Why is it not just 3 days to process, rather than 3 business days? And follow up, why does it still take 3 days?
In: Technology
Banks still work in giant batch transactions. They don’t want to constantly deal with Bank A owes Bank B $8, but then Bank B owes Bank A $9, and back and forth all the time. They want single giant transactions for processing between them to reduce confusion.
The user access is online. The banking accounting process is still done by batch at end of day to transmit to the clearing house. The clearing house then does batch end of day to submit to the destination bank.
A lot of these answers are pretty good (batch processing, manual process, etc…) but you’d be surprised to know how manual it really is.
If a bank doesn’t have an existing e-bill relationship with a vendor, your auto bill pay isn’t really electronic at all. They actually print the check out and physically mail it for you. It’s insane. Nobody is printing and mailing checks on weekends or holidays.
So, I work in IT for a utility in Canada, and have quite a bit of involvement in our posting process.
First of all, we only process payments on business days. We also only perform “batch billing runs” on business days. More specifically, at night on business days, to avoid overloading the system everyone is using during the business day, and to avoid database locking issues. We don’t invoice/bill customers on weekends or holidays. If we were bigger, we would maybe start doing those things on weekends, but that means someone has to be on call to support it on the weekend.
Second, the payment data files come from our bank. Payments that arrive at our bank are posted the next business day, unless we have an issue with the payment data, such as a corrupt or missing file. This could delay the payment by a day or two.
Additionally, the payments that come to our bank are collected from the banks that YOU bank at, so there is a one or two day delay for those payments to get to our bank before the data files with the payments are sent to us.
Edit to add: if you pay from your account on our website through our credit card processor, we get those payments much faster, as they follow a different path. We actually process payments that come through five different possible paths before they get to us.
TLDR: Big companies typically process things at night in batch, to avoid putting a heavy load on the system during the business day, and it can take two or three days for data to get from your bank, to our bank, and then to us to post against your account.
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The majority of these answers are wrong. Yes, the process takes time, but that’s only because of the way they’re implemented. The answer is similar to the same reason the [IRS is scrambling to hire COBOL developers](https://www.pcmag.com/news/us-states-ask-for-help-from-cobol-programmers) to make updates – everything in this World is built on aging technology (in this example the bank ACH network), and no one wants to pay to update it when it’s easier to just cobble together patches.
[One of many sources](https://www.nerdwallet.com/blog/banking/slow-mobile-payments/).
[This episode of Planet Money explains things nicely.](https://www.npr.org/sections/money/2013/10/04/229224964/episode-489-the-invisible-plumbing-of-our-economy)
Basically lack of will to do it faster.
In the Netherlands we have [Instant Payments](https://www.betaalvereniging.nl/en/focus/instant-payments/) which means for transfers between participating banks it takes 5 seconds at any time of the day or week.
Related question:
If both banks are open on both Saturday and Sunday, then why do they still count those as separate from business days?
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