What happens to funds that are withdrawn from my bank account until they are actually deposited in the payees?

Question

It seems to take 3-4 days for funds to be transfered. Where are the funds in the interim?

Answer 1

I believe you are referring to on-line bill payments. Many of these payments are NOT electronic payments. Often an actual paper check is mailed. The funds are transferred to a special account on which that check is drawn. That account may or may not be housed at your bank.

Answer 2

Your bank is hold the funds in their own account and collecting interest on it.