Originally Posted by Shalmanese
None of these answers are very convincing. Other countries manage to implement much more efficient electronic banking systems with lower fees.
The real answer seems to be that America has a lot of legacy systems and there's a lack of incentive to ditch them and move to something more modern.
Maybe if I was a little more forthcoming I'd be more convincing. My company processes about 70% of the online payments made in the US. As I said before, 80% of those payments are made via ACH, 20% by paper check. ACH payments can be processed on the day on which they are authorized, if they are authorized early enough. They can always be processed by the following business day. The US system is not antiquated. The reasons payments take longer are more complicated than that.
Many banks offer online bill payment to their customers at no cost. My company processes those payments, and we always charge a fee for each transaction. How much we charge depends on several things, one of which is the lead time allowed for the payment. ACH payments are not processed individually, they are batched. We
run several batches of payments per day. We prefer, and charge our lowest cost for, processing payments in the middle of the night, because the system which processes the payments is the same one that 30 million individuals use to schedule their payments. Most of our user activity is between 7 AM and 7 PM EST, so we charge a premium for batch processing during those hours.
Another factor is risk. There are several payment and collection models used by our bank customers. For some banks, we debit the customer before we credit the payee. No risk there, so payments for customers under that model can usually be scheduled for next day payment. For some banks, we credit the payee and then attempt the debit for electronic payments. For customers under this model, a complex set of rules determines whether we make the payment electronically or via paper. For these customers, a three or four day processing time is imposed on their payments, even though we could make the payments faster.
Our bank customers are the ones who came up with the idea of charging a premium to their customers for next day payments. We only charge extra if we have to execute the ACH transaction during a daytime batch.