3 ms·

Why Slow Electronic Payments Can Cause Cash Flow Problems

16 points by user_235711 12y ago

megaman22 12y ago
First, I know its NPR, but really, there's a lot of "Get off my lawn you pesky kids!" going on in that comment section. Second, cash is becoming increasingly nonviable, at least in the US. Prices are so high on most consumer goods and services that the amount of cash that you would have to carry around is ridiculous. $50 for a tank of gas, $150 for a week's groceries, $40 for a pair of movie tickets and a popcorn. Worse, banks often don't even have enough cash on hand to cover more than one or two non-trivial withdrawals per day. My father recently paid off his mortgage. To do so, he had to pay cash at one bank with monies withdrawn from an account at a second bank. The total amount was about $5000 dollars. The second bank had to give him every $100 and $50 bill they had in stock, plus a large number of $20s, to cover the withdrawal. One withdrawal wiped out nearly the entire stock of cash at that branch for the day. Third, it is ridiculous how long it takes "direct deposits" to clear. About half the time, my employer will do payroll on a Tuesday, sending out the electronic deposits. If I am lucky, the monies will become available by end-of-day friday. If there is any kind of holiday, or the bank is just slow, it will roll over the weekend and into Monday or the next Tuesday.
- toomuchtodo 12y ago
  > My father recently paid off his mortgage. To do so, he had to pay cash at one bank with monies withdrawn from an account at a second bank. The total amount was about $5000 dollars. The second bank had to give him every $100 and $50 bill they had in stock, plus a large number of $20s, to cover the withdrawal. One withdrawal wiped out nearly the entire stock of cash at that branch for the day. Could he not have done a certified/bank check or even a wire transfer? I understand the urge not to incur the $10 or $20 fee (respectively) both instruments incur, but surely that must be easier then carrying cash between financial institutions. I, of course, pine for the simplicity of UK/EU money transfers.
jeffasinger 12y ago
This is sort of a confused article. It sounds like it's referring to Same Day ACH, but it starts out by mentioning non relevant things (unless the consumer in question is paying with ACH at a grocery store ...). Same Day ACH is exciting, but well over a year off. Also, it comes with a limit of $25,000 per transaction, which makes it useless for certain types of transactions, and it also has an added fee of about $0.08 per transaction. For something like payroll or bill payment, this really adds up, and I'm guessing it will see less use because of the fee.
dredmorbius 12y ago
Isn't the problem here more one of not being able to readily determine your account balance? And of financial institutions capitalizing (which is to say: imposing arbitrary and inescapable fees) on this situation? Which, I'll note, they themselves have caused? There are reasons cash is frequently preferable.

16 points by user_235711 12y ago

First, I know its NPR, but really, there's a lot of "Get off my lawn you pesky kids!" going on in that comment section. Second, cash is becoming increasingly nonviable, at least in the US. Prices are so high on most consumer goods and services that the amount of cash that you would have to carry around is ridiculous. $50 for a tank of gas, $150 for a week's groceries, $40 for a pair of movie tickets and a popcorn. Worse, banks often don't even have enough cash on hand to cover more than one or two non-trivial withdrawals per day. My father recently paid off his mortgage. To do so, he had to pay cash at one bank with monies withdrawn from an account at a second bank. The total amount was about $5000 dollars. The second bank had to give him every $100 and $50 bill they had in stock, plus a large number of $20s, to cover the withdrawal. One withdrawal wiped out nearly the entire stock of cash at that branch for the day. Third, it is ridiculous how long it takes "direct deposits" to clear. About half the time, my employer will do payroll on a Tuesday, sending out the electronic deposits. If I am lucky, the monies will become available by end-of-day friday. If there is any kind of holiday, or the bank is just slow, it will roll over the weekend and into Monday or the next Tuesday.

toomuchtodo 12y ago
> My father recently paid off his mortgage. To do so, he had to pay cash at one bank with monies withdrawn from an account at a second bank. The total amount was about $5000 dollars. The second bank had to give him every $100 and $50 bill they had in stock, plus a large number of $20s, to cover the withdrawal. One withdrawal wiped out nearly the entire stock of cash at that branch for the day. Could he not have done a certified/bank check or even a wire transfer? I understand the urge not to incur the $10 or $20 fee (respectively) both instruments incur, but surely that must be easier then carrying cash between financial institutions. I, of course, pine for the simplicity of UK/EU money transfers.

jeffasinger 12y ago

This is sort of a confused article. It sounds like it's referring to Same Day ACH, but it starts out by mentioning non relevant things (unless the consumer in question is paying with ACH at a grocery store ...). Same Day ACH is exciting, but well over a year off. Also, it comes with a limit of $25,000 per transaction, which makes it useless for certain types of transactions, and it also has an added fee of about $0.08 per transaction. For something like payroll or bill payment, this really adds up, and I'm guessing it will see less use because of the fee.

dredmorbius 12y ago

Isn't the problem here more one of not being able to readily determine your account balance? And of financial institutions capitalizing (which is to say: imposing arbitrary and inescapable fees) on this situation? Which, I'll note, they themselves have caused? There are reasons cash is frequently preferable.