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Basically, banks charge each other per each transaction. To minimize the amount they have to pay, instead of requesting thousands of small transactions, they b
by lodi 7y ago
Basically, banks charge each other per each transaction. To minimize the amount they have to pay, instead of requesting thousands of small transactions, they batch things up into larger overnight jobs. The other problem is that banks can only directly deal with other banks that they have a relationship with. So to transfer money from bank A to bank C, where A and C don't have an account with each other, they have to go through bank B that they both mutually trust. It's kind of like a computer network where each hop between routers can take up to a day.
- maxerickson 7y agoThat's a mechanistic explanation though, not an explanation of why they don't share the information that would reduce fraud. (they could batch the transactions/fees and still share information about the members of the batch…)
- lallysingh 7y agoThey're competitors.
- maxerickson 7y agoWithout thinking too hard about it, it sure seems like sharing the information would be mutually beneficial, so I'm not sure why that would matter. (it wouldn't be an antitrust problem, the communication would also benefit their customers)
- sbarre 7y agoYou'd be surprised how often that is not true for secondary and support services. In Canada we have many service providers (Interac and Symcor being two big examples)that are joint ventures between all the banks they service. So things like (historically) bill printing and mailing and more currently fraud detection and various digital transformation initiatives are being done by these service providers, so that the banks don't all have to spend money on the same stuff separately (and can interoperate more easily). As a bonus, they can also offer those services to other parties and increase profit for the bank owners.
- toomuchtodo 7y agoIn the US, it's FiServ and Early Warning Systems ("Zelle").
- munk-a 7y agoThis is comprehensible and I believe it but... it's stupid - and stupidity may explain an action, but it should never excuse an action.