All internet funds transfers should be real time.

**The following blog has been updated. Please see comments below for more detail.**

We love a good personal crusade here at Mozo HQ. So when we recently received a passionate plea from a concerned citizen questioning why internet fund transfers aren’t in real time, we thought it was worth publishing and doing some number crunching to figure out what the delay adds up to.

Here is the full article:

All internet funds transfers should be in real time.

The Banks have a privileged position in the economy being a necessity for the flow of funds through the market. Their privilege is not matched by their overweighted focus on results for the shareholders as opposed to the better good of the country. Their protests that margins have to rise to keep the banks strong and therefore benefit the community are difficult to accept when there is likely greater benefit to the economy by their measured increases in rates similar to the RBA. The out of order rise from the CBA is more an indicator that that Bank got it wrong with their risk management and we are paying for it.

There is much comment lately about how the Banks need to treat the customer fairly. There are different ways this could be addressed. My crusade for fairness is to enable all electronic transactions to be real time. For example when you make a funds transfer on the internet to pay a bill or a BPay transaction to pay a bill it should not take 1, 2 or 3 days to arrive at the destination.

Let the Banks try that trick at the supermarket checkout! It could take several days to complete the shop because we would have to wait for the funds to arrive at the Woolies or Coles account. That is not going to happen.

The Banks have the systems to achieve this now. The real time gross settlement system will allow this. Oh I forgot, you can go to your bank and request such a transfer to another person’s account if you want to pay a fee of about $35.

EFTPOS transactions are immediate. The transfer is completed while we wait. Money has moved from my account to another account because I authorised it. Why does that not happen with internet banking for individuals and business? I know there are businesses large enough that they have systems through the Bank that allow this but this must be made available to all.

Why, because the Bank has taken the funds from my account and only once they have finished investing it overnight or for three days to squeeze every last earning out it will the Bank allow it to continue on its journey. Why do I wait for three days for my funds to arrive? That is costing me interest if it is paying a credit card. If the debit is from an overdraft then it is costing me at both ends.

If the Banks are the conduit, the pipe is blocked and needs a clean out. Regulate that if there are clear funds in an account that a funds transfer to another account should be real time.
– ends –

And what about the numbers?

Let’s take UBank as an example. It recently announced that it has $5 billion in deposits. It seems common for UBank to have a 3 day delay coming in or out. All $5 billion had to get in there, and will come out again at some point, and so it loses up to 6 days of interest. At UBank’s 6.51%, that’s over $5 million [edit: $2.5 million – see comments below] windfall to the banks – and that’s just on the money in UBank.

Does that sound fair?

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All internet funds transfers should be real time. was last modified: June 29, 2015 by Mozo

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9 Comments - Write a Comment

  1. It’s quite clear that you’ve not done your research here… Perhaps 10 minutes on Google and you would be less likely to mislead consumers!

    To correct a few of your statements:

    1. Customers do not lose interest on bank transfers (they are dated the same day at the destination account as they are sent)

    2. EFTPOS transactions place a hold/debit on funds real-time and do not settle real-time with the merchant – this is “batch” overnight

    3. Direct Debit system mandates that the source of the funds have a period of ~3 business days to bounce/decline the transaction – it is a trust based system

    Australia has one of the most advanced payment systems in the developed world, consumers can generally pay consumers free-of-charge next business day – have a look at the UK, HK & USA for a real complex framework…

  2. Mozo

    Sorry, we got a little over-excited in putting some numbers to this. But while Monty is right is saying that your money doesn’t miss any days of interest, it does still miss out on interest. Our mystery-customer-blogger’s point is that the delay in settling the transfer means that you need to pull it out of your online account a few days before you actually need it. If everyone has to pull their money out 3 days earlier than they really want to, and assuming their transaction account pays next-to-no-interest, then customers collectively miss out on $2.5 million in interest on a total of $5 billion in deposits (not $5 million as we originally wrote; there is no ‘delay’ on the way into the online account). But the real issue is this: in this technological age, is it really too much to ask that we be able to move money down a wire faster than Australia Post can move snail mail?

  3. Well, every now and then I do a big (well, big for me, a couple hundred dollars) transaction and I think I have the money in there. But then I look at my account that night or whatever and realise that I was actually $30 short. If the 3 day delay for me to put more money in wasn’t in place then I would have to pay the overdrawing fee or whatever it is, which is another $30 which is far worse than the three days of interest I might make on a couple hundred dollars in my account. Also, 2.5 million might sound like a lot to us because we don’t earn billions of dollars each year, but that is .05% of the $5B that is in their accounts. The equivalent for my $40k dollar wage? $20 for the whole year assuming I pay the whole thing to bills and never withdraw anything from the ATM. Think about it like that, the bank makes a whopping $20 extra over a whole year because they hold my money for three days. Or, less than they would make if they removed their three day period that waits for more money in the account if it goes over and charged me once a year for doing a transaction when I thought I had an extra few bucks in my account.

    I’m pro three day waiting period.

  4. Interesting that this blog post was showing up in Google days ago but when clicked on was not available … did someone at a big bank question the figures and delay publishing or have I been reading too many conspiracy theories?

    As for transfer times .. ubank (I am a customer) is woeful. What would be an overnight transfer for ingdirect takes days in ubank. Not good enough!

    My dog required 3000 dollars worth of vet treatment to diagnose a malignant cancer of the spleen. That money was spent in 24 hours and thankfully ingdirect was quick at transfer…. I still have 2 dogs and keep some cash with ing so I don’t have to worry that ubank wont be able to transfer funds in an emergency.

  5. I agree absolutely.

    Although there may be a “trust” system in place for the debit network, I don’t think that is a valid reason for delaying electronic fund transfers initiated by a customer from some sort of banking portal.

  6. I am a tradesman and I often need customers to pay me on the day of work so that I can cover the cost of materials etc. They mistakenly believe that they can deposit it online into my account and I will have the funds straight away. This means that sometimes I have to wait 3 days before I can start work when I don’t have the funds to cover it. I don’t understand the issue of security since you can’t send the funds if you don’t have them. Its no different to drawing the cash out at one bank and depositing at another. I honestly believe that the banks just want time to correct any stuff ups they may make themselves…as they often do

  7. My business’s credit card payments are compiled and transferred each evening, and take three or four days to arrive in the bank account.

    This is money that I can’t use during those days.

    I am in a business of sudden opportunities and quick purchases and sales. There are times where I have missed a change at a good purchase because I have been short the few dollars that were in transit from the credit card processor.

    This must also happen to other small business owners.

    The wealth of the world, and the health of the economy, largely a matter of how much money moves, and how fast it gets there. There most be a signioficant cost to the economy in having financial institutions sit on every fund transfer for three or four days.

  8. I have a constant delay every month from being paid consult fees out of China. Current example. I have deposit slip from China Communications Bank that money was transferred last Thursday 11th April. It is now 12:05 am Tuesday morning 16th April. My St. George acct is still lanquishing with no sign of my fees.


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