Speaking of Banking... why aren't transactions INSTANT?

I've always wondered this....
Since everything is digital these days...
When I buy something, why is the charge "pending"?
I understand, perhaps their are "roll overs" at 24 hour intervals, and that's fine for that...
But for other things, I've seen them "pending" for 3-4 days!
Also, why can't I transfer money instantly between major banks (i.e.: BofA & Chase)...working in the software industry, and around PCI Audits..I KNOW the technology is there...I've just never really asked around at work (although I've thought about it!)
Is it for "security" purposes?
Are money transfers MANUALLY done, in this day in age?

 

I am with you. I always wonder why when I pay my credit card on my banks website it takes 3-4 days to post to my credit card account. Makes no sense to me.

 

fraud, would be one reason. Identity theft.

 

I would assume that business submit their credit card batches daily but I wonder if that is the case. And it's not just them charging your account, there is a payment processing center and their own banks in the mix.

As for making money transfers faster, it's probably because no one is making them do it faster. They have to do it in two days by law but before that the banks took as long as they could to deposit money into personal accounts. It made checks bounce and they could collect fees from it.

 

Batch processing. And the massive volume. Read a report that over 122 BILLION transactions took place in 2012. It has of course grown since then.

 

That's what I always thought...transactions weren't individual, but done in batch (either daily, or bi/weekly)
Still...weird that inter-bank transfers can't be instant (they can for less than like $100..but more money...nope)
Just seems like we could automate more thinks and take humans out of the mix

 

They are automated, but just not instant retail to visa to bank to bank transactions. That is a high level of multiple transactions through many different people/places. Lots of things take place behind the scenes, and pretty much all automated without "humans" involved. But, it just is not instant.

 

I know when I get cash from the ATM. I get a text telling me of the transaction before the cash has even spit out. Thats pretty fast

 

We have a service called "Fast Pay" where transactions set up between various Banks that offer the serice can take up to 2 hrs
They are usualy instant, I can transfer money from one bank to another and by the time I have logged in to the second account it's already there

 

It also depends if you are before or after the cutoff day for those transactions. If your bank has a cutoff time of 5PM PDT and your transaction hits at 5:01, it's in the next days transactions.

If it's Friday and it hits at 5:01 PM, it won't be processed until Monday's transactions.

 

I understand that part...but what I don't get..is if I transfer $500 from my Chase bank to my BofA on a Monday at 9am...I can't go over to Chase and draw out that $500 until Friday...

 

Shouldn't take that long. How are you doing the transfer? ACH, Wire, a check they are putting a hold on? If I log in todo a person to person for my daughter on Monday, it will normally hit her account Wed or Thurs. They have to create an ACH file & transmit it. Same day ACH changes may be speeding that up a bit hopefully.

A good example on debit/credit - if each transaction were completed individually then the corresponding credit to the merchant would also be individual- can you imagine trying to balance a statement as a merchant with 87,000 individual transactions on it lol?

When your debit card item is approved it will affect your balance right away but will normally display with PA (pre-authorized). When the batch goes thru, the PA is reversed & the hard charge goes thru. (Every system will have its own term for the pre auth).

 

Just straight pay...Like I said, SMALL amounts ($500 or $300, I forget the max) will go through in 1-2 days..but it just seems like large amounts take longer.

 

That may be a standard set by your bank (and should be in disclosures for the product). Otherwise the same 'path' should be the same time frame. But your bank may have limits that change this

 

banks have been a little behind intermediaries, but person to person instant transfer is coming w/ a new co-owned network

http://www.reuters.com/article/us-banks-payments-insight-idUSKCN0WB0DO

 

I did not know about this, but THANK YOU!!!!
That's exactly what I was thinking...and yeah, all those major banks had to be on the same network...nice!

 

Like someone said, many bank transactions only take 1-2 business days. I paid my cell phone bill online using my debit card on a Tuesdays a credit, which was approved, and the very next day, the merchant reversed the transaction, putting the cell phone money back into my account. I was advised by my bank to not spend the reversed money as it would go through in 1-5 business days
Lo and behold, by Wednesday night, the merchant took the cell phone bill money back. Had I spent the reversed money, I would have been overdrawn.

 

Where are you initiating the transfer from? I always transfer money from my bank to my Fidelity account from the Fidelity website. That money is instantly available for me to use, although it doesn't disappear from my Chase account for a couple/few days. Fidelity floats me an interest free loan as a customer service.

On check deposits, Chase gives me instant access to the deposit. Really a minor thing, since the deposits are generally a small amount compared to the minimum balance to avoid fees. I suppose it does give me a cushion if I was running my balance close to the minimum.

 

I transfer money from the UK to Spain and vice versa regularly. If I do a transfer in the morning it can be withdrawn from the accepting bank that afternoon. We also get texts to acknowledge the transfer.

Different banks, different currencies and different countries. Never had a problem. Yet. Brexit might make a big difference. Whenever that happens.