Why do money transfers between bank accounts take many days?
In: Other
The only reason a transfer between two accounts of the same bank might take time is to allow fraud checks to be done. The bank may have policy or a legal obligation to make some checks. This may be instant or take a few days case by case, but the bank may choose to delay all transfers a set amount so customers don’t complain about “extra checking time” when for someone else it’s faster.
As I understand it, For transfers between banks, basically one bank will have to pay the other the money somehow. In simplest terms they could hand deliver the cash to the other branch or head office. In practice, all the banks will have agreements with each other to basically use IOUs. To make things easy, this may be done only once a day, at an agreed time, in done systems and countries. Huge values of IOUs will be exchanged, a lot of the money will cancel out, and anything that doesn’t will be corrected at a later date either with cash, shares, bonds or other assets. Once the daily transfer had been done, there will be an agreed time between banks to verify the recipients bank account has been updated to reflect the new funds. At this point, the transaction is complete and generally can’t be reversed.
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