Why does an electronic transfer of funds take 1-2 working days? If it's electronic, why isn't it immediate?

Question

From the Commonwealth Bank of Australia site:

"If I make a transfer to an account at another financial institution, when will the funds be available in the recipient's account?
Transfers to other Australian financial institutions performed before 6pm (Sydney time) on a business day will generally be available in the recipient's account in 1-2 working days."

I've heard it's the same in the US also.

Answer 1

The programs that process these transactions are run overnight, because the servers are busy during the day responding to questions, and doing urgent transactions. So the first institution processes the transaction overnight and sends to the other. Then the second processes it overnight and confirms it. Depending on the timing, it could take one or two days.

Answer 2

Sometimes funds are available almost immediately. Much of this depends on the institutions involved and the policy they set. Banks often build in extra time to complete transaction. I think this is due in part to them wanting to make sure transactions are legitimate and in part due to the small bit of interest they make by holding on to your money.

Answer 3

The funds are available as soon as the receiving bank ACCEPTS the transfer. This requires human intervention.

Answer 4

Even the Credit cards take time to post the transactions 3-4 days. I would say that electronic transfer need time as well.

Answer 5

Yeah it is slow over here in the US too. I assume it takes that long because of security purposes. They need vertification that the funds are really available from one end to another. Its sucks but in a way I guess its safer.

Answer 6

it is a matter of timing -- banks only roll up once a day and so if if come in one minute after the roll up time it would be done on the second day!!!