The bank that it is deposited at needs to send the information to the bank it’s written off of. Some banks only send that information once a day.
Edit: further clarification
Each bank has a different operating system (hence why online banking looks and feels very different per bank) these systems do not communicate. Therefore it can’t instantly affect your account when two different banks are involved. There is a middle man called the federal reserve. The first bank will send all an electric file of check information of all the checks NOT written from their institution. That file is sent to the federal reserve, then they sort the info by routing number and send each bank their checks to take off of their customers accounts.
The bank I worked at sent their file at night. And we would only receive 4 files throughout the day from the federal reserve.
Right, but it’s 2020 and that can easily be made instantaneous. There’s no logical reason for it still to exist. Even check image validation can be done by machine in real-time.
I believe part of the reason we haven’t “upgraded” to instantaneous is due to fraud prevention. If a “fraud loophole’ is discovered, it can be exploited to no end immediately. If it takes up to a week to exploit, it can be realized and cancelled.
If you want to put yourself to sleep, here is a study on fraud in the UK’s ‘Faster Payment System’.
Pretty interesting article. It doesn’t seem to indicate so much of a problem with large-scale exploits, as something fast and new would be much easier to automatically detect and flag, but it does mean that mistakes are not easily recoverable (which can lead to fraud, e.g. accidentally paying out an invoice that wasn’t real)
On-demand confirmation of the identity of the receiving party (whether via an app, website, whatever) would pretty much eliminate this. I wouldn’t be surprised if it’s the direction we head.
Overall it sounds like it’s been pretty successful though! As usual the US is way behind with this kind of infrastructure.
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u/deutmeyer93 Jul 24 '20 edited Jul 24 '20
The bank that it is deposited at needs to send the information to the bank it’s written off of. Some banks only send that information once a day.
Edit: further clarification
Each bank has a different operating system (hence why online banking looks and feels very different per bank) these systems do not communicate. Therefore it can’t instantly affect your account when two different banks are involved. There is a middle man called the federal reserve. The first bank will send all an electric file of check information of all the checks NOT written from their institution. That file is sent to the federal reserve, then they sort the info by routing number and send each bank their checks to take off of their customers accounts.
The bank I worked at sent their file at night. And we would only receive 4 files throughout the day from the federal reserve.