Who has my money

[Dinner]

The bank is short term investing with it usually trying to get the over night rate. I've actually brought up this subject before so it is nice to see I am not the only one here who feels like the banks are trying to pull a fast one.

[Sava]

Are you bringing beer to the meeting, comrade?

[Pekka]

When you make an electronic transfer, the bank takes away your money immediately. However, it can take 2 - 3 business days for the money to show up in the new account. Who is holding the money during those 2 - 3 business days? Is someone earning interest on that money during that time? If you take all the electronic transfers happening every day all over the world, how much money does that amount to?

YEs, the card processor has the money. The way it goes is that the bank usually uses a processor to deal with point of sale etc. The processor (or the acquirer) basically owns and operates the processing infrastructure. Banks usually don't have this and prefers to use outsiders for this processing business, it's not too simple OR good business to, for example, sell point of sale terminals. It's a pain basically and is not core business for banks.

So, when you put your card in a machine, the processor pays the money to the merchant with the time frame they have agreed (say, 2 days). Then, or in fact at the same time, they send a message to the card holder bank, and ask "does this person have enough money for this purchase?", and then they front some of it and carry the risk that the message will be negative. The processor/acquirer gets paid by the merchants who have terminals of any kind, the bank gets to sit on top of the money for some extra time and make more in interest and no one wins (except those with money).

It's basically a business where the product IS money.

These would be also the folks who are the underlings of credit card companies liks Visa, Mastercard, Amex etc.

It's been a few years since I last dealth and worked for such a company so my memory is a bit fuzzy but I remember the business goes something like that. I might have missed few details but that's the idea in general. Banks are, however, at the moment taking up the processor/acquiring business under their wings and trying to become this megacompanies that own everything from hair cuts to banking to everything. We do hospitals as well these days.

[Dauphin]

Over here, wires of up to ~5k USD are instant if made during business hours (8-18). Domestic obvs.

For int'l transfers, I think the money just sits in the respective banks clearing sections while all the steps are performed. Very probably nobody is earning interest on that cash, but IDK.

My bank has either immediate payment under FPS or immediate payment (interest bearing) but not able for withdrawal until clearing is complete after 1-3 days.

My experience and knowledge of how international USD payments are made, I can't consider interbank payments as being real cash flows of money anymore. Just a bunch of people issuing IOUs. The interest you get is simply determined by when the bank thinks it started owing you money.

[Sava]

American banking is a scam.

[Al B Surer]

American banking is a scam.

Don't insult American banking, dammit.

[I AM I AM MOBIUS]

You yanks and your global war on everyone else.

[Al B Surer]

Someone needs to police the bandits.

[I AM I AM MOBIUS]

I'd like to police this bandit:

[Al B Surer]

You are Welsh. It's only natural.

[I AM I AM I AM MOBIUS]

Have room for another?