7 ms·

What's transaction reordering? 1. have $10 in your checking 2. pay $9 for steak 3. fill account with $500 4. buy sausage for $2 bank reorders it as 1. hav

What's transaction reordering? 1. have $10 in your checking 2. pay $9 for steak 3. fill account with $500 4. buy sausage for $2 bank reorders it as 1. have $10 in your checking 2. pay $9 for steak 3. buy sausage for $2 4. charge overdraft 5. count $500 deposit Is that what banks would do? I faintly remember that really old accounts I had in Germany had overdraft capability, but for all newer(last decade or so) accounts, I had to explicitly request overdraft. I guess it was inherently more user hostile in the US. Although in German its not because of good service, but rather because banks don't trust the consumer.

steveklabnik 5y ago
I left a comment about how this happened to me... 8 years ago, wow https://news.ycombinator.com/item?id=6424493 https://news.ycombinator.com/item?id=6424493
AdamJacobMuller 5y ago
The specifics of it are dependent on the bank, but it can be more insidious than even your example. Given a balance of $100 and 4 transactions of $20, $20, $20, $90 you can either be charged one, or three overdraft fees depending on the order in which your bank deducts those from your account. Basically, ordering from largest to smallest will cause the most number of overdraft fees.
- NikolaNovak 5y ago
  I'm going to re learn the lyrics to Oh Canada and sing them joyously and thankfully... Our banking system gets a lot of ire but dear Gawd.
  - joecool1029 5y ago
    I seem to recall there being service levels at banks in Canada and maximum numbers of transactions per month until one gets hit with per-transaction fees. I was told explicitly when I opened my TD Canada Trust account there that it was imperative that I both keep money in the accounts and use them occasionally or dormancy fees would accrue (and if there was no money left, they'd then slam it with overdraft fees). The benefit of US banking despite lax regulation was that there's a ton of different banks and credit unions to choose from. Some are great and some are shit. Literally hundreds to pick from. Canada there was like 5 big banks, a large credit union, and then depending on your area there was maybe perhaps a small community credit union.
    - dsomers 5y ago
      Totally agree, the Canadian banking system is a corrupt cartel the levies it’s own tax on every Canadian. This was made even more clear to me when I moved to the Netherlands and every banking fee was suddenly 1/3 as much as in Canada for the exact same service.
      - doikor 5y ago
        Here in Finland banking fees are a thing only for the poor (and even then we are talking about a total of 20 or 30 euros per year) Basically every bank has some kind of "premium customer" program that you qualify for by having enough investments or loans from that bank and magically all your banking fees go away (obviously they just make their money from the services they provide for your investments/loans)
        kwhitefoot 5y ago
        Banking fees? Never paid any as far as I can tell, not for the ordinary things. My bank here in Norway won't pay a bill if there isn't enough money in the account. It sends me a text and an email to say what happened and doesn't charge me anything. The only fees I pay are a small percentage for management of mutual funds.
        adpcm 5y ago
        I’m assuming parent meant fees like X per month for having a debit/credit card or for access to “online” banking.
        doikor 5y ago
        Yeah that is what I meant. Basically having online banking + debit/credit card. Also for under 2X years old (depends on the bank) they are usually free.
        kwhitefoot 5y ago
        You are right I pay an annual fee for my credit card and debit card. No fees for using them or access to online banking. The bank is online only anyway.
  - 8ytecoder 5y ago
    It a uniquely American stupidity that somehow everyone just lives with. The concept of overdraft doesn’t even exist in normal consumer accounts anywhere else in the world. The first thing I do when I open an account here is to disable overdraft - but then you have to pay return cheque charges by whoever was trying to charge your account.
    - throwaway8689 5y ago
      We have exactly this concept in normal consumer accounts in the UK. It is not uniquely American.
    - jlmorton 5y ago
      The history is that people used to write paper checks, and merchants would charge a bounced check fee. Overdraft _protection_ was actually a banking feature which would save you from the cost and embarrassment of a bounced check. There is very nearly zero usefulness to overdraft protection in a real-time authorization world. Nobody charges a fee for a rejected debit authorization. I suppose merchants might charge a return check fee for a failed ACH payment, but nobody uses ACH payments for anything routine in the US.
      - JoBrad 5y ago
        Consumers don’t use ACH for very much. Businesses utilize ACH a lot, because despite the additional time lag, it’s free.
      - kgermino 5y ago
        > nobody uses ACH payments for anything routine in the US. Water bill, electric bill, mortgage, and property taxes are all ACH for me. Many people pay rent that way. I don’t think it’s commonly used for day to day interactions but a lot of payments are still ACH
      - rootusrootus 5y ago
        The latest thing I've noticed is that if you attempt to debit, say, $100 from an account that has only $95, it will successfully debit $95 and then the POS equipment will show that you still need to find some other way to pay the remaining balance. Used to be in this situation it would just be rejected outright. It's more handy for gas pumps, but less transparent. It stops before your tank is completely filled, but doesn't say why. You can hear the difference if you are standing there while it fills, of course, but other than that you may be confused why it slowed down and stopped exactly at a certain amount and won't go any farther.
  - refurb 5y ago
    Oh boy no. Canada has only a handful of banks, minimal competition (they make money hand over fist) and customers get bent over on a regular basis.
    - rudian 5y ago
      Canada sure learns a lot of tricks from their big brother.
      - refurb 5y ago
        What’s hilarious is Canadians banks can come up with that all on their own.
    - katbyte 5y ago
      My Canadian bank (rbc) doesn’t charge me any fees outside of interest if I keep a negative balance for going into my overdraft.
ryandrake 5y ago
Yes, that's exactly what they would do. Even better (for the bank's profits) is if you had lots of other smaller transactions that day too. They would re-order everything from largest-to-smallest, so it's: 1. have $10 in your checking 2. pay $9 for steak 3. buy sausage for $5 4. charge overdraft 5. buy milk for $3 6. charge another overdraft 7. pay $2 for parking 8. charge another overdraft 9. buy a pack of gum for $1 10. charge another overdraft 11. count $500 deposit It was truly despicable behavior that benefited nobody but the banks.
- beebeepka 5y ago
  Dear gawd. I've never heard of this shit before and hope it's not a thing anywhere else. Amazing it's all legal. That's the very definition of fraud
  - rootusrootus 5y ago
    I may be wrong, but I think this is now illegal in the US. I haven't heard of it in a while, at least. But it's also been some time since I left little enough in my account that it could happen to me, or banked at a shitty bank that would even do it to begin with.
    - plorkyeran 5y ago
      Banks "voluntarily" stopped doing it once regulators got serious about forbidding it and then the regulations never actually happened, so while it's not currently a thing anyone does it probably will be again some time in the future.
- dntrkv 5y ago
  I know Chase and USBank always credited deposits first (going back to about 2006).
- ikr678 5y ago
  What is the time period for reconcilling transactions? Is it reordering them per a 24 hour period? Or is every bank settling them differently.
deleted 5y ago
[deleted]
klipt 5y ago
Yes they reordered transactions to maximize their money. E.g. you have $495 in the account, and you spend: -$5: $490 left -$5: $485 left -$5: $480 left -$500: -$20 left, overdraft fee of $40, $-60 left. They will reorder it as: -$500: -$5 left, overdraft fee of $40, $-45 left. -$5: -$50 left, overdraft fee of $40, $-90 left. -$5: -$95 left, overdraft fee of $40, $-135 left. -$5: -$140 left, overdraft fee of $40, $-180 left.
- Avshalom 5y ago
  And of course even if you deposited a check that day it wouldn't clear until the next business day so you'd pay a negative account balance fee for three days before your money hit.
- Aerroon 5y ago
  Wow. Yeah, the bank employees involved in this should go straight to jail.
Larrikin 5y ago
I think it was more like 1. have $100 in your checking 2. pay $10 for steak 3. buy sausage for $5 4. Buy a ticket for $99 You think you get one over draft fee bank reorders it as 1. have $100 in your checking 2. Buy ticket for $99 3. buy sausage for $5 4. Pay 10 for steak Get 2 over draft fees. Add more transactions in between the ticket purchase to increase the fees.
zaphirplane 5y ago
This thread assumes intentional reordering not that the transaction arrive at the bank out of order I have transactions that show up out of order to the event time. Thou I wouldn’t put it past some smaller banks in low regulation geographies
- desmosxxx 5y ago
  I think it's pretty well documented that intentional reordering happens and still happens
  - mdp2021 5y ago
    Should not that cause legal action - duly and factually?
    - organsnyder 5y ago
      Only if it's illegal.
      - mdp2021 5y ago
        It's a scheme with the purpose of theft. You cannot have law as a list of specific cases: it must be based on patterns - "All arbitrary appropriation is forbidden and sanctioned", then further made into distinct categories to substantiate and differentiate the amount of gravity. All theft is illegitimate.
- Arrath 5y ago
  When the transactions 'arrive' in the bank's system should be immaterial, as they should be timestamped at the moment the card is swiped, matching the date and time the printed receipt I am handed has. Regardless, the bank's mission is to make money, and they can make a lot more of it by adversely reordering transactions in their favor, it is not at all a reach to assume that they do so, and in fact have done so and may well continue to.
brazzy 5y ago
Germany here as well. I have never heard of event-based overdraft fees, only interest-based. Which makes this transaction reordering pointless
- jmkerr 5y ago
  Because it's not true, check the largest consumer banks: https://www.postbank.de/dam/postbank/pdf/privatkunden/Postbank-Preisaushang-678-147-007-0621.pdf https://www.postbank.de/dam/postbank/pdf/privatkunden/Postba... https://www.deutsche-bank.de/dam/deutschebank/de/shared/pdf/ser-konditionen_preise-preisaushang.pdf https://www.deutsche-bank.de/dam/deutschebank/de/shared/pdf/... https://www.commerzbank.de/portal/media/efw-dokumente/preisaushang.pdf https://www.commerzbank.de/portal/media/efw-dokumente/preisa... https://www.hypovereinsbank.de/content/dam/hypovereinsbank/shared/pdf/Footer/Preisaushang.pdf https://www.hypovereinsbank.de/content/dam/hypovereinsbank/s... https://www.ing.de/girokonto/konditionen/ https://www.ing.de/girokonto/konditionen/ https://www.diebank.de/content/dam/f0032-0/PDF_neu/preisaushang-und-geschaeftsbedingungen/preisaushang/Preisaushang_11.08.2021.pdf https://www.diebank.de/content/dam/f0032-0/PDF_neu/preisaush... (Volksbank) https://www.ksklb.de/content/dam/myif/ksk-ludwigsburg/work/dokumente/pdf/preise-leistungen/preisaushang.pdf https://www.ksklb.de/content/dam/myif/ksk-ludwigsburg/work/d... (LBBW) In this sample, if overdraft is enabled, you pay up to 15% p.a., if disabled the cancellation fee is up to 2€ for the postal notice, but mostly just porto (0,80€).
  - deleted 5y ago
    [deleted]
namibj 5y ago
My German back account has overdraft, but that only charges via ~12% annual interest (billed at end-of-month, but charges proportionality if you've been in the red for part of the month). Also note that for ATMs (including deposits) and within-bank transfers, we had no more than a couple seconds latency since €, which got expanded for all willing banks to cross-bank push transactions specifically requested to be "SEPA instant push". The "SEPA instant push" transactions have some issues with reversing in case of accidentally fat-fingering IBAN (target account; like a crypto wallet address but no crypto) or amount. Once the money is in the target account, you basically have to go to court if it wasn't outright fraud. And being instant removes the window you had to call your bank and cancel the transfer. IIRC there are some further liability shifts. And yes, this transparent interest-based handling is why we get by perfectly fine without credit cards.
- t0mas88 5y ago
  Exactly the same in the Netherlands. Didn't even know the Americans got screwed so badly.

steveklabnik 5y ago

I left a comment about how this happened to me... 8 years ago, wow https://news.ycombinator.com/item?id=6424493 https://news.ycombinator.com/item?id=6424493

AdamJacobMuller 5y ago

The specifics of it are dependent on the bank, but it can be more insidious than even your example. Given a balance of $100 and 4 transactions of $20, $20, $20, $90 you can either be charged one, or three overdraft fees depending on the order in which your bank deducts those from your account. Basically, ordering from largest to smallest will cause the most number of overdraft fees.

NikolaNovak 5y ago
I'm going to re learn the lyrics to Oh Canada and sing them joyously and thankfully... Our banking system gets a lot of ire but dear Gawd.
- joecool1029 5y ago
  I seem to recall there being service levels at banks in Canada and maximum numbers of transactions per month until one gets hit with per-transaction fees. I was told explicitly when I opened my TD Canada Trust account there that it was imperative that I both keep money in the accounts and use them occasionally or dormancy fees would accrue (and if there was no money left, they'd then slam it with overdraft fees). The benefit of US banking despite lax regulation was that there's a ton of different banks and credit unions to choose from. Some are great and some are shit. Literally hundreds to pick from. Canada there was like 5 big banks, a large credit union, and then depending on your area there was maybe perhaps a small community credit union.
  - dsomers 5y ago
    Totally agree, the Canadian banking system is a corrupt cartel the levies it’s own tax on every Canadian. This was made even more clear to me when I moved to the Netherlands and every banking fee was suddenly 1/3 as much as in Canada for the exact same service.
    - doikor 5y ago
      Here in Finland banking fees are a thing only for the poor (and even then we are talking about a total of 20 or 30 euros per year) Basically every bank has some kind of "premium customer" program that you qualify for by having enough investments or loans from that bank and magically all your banking fees go away (obviously they just make their money from the services they provide for your investments/loans)
      - kwhitefoot 5y ago
        Banking fees? Never paid any as far as I can tell, not for the ordinary things. My bank here in Norway won't pay a bill if there isn't enough money in the account. It sends me a text and an email to say what happened and doesn't charge me anything. The only fees I pay are a small percentage for management of mutual funds.
        adpcm 5y ago
        I’m assuming parent meant fees like X per month for having a debit/credit card or for access to “online” banking.
        doikor 5y ago
        Yeah that is what I meant. Basically having online banking + debit/credit card. Also for under 2X years old (depends on the bank) they are usually free.
        kwhitefoot 5y ago
        You are right I pay an annual fee for my credit card and debit card. No fees for using them or access to online banking. The bank is online only anyway.
- 8ytecoder 5y ago
  It a uniquely American stupidity that somehow everyone just lives with. The concept of overdraft doesn’t even exist in normal consumer accounts anywhere else in the world. The first thing I do when I open an account here is to disable overdraft - but then you have to pay return cheque charges by whoever was trying to charge your account.
  - throwaway8689 5y ago
    We have exactly this concept in normal consumer accounts in the UK. It is not uniquely American.
  - jlmorton 5y ago
    The history is that people used to write paper checks, and merchants would charge a bounced check fee. Overdraft _protection_ was actually a banking feature which would save you from the cost and embarrassment of a bounced check. There is very nearly zero usefulness to overdraft protection in a real-time authorization world. Nobody charges a fee for a rejected debit authorization. I suppose merchants might charge a return check fee for a failed ACH payment, but nobody uses ACH payments for anything routine in the US.
    - JoBrad 5y ago
      Consumers don’t use ACH for very much. Businesses utilize ACH a lot, because despite the additional time lag, it’s free.
    - kgermino 5y ago
      > nobody uses ACH payments for anything routine in the US. Water bill, electric bill, mortgage, and property taxes are all ACH for me. Many people pay rent that way. I don’t think it’s commonly used for day to day interactions but a lot of payments are still ACH
    - rootusrootus 5y ago
      The latest thing I've noticed is that if you attempt to debit, say, $100 from an account that has only $95, it will successfully debit $95 and then the POS equipment will show that you still need to find some other way to pay the remaining balance. Used to be in this situation it would just be rejected outright. It's more handy for gas pumps, but less transparent. It stops before your tank is completely filled, but doesn't say why. You can hear the difference if you are standing there while it fills, of course, but other than that you may be confused why it slowed down and stopped exactly at a certain amount and won't go any farther.
- refurb 5y ago
  Oh boy no. Canada has only a handful of banks, minimal competition (they make money hand over fist) and customers get bent over on a regular basis.
  - rudian 5y ago
    Canada sure learns a lot of tricks from their big brother.
    - refurb 5y ago
      What’s hilarious is Canadians banks can come up with that all on their own.
  - katbyte 5y ago
    My Canadian bank (rbc) doesn’t charge me any fees outside of interest if I keep a negative balance for going into my overdraft.

ryandrake 5y ago

Yes, that's exactly what they would do. Even better (for the bank's profits) is if you had lots of other smaller transactions that day too. They would re-order everything from largest-to-smallest, so it's: 1. have $10 in your checking 2. pay $9 for steak 3. buy sausage for $5 4. charge overdraft 5. buy milk for $3 6. charge another overdraft 7. pay $2 for parking 8. charge another overdraft 9. buy a pack of gum for $1 10. charge another overdraft 11. count $500 deposit It was truly despicable behavior that benefited nobody but the banks.

beebeepka 5y ago
Dear gawd. I've never heard of this shit before and hope it's not a thing anywhere else. Amazing it's all legal. That's the very definition of fraud
- rootusrootus 5y ago
  I may be wrong, but I think this is now illegal in the US. I haven't heard of it in a while, at least. But it's also been some time since I left little enough in my account that it could happen to me, or banked at a shitty bank that would even do it to begin with.
  - plorkyeran 5y ago
    Banks "voluntarily" stopped doing it once regulators got serious about forbidding it and then the regulations never actually happened, so while it's not currently a thing anyone does it probably will be again some time in the future.
dntrkv 5y ago
I know Chase and USBank always credited deposits first (going back to about 2006).
ikr678 5y ago
What is the time period for reconcilling transactions? Is it reordering them per a 24 hour period? Or is every bank settling them differently.

deleted 5y ago

[deleted]

klipt 5y ago

Yes they reordered transactions to maximize their money. E.g. you have $495 in the account, and you spend: -$5: $490 left -$5: $485 left -$5: $480 left -$500: -$20 left, overdraft fee of $40, $-60 left. They will reorder it as: -$500: -$5 left, overdraft fee of $40, $-45 left. -$5: -$50 left, overdraft fee of $40, $-90 left. -$5: -$95 left, overdraft fee of $40, $-135 left. -$5: -$140 left, overdraft fee of $40, $-180 left.

Avshalom 5y ago
And of course even if you deposited a check that day it wouldn't clear until the next business day so you'd pay a negative account balance fee for three days before your money hit.
Aerroon 5y ago
Wow. Yeah, the bank employees involved in this should go straight to jail.

Larrikin 5y ago

I think it was more like 1. have $100 in your checking 2. pay $10 for steak 3. buy sausage for $5 4. Buy a ticket for $99 You think you get one over draft fee bank reorders it as 1. have $100 in your checking 2. Buy ticket for $99 3. buy sausage for $5 4. Pay 10 for steak Get 2 over draft fees. Add more transactions in between the ticket purchase to increase the fees.

zaphirplane 5y ago

This thread assumes intentional reordering not that the transaction arrive at the bank out of order I have transactions that show up out of order to the event time. Thou I wouldn’t put it past some smaller banks in low regulation geographies

desmosxxx 5y ago
I think it's pretty well documented that intentional reordering happens and still happens
- mdp2021 5y ago
  Should not that cause legal action - duly and factually?
  - organsnyder 5y ago
    Only if it's illegal.
    - mdp2021 5y ago
      It's a scheme with the purpose of theft. You cannot have law as a list of specific cases: it must be based on patterns - "All arbitrary appropriation is forbidden and sanctioned", then further made into distinct categories to substantiate and differentiate the amount of gravity. All theft is illegitimate.
Arrath 5y ago
When the transactions 'arrive' in the bank's system should be immaterial, as they should be timestamped at the moment the card is swiped, matching the date and time the printed receipt I am handed has. Regardless, the bank's mission is to make money, and they can make a lot more of it by adversely reordering transactions in their favor, it is not at all a reach to assume that they do so, and in fact have done so and may well continue to.

brazzy 5y ago

Germany here as well. I have never heard of event-based overdraft fees, only interest-based. Which makes this transaction reordering pointless

jmkerr 5y ago
Because it's not true, check the largest consumer banks: https://www.postbank.de/dam/postbank/pdf/privatkunden/Postbank-Preisaushang-678-147-007-0621.pdf https://www.postbank.de/dam/postbank/pdf/privatkunden/Postba... https://www.deutsche-bank.de/dam/deutschebank/de/shared/pdf/ser-konditionen_preise-preisaushang.pdf https://www.deutsche-bank.de/dam/deutschebank/de/shared/pdf/... https://www.commerzbank.de/portal/media/efw-dokumente/preisaushang.pdf https://www.commerzbank.de/portal/media/efw-dokumente/preisa... https://www.hypovereinsbank.de/content/dam/hypovereinsbank/shared/pdf/Footer/Preisaushang.pdf https://www.hypovereinsbank.de/content/dam/hypovereinsbank/s... https://www.ing.de/girokonto/konditionen/ https://www.ing.de/girokonto/konditionen/ https://www.diebank.de/content/dam/f0032-0/PDF_neu/preisaushang-und-geschaeftsbedingungen/preisaushang/Preisaushang_11.08.2021.pdf https://www.diebank.de/content/dam/f0032-0/PDF_neu/preisaush... (Volksbank) https://www.ksklb.de/content/dam/myif/ksk-ludwigsburg/work/dokumente/pdf/preise-leistungen/preisaushang.pdf https://www.ksklb.de/content/dam/myif/ksk-ludwigsburg/work/d... (LBBW) In this sample, if overdraft is enabled, you pay up to 15% p.a., if disabled the cancellation fee is up to 2€ for the postal notice, but mostly just porto (0,80€).
- deleted 5y ago
  [deleted]

namibj 5y ago

My German back account has overdraft, but that only charges via ~12% annual interest (billed at end-of-month, but charges proportionality if you've been in the red for part of the month). Also note that for ATMs (including deposits) and within-bank transfers, we had no more than a couple seconds latency since €, which got expanded for all willing banks to cross-bank push transactions specifically requested to be "SEPA instant push". The "SEPA instant push" transactions have some issues with reversing in case of accidentally fat-fingering IBAN (target account; like a crypto wallet address but no crypto) or amount. Once the money is in the target account, you basically have to go to court if it wasn't outright fraud. And being instant removes the window you had to call your bank and cancel the transfer. IIRC there are some further liability shifts. And yes, this transparent interest-based handling is why we get by perfectly fine without credit cards.

t0mas88 5y ago
Exactly the same in the Netherlands. Didn't even know the Americans got screwed so badly.