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Thursday, 09 November 2023

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It's pretty much a universal scam. You see it everywhere when you start paying attention. I call it the money diode. Money flows with great ease into companies but flows out only with great difficulty. And it's so common that it has to be a deliberate policy...

Cheers.

"...you'd hypothetically need a government for. The government would step in and say, ah ah ah, no fair. That's not your..."

The same Government that takes weeks to process your tax return and issue a refund for money, your money, that you haven't been able to use for a year? I don't think they care.

Yes, to be sure.

But governments (or societies) also need to ensure that businesses can make money, somehow. You know, to pay taxes, to employ people, to enable people to pay taxes, to enable people to pay for art and creative work, to build/pay for guns and bombs and such to scare away would-be invaders, and so on.

So there's a balance somewhere.

Michael: you may find this link interesting.

https://www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-credit-transfer

Right down your lane and it will become reality soon.
Many of their project of a few years ago are now reality and taken for granted.

Alan Sailer opines "It's pretty much a universal scam", which agrees with Mike's essay

And yet, I transfer money between accounts in different institutions, sent it to kids and grandkids, pay for stuff done in and to my house — and don't encounter this.

Perhaps an easier solution would be the so called "free market" one; stop using institutions that do this to you. Patronize those that do not.

Certainly easier to fix on the local, personal level than changing the world.

Examples:

Lenore and her daughter are cleaning our house as I write this. It just took me about a minute to send payment using Zelle. The money will be in her account before they are done.

I keep my retirement account in a different huge institution than my day to day checking, savings and some credit card accounts. Simple firewall; the day to day may be compromised without touching the other.

When I transfer money from retirement to daily, the money is there the next morning.

I just enrolled in Venmo, to pay someone who uses only it. It looks as though they do hold on to the transfer money for a bit, maybe charge a fee for instant availability?

Just eschew such things.

Yes, every handler of large amounts of money plays the very short term interest game. But you can choose those that don't abuse it.

Why I choose a credit union. To be honest, I don’t even know if they refrain from that particular practice, but I do know that they are considerably less predatory of their own customers in general.

PS: you could also make the case that the delay tactics is a form of junk fees, and get them that way.
https://www.ftc.gov/news-events/news/press-releases/2023/10/ftc-proposes-rule-ban-junk-fees

Let us know how it goes. :-)

From my experience there is significant difference between a direct payment transfer/ETF vs a wire transfer. For instance most if not all direct payments including electronic fund transfers actually goes through an escroll, called ACH (Automatic Clearing House). They hold the funds usually for several days.

A Wire Transfer in almost all case is immediate.
For instance when I purchased large dollar purchases like real estate in Costa Rica or shall we say an automobile, the seller always wants a wire transfer and won't accept an ETF or direct transfer because they won't have access to their money for several days because ACH holds the funds.

Zelle, Venmo, Paypal, etc. all go through ACH so you won't immediately get the money.


Since you mention the bank is holding "your" money for five days, I assume these are deposits, and that they involve checks. I know of no other payment type which can take five days to clear. If you're dealing with payments from larger companies, can they make ACH payments (like "direct-deposit")? When paying off my mortgage earlier this year, Schwab made three ACH deposits to my checking account overnight. All were 100% available in the morning, and I provided a check to my mortgage holder after lunch.

Are you set up to receive payments via Zelle or Venmo? Nearly all of our household payments to smaller service-providers are made this way. So when I pay my barber for a haircut, for instance, the money is in his account in less than 10 seconds.

Do you bank with an institution that has some size to it? Most should credit a portion of a check deposit almost immediately, with the rest within 5 days. There are existing rules in place, dictated by the Fed. A lot of banks do much better than the Fed requires.

I try to avoid receiving check payments when I can, but a couple of months ago I received checks from Medicare. I used my bank's remote deposit app, scanning the front & back of the checks; all checks were accepted in under a minute, with all funds immediately available. Remote deposit has the advantage of capturing up-front an image of the check and its key information. Not having to handle paper checks can speed things up.

The banking system in the US has spent considerable effort in the 21st century speeding up payments and the availability of funds. Some involved speeding up check processing, but most went to other forms of payment (checks are dying, fairly quickly). If you're not benefiting from those efforts, perhaps there are things that you can do to get paid using methods which are inherently faster than checks. If not, you may need a new banker. Certainly the bigger players - such as Chase, Citi, B of A, etc. - should do better than what you're experiencing now.

[I'm trying to transfer money from myself to myself--from my bank account to my PayPal account. PayPal says it may take up to five BUSINESS days depending on my bank's policies, but the bank says they cleared the transfer four days ago. I initiated the transfer on the 4th and it is now the 9th. PayPal is merely holding on to it. Tomorrow is the last day the transfer can take effect, so I'm still waiting with bated breath. --Mike]

I haven't come across a cheque for years - they probably still have to "clear". Here in Europe if I make a bank to bank transfer, or someone pays me electronically, the funds arrive within minutes. (they say "within 2 hours")

I guess this is a PayPal 'issue'?

I ran into something similar when we purchased our first home two years ago, which is heated by an oil boiler. I was not a fan for climate change reasons, but seeing how we spent all our dollars (and most of our patience) to get a house we don't have funds to immediately start tearing it apart.
Anyway, oil for the boiler is priced like liquid gold. That's bad enough, but the local oil companies make you pay before delivery based on your estimate of how much oil you will be receiving. If you don't hit some minimum quantity (100 or 150 gallons depending on the company) you get charged a penalty fee. If you overestimate, as I did the first time, they don't return the surplus you paid them, they just hold it until you purchase more oil. I asked them if they were getting interest on my free loan and they didn't have an answer. Pretty frustrating.

Mike, you might want to post this rant with the Consumer Financial Protection Bureau (https://www.consumerfinance.gov/). This relatively new part of the government has a mission of, well, protecting us consumers from financial fraud.


I agree with Stan B -- credit unions are usually a better deal for most of us than the big name banks.

The US banking system has always lagged Europe and Canada (and probably other places as well). Direct deposit of your pay by your employer to your bank account was already being done in those places 45 years ago, but in the US they still used to pass out checks.

Yesterday (I live in Ontario) I had some work done in my condo. The woman who completed the work asked how I would pay. I could email it to her by putting her email on my bank’s payee list and then sending her the money. I would not need her banking details or even which bank she used. Likewise, she would not know anything about my banking, she would just get an email telling her the money was in her account. Couldn’t be simpler or faster. I’m pretty sure this system has not arrived in the US.

The American banking system is pretty antiquated. Checks are still used, while Europe uses a much faster system. Security is not as stringent in an attempt, it seems, to not bother the customer too much (or based on the belief that the customer is stupid).

In Europe and here in Norway transfer between account is in most cases instantaneous or at most a few hours. In Norway a transfer like yours to PayPal will tak at most 1 business day, but if you make the transfer early in the morning it will be same day, as intra bank transfer happens 5 times each day.

It used to take 3-4 days, until the government regulated it because the banks was holding on to the money even thou the financial infrastructure could move the money in a few hours.

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