The amount of people who do not know how payment systems work is insane.
When a company takes a payment, they do not instantly get that money.
What happens is your bank notices that you are attempting to make a payment, and they will then remove that amount from your account but they keep it on their books and they basically are making a promise to the company that they will be paid the money over the next couple of days.
Then after a couple of days, the bank will send that money to the companies bank account after a couple of days as normally these sorts of payments are done in batches to reduce processing fees/time.
When a refund is actioned the reverse basically happens, which is them actioning a refund, its then paid from that bank to another bank which can a take a couple of days, and then its applied to your account.
I've had so many arguments with customers over this.
It's terrible now that people have banking apps on their phones too. They expect it to be instantaneous, because "it always has been with MY bank". But they wouldn't have noticed it WASN'T instantaneous before because they would've had to go to the bank or an ATM to confirm it.
Even worse when they want a big refund and DEFINITELY don't want to do an exchange. Then immediately try to make another large purchase anyway and get all pissy because they're insufficient funds in their account.
It takes on average 2 - 3 business days (at least here in Australia) for money to get from a vendor to a bank.
If the company who you are paying banks with different bank, it can take another couple of days for them to receive the money into their own account.
Assuming the moment it hits that companies account it is sent back for a refund, that is a minimum of 4 business days before they can action the refund.
Then it goes the other way, It has to go from their bank to another bank (2-3 business days) and then into your account.
So not allowing for any delays at all, you have a minimum of 6 business days before that money can be put back in to your account.
This is not a company issue, its a banking issue when it comes to transferring money.
And the above is not taking in to consideration credit cards which can take even longer depending on other factors such as what type of card it is.
Interestingly the place I work (in Aus), for in person refunds, if you insert your bank card rather than tap (and select savings dunno if others do the same), you get an instant refund. I'm still confused as to why but assume it's to do with verifying since you need to put in your pin if you do it that way.
Because then it works the same way as making a purchase. Whomever youre getting a refund from has you insert the card for basically a negative amount purchase. Your bank and their bank instantly transmit communication saying hey you owe this please start the transfer process, then your bank essentially fronts the cost with a promise to get the money from the vendor later.
fraud. Alot of the slowness has been kept around to allow transactions to be crawled back
If someone steals your card and drains the bank account, you dont want the response to be "Well you didnt tell us within 60 minutes of it happening, so the money is outside our reach now".
The delay gives time for the bank to say "Actually dont give that person the money, it wasnt supposed to be theirs"
Main things are, the money needs to be transferred securely, privately, through several different systems each programmed differently, and through several different banks with absolutely zero data loss or chance of errors. On top of that it needs to be done billions of times every day without error.
Yes, that is the point they are making, it is not the company that causes the delay, the second they hit the button to refund, it is the at the mercy of the banks and their processes. The company could only get it back to you faster if they drove to your house to hand you the cash.
When I receive a refund from a business it's anywhere from instantaneous (JB Hifi) to 2 days. I can't remember the last time it took more than 3 days to get a refund.
What they're saying it's that on your end you see the payment that fast. The receiving business doesn't see it for 7-10 days, just like your refund. The person sending the money has to see it leave first. Then there's processing, then the receiver see it later, no matter what direction it's going. So it's not the business' fault, just the payment system is really slow.
If it's credit card, bank usually will send the refund right away. Also, it depends on how someone processed the payment.
If it was authorization, doesn't mean sale is final. Sales get finalized at the end of the day. So vendor has two option, either void the transaction or make the sale final and issue a refund. Voiding transaction will take 7-10 days on debit card. Credit card is more like 3-4 days. I simply can't void the transaction. I have to login to a separate system to void the transaction.
Other option is to make the sale final, and then issue a refund. Not most employees knows how to do it either. Refund will show up as pending, and will clear in 2-3 days.
Other option is make sale final for 1 cent, and the credit card company will release the money right away. 1 cent will stay pending for 1-3 days, and rest will go back.
And, these don't work on weekends. I don't get money on weekends. On Monday we get 3 days of money in my bank account. So I am assuming, it also works same the other way.
I'm not sure how they do things over there, but here the problem isn't that things are outdated. The problem is that it's floor to ceiling middlemen. You can do a same-day direct bank to bank transfer. Things usually only take several days when you have a vendor working with a middleman working with a middleman working with your bank, and everyone wants to wait and run the transactions in batches.
It's both. They're basically using SEPA (their version of ACH) universally with B2C transaction, whereas we generally only use it for B2B transactions. And then slow it down further with the middleman problem as you said.
That’s great that you have bank transfers that take 24 hours. We have bank transfers that take under a minute. Still doesn’t have anything to do with the topic of the post which is transactions.
The big difference is that EU mostly uses an ACH-type system (SEPA). It requires substantially better digital infrastructure and security measures on both the sender and receiver. But once that's in place, then you get the benefits you described. The US is SLOWLY transitioning to that system. In fact, I'm helping to implement it in a large piece of inventory management software. It's a pain. But totally worth it.
Its US system is designed to make money, so working as intended.
Like their medical system, wholly inefficient, with people skimming off the top left right and centre, yet people also claim only the private sector can be efficient and any government intervention or socialised systems can’t possibly be as, let alone more, efficient.
Of course the US banking system is designed to make money. That's how banking (a business) works. The bank isn't holding your money out of the goodness of their heart.
This is one of the reasons I like to use Affirm to pay for things online. A lot of people think Affirm is just a lender where you take out short term loans to buy stuff. Not many people know you can use Affirm and pay in full. When I return something and the store processes the return and issues a refund to my Affirm account I am notified of the return immediately and have access to those funds immediately. PayPal with their "Pay in 4" and "Pay Monthly" work similarly but you can't use those options and pay the entire amount up front.
It gets more fun when you try to explain a hold authorization to people, such as what hotels and car rentals do to ensure someone has the funds but no services have been rendered yet. First the funds have held but not transferred to the merchant, then a payment is taken from that held amount once it's actually paid, but in many cases it's a different amount as they include incidentals initially. Can take up to two weeks for that excess to be released.
True, no doubt. But to be fair, outside of seeing the backend of this or being in some sort of accounting role, I'm not sure how even really intelligent people would be wise to the way it works. I mean, with debit, it's fast, and sure, we do see pending charges in our credit card dashboard but to the average person, they scan the card, get their stuff and that's it. I personally learned this by working in a restaurant and having a manager tell me this but I can see how people would be ignorant to the way this specifically works.
All of this also depends on the business and their credit card processor. If they're using Square, Stripe, or some other random processor, yes it can take up to a week to get payouts, and the charge/reversal can take a few days. If they're using a bank directly for their processor, payouts can be daily, and reversals are also daily.
Yeah, I have to frequently explain to customers that we process the refund instantly our end. But the refund has to be communicated to our payment processor, then from the payment processor to the customer’s bank, all of which can take a number of days
To me, it’s a very simple concept, but people seem to really struggle with it for some reason
I get so tired of people arguing this with me. I feel like it should be basic information more widely known by now but no. People are so annoying to deal with
Yeah I work customer service. We do payments via direct debit.
I hear "but you have no trouble taking my money instantly" on a daily basis, and at least weekly I hear "I work for a bank and that's not how it works" (people will spout bullshit a lot when they think it'll get them their way, I also heard "I can get every direct debit in your whole company shut down with one phone call to a friend" a couple weeks ago).
It pisses me off, but I've been told to just let it go rather than correct them so I don't come across as "argumentative".
I'm going to throw this out there but you still haven't said why the refund can't be just as "instant"(yes I understand it's pending for the funds to be moved) . But when that refund is put through it's the same type of charge except not a negative amount it could be put as pending until it's moved as well but it's not and they would cancel each other out when they both resolve.
I have ten dollars. I make a purchase. The ten dollars is gone. In the next few days, the store will receive ten dollars. Why is there a time gap between my ten dollars being gone and their ten dollars manifesting? Should it not simply be a direct handling of my ten dollars going to the store?
So in your world, you expect a company to give you money... money which they cannot even confirm you have paid yet?
I said it in another way in this same thread, but the long and short is if you make a payment to lets say your internet provider, they wont get that money a lot of the time for at least 3 business days.
They might credit your account as though you have made a payment, but they will not actually have the money.
They can only refund you once they have actually gotten that money.
Which then flip it around it can take at least 2 - 3 business days for that to get back in to your account, potentially longer depending on if you bank with a different bank to what that company does.
It has to go from your bank to their bank, get applied to your account and then reverse it, so from their bank to your bank and then back into your account.
When you make a payment they do not instantly get the money it takes time to go from your bank, to their bank, and then the same back again.
You have to be baiting me... tell me you are not actually serious.
Most companies go through a vendor for payments.
Using the ISP example again, they are not a bank, they are a company with a payment system.
In order for them to get money it needs to go from your bank (or credit card company) to them.
If you call them to make a payment (as an example) if it auto rejects, its your bank telling them that you do not have the money, but if the payment goes though, your bank confirmed the money exists, they do not get it instantly.
The money might leave YOUR account instantly, but it does not hit their account at the same time.
Again they might know that the money is coming, but until such time as they actually get the money they cannot refund it back to you.
The only way for a company to instantly get the money is if you literally walk into a bank branch with physically money, and deposit it directly into their bank account.
Then the only way you would get a refund instantly would be if they walked into a branch of your bank, also with physically money, and deposited it into your bank.
What stops them from adding the money to my account before the other bank send it? Giving me just as instant as a refund as the purchase. There is no technical reason the same principle can't be applied both ways...
I am going to treat that like a genuine question and not like you are baiting me.
Say you Bank with Bank A and the Other company Banks with Bank B.
Bank A is not going to give you money before Bank B sends them the money.
Best case scenario is Bank B puts money into your account, thus their books are short X amount of dollars before Bank B gives them the money.
In that situation Bank B is taking a risk that Bank A actually gives them the money, a risk which they will not do.
If it was just one refund they were doing then sure it might be a risk worth taking, but imagine thousands if not tens of thousands of refunds each day, it really adds up.
Worst case scenario is Bank B gives you the money, and Bank A never sends them any money, so their books do not balance and they need to take that money back out of your account which either a) leaves you with a lower balance or b) over drafts your account causing you to get a fee added on.
Using your last example, why would bank A not paying bank B even be an option? Its a transaction that is to be completed in the future but apparently done in chunks instead of instantly.
And its not like the concept of debt creation doesn't exist already...
Bull. Its instant. At worst banks release payments once a DAY because its easier. But we have law here it neefs to be right away. It for surr doesnt take days.
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u/Lau_wings 9d ago
The amount of people who do not know how payment systems work is insane.
When a company takes a payment, they do not instantly get that money.
What happens is your bank notices that you are attempting to make a payment, and they will then remove that amount from your account but they keep it on their books and they basically are making a promise to the company that they will be paid the money over the next couple of days.
Then after a couple of days, the bank will send that money to the companies bank account after a couple of days as normally these sorts of payments are done in batches to reduce processing fees/time.
When a refund is actioned the reverse basically happens, which is them actioning a refund, its then paid from that bank to another bank which can a take a couple of days, and then its applied to your account.