In the age of the instant everything, why does the money I transfer electronically disappear from my account immediately, but take up to five business days to reach its destination?
I can’t help but imagine a giant multinational conglomerate conspiracy as I watch my funds fly off into the abyss of nothingness for days before my debts are settled at the other end. Where did they go? And importantly, who is earning interest off of them while they’re unavailable?
Are the financial institutions of Australia stocking their staff kitchens with Krispy Kreme or sending their executives on round-the-world trips with the interest they’re skimming from my sluggish transactions?
Or am I just impatient?
My baby boomer father will lament that my generation (Y) “expects everything yesterday”.
I admit, my life is ruled by my mobile banking, mobile shopping, mobile gaming, mobile socialising, mobile memory-capturing mobile phone that is pretty much permanently connected to my head, hand, hip.
But c’mon bank, five days?
Why is it that my pennies were punted to purgatory before my daughter’s dance school got paid for another term of tiaras and tulle?
Australian Payment Clearing Association (APCA) CEO Leila Fourie has been faced with suspicion like mine more than once, but she is here to reassure us all.
“Financial institutions give the payer the benefit of any interest until the nominated payment date and the payee gets the benefit from that date,” Ms Fourie said.
“So either the payer or payee is benefiting from the interest at any given time.
“There is no gap in interest no matter how long the payment actually takes to process.
“The funds sit with the payer financial institution until the clearing and settlement process is complete.“
OK, got it.
Then how come it sometimes takes five days, sometimes only three days and occasionally just a few moments for my money to travel through outer space to arrive at its intended recipient, depending on the bank I’m working with.
This is where the waters muddy a little.
Apparently APCA imposes its own rules upon banks for payment clearing and the voluntary e-payments code and legal obligations must also be abided by, but at the end of the day, each financial institution operates within its own Terms and Conditions.
Ms Fourie assures us the process is still thoroughly supervised.
“The rules for clearing most payment instruments in Australia, including direct debits and direct credits, are governed by our organisation,” she said.
“Under APCA’s rules, payments occur through bilateral exchanges between member organisations.
“There are no central ‘clearing houses’ for such payments, which account for approximately 98 per cent of Australia’s non-cash payment value.
“The Reserve Bank of Australia (RBA) also oversees the payments systems in Australia.”
The Commonwealth Bank of Australia (CBA) told news.com.au the CBA make up to six transfers between the Big Four banks each weekday trying to get payments cleared as quickly as possible for anxious people like me,
“For transfers to us, once we receive a file from a corresponding bank we process that file and funds are available straight away with our real-time core banking,” the spokesman said.
“For BPAY we settle up to 13 times per day.
“We are our own clearing house.”
And the good news is all of this fuss could soon go away instantly if the RBA delivers on its New Payments Policy (NPP) this year which promises “real time payments”.
In 2014, 12 Authorised Deposit Taking Institutions committed to funding the operation of the NPP.
In their own words; “The NPP is being developed via industry collaboration to enable households, businesses and government agencies to make simply-addressed payments, with near real-time funds availability to the recipient, on a 24/7 basis,”
Other related objectives being tackled by the RBA include the ability to send more complete remittance information with payments and the ability to make and receive payments outside normal business hours.
It is good news.
Pony up financial institutions — it is time the age of instant gratification extended to our transactions.
(Contributing Source: news.com.au)