RANT: Why is our banking system so out of date?!

RANT: Why is our banking system so out of date?!

This is a discussion on RANT: Why is our banking system so out of date?! within the Off Topic & Humor Discussion forums, part of the The Back Porch category; I don't get it. Doing an electronic ACH transfer (like moving money between banks from your online account managers) takes 3 business days, at a ...

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Thread: RANT: Why is our banking system so out of date?!

  1. #1
    Ex Member Array JOHNSMITH's Avatar
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    RANT: Why is our banking system so out of date?!

    I don't get it. Doing an electronic ACH transfer (like moving money between banks from your online account managers) takes 3 business days, at a minimum. Nothing is really happening - just a simple swap of money. It should be instantaneous. Yet it takes three days. Three BUSINESS days. Uh, hello? Computers don't need to take weekends or holidays. They should be able to get going, 24/7/365.

    I could withdraw the cash, physically move it to bank B, and deposit it faster. Same with a wire transfer - why in the world does it cost SO MUCH MONEY just to move money that takes hours, sometimes DAYS , to get there??!

    The banks steal money from us too by making interest off the float, without giving us a cut of the interest. It's a free CD for them.

    Give me a break. It's like no one cares, either.

    Even in the EU, hardly a stranger to regulation, one can make a regular, free electronic transfer from a bank in one EU country to another EU country and have it there within the day. India does it almost instantly. In Kenya, you can swap money from your CELL PHONE instantly. How is the US so behind? What gives?

    They say some vague "security" reasons, but there is no legitimate reason for that. What could possibly be done for three business days to ensure "security?" The answer is nothing. The banks are just making free interest off the float while denying you access to your money. You know what I call that? Flat out THEFT.

    Also, what's with banker's hours? 9-4? What in the world? What working person can actually go to the bank at that time? Luckily my WalMart has a bank branch inside, which happens to be my bank. They stick around until 7.


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    Its a racket.

    If you need to transfer,say, 100,000K. At a daily rate of 1% interest, (just using that as an example) it would be worth 1000 dollars per day to them to keep it afloat so that they could collect the interest on the amount thus, someone makes 3 thousand off of the transaction.

    As you can see, it wouldnt take long to for someone to get rich.
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    Senior Member Array Devilsclaw's Avatar
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    Quote Originally Posted by HotGuns View Post
    Its a racket.

    If you need to transfer,say, 100,000K. At a daily rate of 1% interest, (just using that as an example) it would be worth 1000 dollars per day to them to keep it afloat so that they could collect the interest on the amount thus, someone makes 3 thousand off of the transaction.

    As you can see, it wouldnt take long to for someone to get rich.
    I think you forgot a step, now divide that $1,000 by 365....= $2.73 for a day, and they'd actually get about 1/3 of that amount. As to why it is so slow, I don't know. As far as banks making money on the "float", right now, money isn't worth anything.....banks are actually losing money on demand deposits. They can get the money cheaper lots other places, without having to pay people to wait on customers wanting to transfer $25 from savings to checking, etc.

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    I'll ask a banker I know and report back. Probably "clearing" issues whereby the issuing bank clears their Federal Reserve Bank, then that federal Reserve Bank clears to the Federal Reserve Bank of the recipient bank, then the second Federal Reserve Bank clears to the recipient bank. Beats the hack out of me.


    Wiki has a pretty decent explanation here: http://en.wikipedia.org/wiki/Automated_Clearing_House


    Automated Clearing House (ACH) is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit payroll and vendor payments. ACH direct debit transfers include consumer payments on insurance premiums, mortgage loans, and other kinds of bills. Debit transfers also include new applications such as the Point-of-Purchase (POP) check conversion pilot program sponsored by NACHA-The Electronic Payments Association. Both the government and the commercial sectors use ACH payments. Businesses are also increasingly using ACH to collect from customers online, rather than accepting credit or debit cards.[1]

    Rules and regulations governing the ACH network are established by NACHA (formerly the National Automated Clearing House Association) and the Federal Reserve. In 2002, this network processed an estimated 8.05 billion ACH transactions with a total value of $21.7 trillion.[2] (Credit card payments are handled by separate networks.)

    The Federal Reserve Banks are collectively the nation's largest automated clearinghouse operator and in 2005 processed 60% of commercial interbank ACH transactions. The Electronic Payments Network (EPN), the only private sector ACH operator in the U.S., processed the remaining 40%. FedACH is the Federal Reserve's centralized application software used to process ACH transactions. EPN and the Reserve Banks rely on each other for the processing of some transactions when either party to the transaction is not their customer. These interoperator transactions are settled by the Reserve Banks.

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    Well I know one thing for sure...when I make a charge, it's on my account in 5-10 minutes, but when I transfer from my savings to my credit card for a payment, it takes a couple days to 'clear'...WHY?
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    Quote Originally Posted by retsupt99 View Post
    Well I know one thing for sure...when I make a charge, it's on my account in 5-10 minutes, but when I transfer from my savings to my credit card for a payment, it takes a couple days to 'clear'...WHY?
    Using different systems.

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    Ex Member Array JOHNSMITH's Avatar
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    Quote Originally Posted by retsupt99 View Post
    Well I know one thing for sure...when I make a charge, it's on my account in 5-10 minutes, but when I transfer from my savings to my credit card for a payment, it takes a couple days to 'clear'...WHY?
    "Well, sir, it appears you bought some gasoline a couple of hours ago, but we still haven't received your payment on your outstanding bill. Oh, you sent it three days ago? Well we haven't gotten it yet, so we get to charge you late fees now"

    When there's money to be made, as with credit cards, they can make the system extremely fast and efficient. I know that with my Bank of America American Express card, I can make a purchase, log into my online account manager, and see the exact charge there INSTANTLY (shows as "pending"). It is amazing. None of my other credit cards do that (they wait for the charge to "clear" before showing ti).

    Other countries, many less advanced than the US, obviously show it is possible. The problem is that we, teh lowly citizens, don't know we could have it better. So we put up with it.

    I wonder if the Fed Reserve system didn't exist, if banks could make a private, independent, national clearinghouse that would be far more efficient and quick.

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    Banks + Post Office has become my personal nightmare. I think I smell a scam, or they actually downsized the PO.
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    Senior Member Array swinokur's Avatar
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    same reason our Internet infrastructure is years behind most of the rest of the world. Making improvements cuts into the bottom lines. It's the profit making part of the equation as some have pointed out. There is no profit in investing in faster systems in either case. That only benefits you.

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    Senior Member Array Phillep Harding's Avatar
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    Quote Originally Posted by retsupt99 View Post
    Well I know one thing for sure...when I make a charge, it's on my account in 5-10 minutes, but when I transfer from my savings to my credit card for a payment, it takes a couple days to 'clear'...WHY?
    So they can charge you over draft fees.

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