Why do bank transfers still take so long today?
Banking
Asked by Question Bot09/Jun/20161 answer
1 Answer
F
Faisal Khan
Answered 09/Jun/2016
Presumably you're talking about banking in the US? Elsewhere in the world, slowly and surely banks and regulators are attending towards the needs to faster payments (read: instant payments).
Quite a few countries have implemented faster payments, the UK is a shining example, where payments are made from account to account in under 15 seconds.
In UK the company that implemented faster payments for the consortium of all the banks is Vocalink (See: VocaLink - operator of the UK national payments infrastructure).
Elsewhere, real-time payments (sub 30 seconds settlement is bearing fruit). Because US is such a large market with 1,000s of banks, getting them onto a single switch is quite a task.
As the US banking system processed trillions of dollars per year via their ACH system, there has been a lot of reluctance to move away from it. Why let go of the easy float you get for free?
The US is now tackling the faster payments challenge and have constituted a study group/committee for it. Nearly everyone within the committee wants to promote their own solution, so it will be some time before we see a consensus, and then open for additional comments amongst the various parties before we see a faster-payment switch initiative from the Government or the Federal Reserve.
There is a lot at stake here, so lobbying efforts are in full-swing and some are even arguing that instead of one switch, two switches might emerge. NACHA is of the opinion that a same day ACH ought to be rolled out rather than instant payments.
So clearly, everyone has their own agenda. I personally think things will get ugly before they get better. The hope/goal for the US to have a faster payments switch by 2018/2019 still seems doable, but it all depends on the cooperation of all those involved and the technology chosen, etc.
Quite a few countries have implemented faster payments, the UK is a shining example, where payments are made from account to account in under 15 seconds.
In UK the company that implemented faster payments for the consortium of all the banks is Vocalink (See: VocaLink - operator of the UK national payments infrastructure).
Elsewhere, real-time payments (sub 30 seconds settlement is bearing fruit). Because US is such a large market with 1,000s of banks, getting them onto a single switch is quite a task.
As the US banking system processed trillions of dollars per year via their ACH system, there has been a lot of reluctance to move away from it. Why let go of the easy float you get for free?
The US is now tackling the faster payments challenge and have constituted a study group/committee for it. Nearly everyone within the committee wants to promote their own solution, so it will be some time before we see a consensus, and then open for additional comments amongst the various parties before we see a faster-payment switch initiative from the Government or the Federal Reserve.
There is a lot at stake here, so lobbying efforts are in full-swing and some are even arguing that instead of one switch, two switches might emerge. NACHA is of the opinion that a same day ACH ought to be rolled out rather than instant payments.
So clearly, everyone has their own agenda. I personally think things will get ugly before they get better. The hope/goal for the US to have a faster payments switch by 2018/2019 still seems doable, but it all depends on the cooperation of all those involved and the technology chosen, etc.