When transferring money between banks, when money has been withdrawn from one account but not yet deposited in the other, where is it?

Question

I did an ACH transfer from an account in one bank to another. The money was withdrawn from Bank A on Friday, but isn’t set to be deposited in Bank B’s account until Tuesday.

Where is my money currently?

In: Economics

Answer 1

Source: I work for a bank. Caveat: It’s a German bank and payment schemes in different countries operate slightly differently.

When you initiate a transfer to a bank account in Bank A, it gets gathered by your bank. All transfers from their customer’s get collected and in regular intervals they send them out to a clearing and settlement mechanism as one batch. This clearing and settlement mechanism then collects all transfers to Bank A from all other banks, puts them into a file and, again in regular intervals, sends these files to Bank A.

There can also be compliance checks that need to be fulfilled and require a human review. In this case, your transfer might park at your bank for a few cycles and gets send to the clearing and settlement mechanism in a later interval.