgements took up to a week. Yet when I opened a student account in College Green, mysteriously this whittled down to less than a day. This wasn't always consistent though - BOI are notoriously inconsistent.

This whole thing reminds me of our payday debacle at work which has gone on for the last 8 months. We had a new accountant who had never worked in Ireland before, last September. Ever since, we have been receiving our wages late. By late I mean that the money is not available to us in our accounts by 9am on payday. Well sometimes it has been, but everytime there is a bank holiday weekend we end up paid late. HR keep insisting (though I suspect know damn well what is happening) that the accounts are posted and authorised in time, but mysteriously this only started happening after this accountant started. And exactly the same for expenses payments (I noticed that I always got my expenses the day after this accountant told me I would receive them).

Our previous accountant often had us paid a day early, and sometimes up to 2 days early, so I suspect there is some knack about clearing that certain people are wise up to. (The bad accountant thankfully left a couple of weeks ago, fingers crossed, she is replaced with somebody who gets everybody paid on time, all the time).