Why don't purchases clear my bank account immedently when using a check card? - Tilted Forum Project Discussion Community

ibis · 07-12-2004, 10:40 AM

hey~

Why does it take so long for finacial transaction to take place? For instance, I pay Geico $93 on my check card on Friday. Come Monday, not only has it not hit my account, my bank doesn't even show it as a pending transaction. Yes, I know the weekends are not business days... but people aren't processing these transactions, it's all automated w/ machines. [sarcasm] The last time I checked, computers still work on the weekends.[/sarcasm].

I do think how it's charged makes a difference. I've noticed when I use my check card as a debit card it goes faster then as a Visa card. I assume that's because the transactions have to go through less "hands" to get to my account.

Nevertheless, this is the 21st century - why can't these things be automatic?

wonderwench · 07-12-2004, 10:45 AM

The reason is because their are quite a few financial transaction / banking networks through which these items are routed. As many of these began as regional "home grown" systems, there are many integration issues.

The type of transaction determines the routing and settlement sequence. Debit transactions are generally interbank, not requiring a path through the Visa net (unless one does the signature based debit). I try to avoid signature based debit because VISA screws the merchant with extraordinarily high fees on this transaction type.

ibis · 07-12-2004, 11:56 AM

Quote:

Originally posted by wonderwench
I try to avoid signature based debit because VISA screws the merchant with extraordinarily high fees on this transaction type.

Oh yeah? How high?

jester · 07-18-2004, 08:15 PM

It is also in the interest of the bank to delay the transaction as long as possible. The longer items float, the greater chance of NSF fees.

ibis · 07-19-2004, 12:23 AM

Quote:

Originally posted by jester
It is also in the interest of the bank to delay the transaction as long as possible. The longer items float, the greater chance of NSF fees.

Not in all cases, it could work both ways.

Jubal · 07-23-2004, 05:12 PM

Your typical merchant pays 2.1 - 2.4% + about $0.20 per transaction. AMEX is more expensive for most retail merchants.

Part of the reason is profit. Some of the clearing companies along the way sure like holding you $93 for a couple of days. It makes their bank accounts look fat. In their defense there is a certain amount of risk involved in clearing checks for which they must make up in profit.

Another reason is the Fed. The national ACH system is administered by a bunch of 'crats in D.C. instead of by businessmen. There is a new system coming up called Check 21 (or something similar) that will speed this process up.

I see most check clearing corps running 24-72 hour cycles.

Even the 18th century had automatic- its called cash. Just doesn't travel so well. It sure does keep the man from seeing where you are what you are doing though.

Bamrak · 07-24-2004, 04:54 PM

Jubal,

They also pay around .35 cents per debit transaction, so it's not cost effective on items under $15.00.

In my experience, most of the hold up is because the funds have to outclear through the Fed and Interchange ( Visa/MC). I know the files we send are only held for a matter of hours.

For the most part the hold up is because the merchant won't settle the transactions until after hours, or even later if their terminal settles via their processor ( ~2 am or so). From there it has to go to the fed to move the funds, which could take more than 8 hours or so bringing you into the 24/48 hours to hit your bank. From there it depends on your bank's postings of it.

I know i have have had check cards post the next day, but mostly it is 48 to 72 based on the logistics.

07-12-2004, 10:40 AM	#1 (permalink)
ibis PIKE!	Why don't purchases clear my bank account immedently when using a check card? hey~ Why does it take so long for finacial transaction to take place? For instance, I pay Geico $93 on my check card on Friday. Come Monday, not only has it not hit my account, my bank doesn't even show it as a pending transaction. Yes, I know the weekends are not business days... but people aren't processing these transactions, it's all automated w/ machines. [sarcasm] The last time I checked, computers still work on the weekends.[/sarcasm]. I do think how it's charged makes a difference. I've noticed when I use my check card as a debit card it goes faster then as a Visa card. I assume that's because the transactions have to go through less "hands" to get to my account. Nevertheless, this is the 21st century - why can't these things be automatic?

07-18-2004, 08:15 PM	#4 (permalink)
jester Tilted	It is also in the interest of the bank to delay the transaction as long as possible. The longer items float, the greater chance of NSF fees. __________________ Like my diamonds? The Devil himself gave them to me...

07-23-2004, 05:12 PM	#6 (permalink)
Jubal Upright Location: Austin	Your typical merchant pays 2.1 - 2.4% + about $0.20 per transaction. AMEX is more expensive for most retail merchants. Part of the reason is profit. Some of the clearing companies along the way sure like holding you $93 for a couple of days. It makes their bank accounts look fat. In their defense there is a certain amount of risk involved in clearing checks for which they must make up in profit. Another reason is the Fed. The national ACH system is administered by a bunch of 'crats in D.C. instead of by businessmen. There is a new system coming up called Check 21 (or something similar) that will speed this process up. I see most check clearing corps running 24-72 hour cycles. Even the 18th century had automatic- its called cash. Just doesn't travel so well. It sure does keep the man from seeing where you are what you are doing though. __________________ Do what thy manhood bids thee do, from none but self expect applause, for he noblest lives and noblest dies that makes and keeps his selfmade laws... Sir richard Francis Burton

07-12-2004, 10:45 AM	#2 (permalink)
wonderwench Banned	The reason is because their are quite a few financial transaction / banking networks through which these items are routed. As many of these began as regional "home grown" systems, there are many integration issues. The type of transaction determines the routing and settlement sequence. Debit transactions are generally interbank, not requiring a path through the Visa net (unless one does the signature based debit). I try to avoid signature based debit because VISA screws the merchant with extraordinarily high fees on this transaction type.

07-24-2004, 04:54 PM	#7 (permalink)
Bamrak Enter Title Here Location: Tennessee	Jubal, They also pay around .35 cents per debit transaction, so it's not cost effective on items under $15.00. In my experience, most of the hold up is because the funds have to outclear through the Fed and Interchange ( Visa/MC). I know the files we send are only held for a matter of hours. For the most part the hold up is because the merchant won't settle the transactions until after hours, or even later if their terminal settles via their processor ( ~2 am or so). From there it has to go to the fed to move the funds, which could take more than 8 hours or so bringing you into the 24/48 hours to hit your bank. From there it depends on your bank's postings of it. I know i have have had check cards post the next day, but mostly it is 48 to 72 based on the logistics.