Canadians invade U.S.!

[choie]

Canadian dollars, that is. (Cheap shot, I know, but all the other subject titles were depressingly boring.)

Recently I received a $3K payment by check from a client based in Canada (I'm a freelancer based in the US). This Sunday I deposited the check straight into my checking account -- Bank of America, if 'tis relevent -- completely forgetting about the international aspects and possible complications thereof.

After doing a little belated research, I found this depressing article from a couple of years ago that states that international checks often take a very long time to clear -- up to 30 days, possibly even longer. That kinda sucks, if true.

My questions are:

1) Is this article still accurate since the whole Check 21 thing, or does that only apply for transactions between two U.S. banks?

2) Why is it really necessary for checks to be held for so long? And which side causes the delay -- the deposit end or the withdrawal end?

3) Is there anything a depositer can do to speed up the process, either before or after the transaction? For example, the article says that a money order or bank check might clear faster than a regular business or personal check. Anything else? Pouting prettily at my local bank teller?

4) Finally -- oh, I'm embarrassed to ask this one, I just know it's a stupid question, but I gotta: My fee for this website was $3K in US currency. But considering that there was no indication of this on the check itself (i.e., nothing like "USD $3,000), how does my bank know that my client wanted to pay me in U.S. dollars, rather than Canadian?

Thanks in advance, all.

[dtilque]

I can only answer the last question. The check is in whatever currency the account is held in. If it's at a Canadian bank, it's most likely that the account is in Canadian dollars. If so, then they may still owe you additional money.

[bob_loblaw]

If it's at a Canadian bank, it's most likely that the account is in Canadian dollars. If so, then they may still owe you additional money.

unless the cheque is made out to xxxxx in the amount of u.s xxx.xx dollars.


otherwise, you knew, and made sure they knew, the conversion rate at the time of transaction, right?

[dtilque]

Originally Posted by bob_loblaw

unless the cheque is made out to xxxxx in the amount of u.s xxx.xx dollars.

The OP said there was no such indication. That means that the check defaults to whatever currency the account is held in. If the company does a lot of cross-border business, it may have a US dollar account in a Canadian bank just to save on money conversion fees.

[MikeS]

My parents live in Canada but have enough connections with the States — publishers, relatives, me, etc. — that they also have a U.S. dollar account with their Canadian bank (Bank of Montreal, to be precise.) They also have cheques (hey, they're Canadian) which are payable in U.S. dollars, through the Bank of Montreal's office in New York. (And they say so in very small print that might not be visible on a cursory inspection.) In my experience, these cheques are treated as domestic but out-of-state by my bank, and take approximately a week to clear.

So if your client knew what they were doing, they would have paid you with a cheque drawn on such an account, the cheque would have specifically said (perhaps in small print) that it was payable in U.S. dollars from the Canadian bank's branch in the U.S.,¹ and it won't take a month to clear. If they didn't know what they're doing, however, you & they are going to have to have words... if only because they've stiffed you by about 20%.

¹ I'm pretty sure that the five major Canadian Banks — Bank of Montreal, Toronto Dominion (TD), ScotiaBank, Canadian Imperial Bank of Commerce (CIBC), and Royal Bank — all have a U.S. office, since there's a susbtantial demand for it. (Canadians can't avoid interacting with the U.S. as easily as vice versa.) There are, however, also innumerable credit unions and smaller banks in Canada which might not have such services available. Caveat lector.

[paperbackwriter]

[minor rant]
People seem to have a huge misconception about what Check 21 actually requires or allows. Check 21 does not require electronic presentment or clearing, nor does it eliminate the previous maximum hold times. Check 21 allows the use of "substitute documents" and Check 21 encourages use of electronic presentment.

Theoretically, these changes will combine to reduce the amount of time it takes to determine if the account the check is drawn on actually has the funds to cover that check. Check 21 has great benefits for chearinghouses, financial institutions, and large vendors. For the average consumer receiving a check, not much changes. You probably don't have the software to scan the MICR line of a check and directly submit a substitute document to the Fed.

The biggest change for the consumer is that the check you write to a large creditor or merchant better have the fund to cover it, because it will reduce their float. IOW, check-kiting opportunities will be greatly reduced.
[/minor rant]

[choie]

Thanks for the answers so far!

I keep checking my account hoping to see a vast increase in my balance, but it ain't happened yet. Indeed, a quick check of my bank account reveals I just got dunned for my deposit! Heh. Apparently there's a $5 processing fee for Canadian checks. ("Can Chk Proc Fee Bat002 Seq280 Usd 3,000.00.") Well, there's at least some action on that front.

dtilque, bob_loblaw, yes indeed, dtilque is correct in that the check looked like every other check I've received, made out to $XXXX with no further notations. So that gives me pause. But am I reading the above processing fee notation correctly -- does the fact that I see "USD 3,000" in there imply that my client drew his funds from a US-currency based account? Perhaps I infer incorrectly. Still, his (primarily web-based) company seems to have a majority of US customers, and he accepts payments in USD.

Shoot I guess I should just ask him. I just hate revealing my ignorance to people who are supposedly going to me for expertise. Of course my expertise, such as it is, is in making things look purty. Not so much in the dollars and the bank drafts and the Check 21s and the hoyvin glavin.

Originally Posted by MikeS

So if your client knew what they were doing, they would have paid you with a cheque drawn on such an account, the cheque would have specifically said (perhaps in small print) that it was payable in U.S. dollars from the Canadian bank's branch in the U.S.,1 and it won't take a month to clear. If they didn't know what they're doing, however, you & they are going to have to have words... if only because they've stiffed you by about 20%.

Ha! Very true, MikeS, and thank you, that was very informative! I can go back and forth on deciding whether this client knows what he's doing, depending on my mood and how many silly questions he asks me, but of course it's not HIS business to know web stuff. But as far as financial transactions, he probably does have his act together, since as I said, he does do mostly US business. It's hilarious to me that I didn't even consider the currency difference before, but then again I can be pretty oblivious to things like that. Also I hate dealing with finances and clients. For some reason asking for payment makes me feel as if I'm asking my father for an allowance.

paperbackwriter -- funny screenname since my client's a publisher -- thank you for the info! I know, I know, Check 21 surely didn't come into being to make my life easier. I pretty much knew that the whole "ooh it'll make transactions SO much quicker!" crap was only good news for businesses, not the little guy who deposits money and is probably even more in need of near-instant clearing than Evil!Big!Business.

But I'm confused by this bit ...

For the average consumer receiving a check, not much changes. You probably don't have the software to scan the MICR line of a check and directly submit a substitute document to the Fed.

Maybe I do, maybe I don't (a lady doesn't give up ALL her secrets). But isn't it the bank that's supposed to be doing the scanning and the check destroying? IOW, when I hand them a check, I thought the idea was that they enter it electronically, destroy the paper version, and zip it over automagically to the issuing bank for verification. So why would it really matter if the depositer is choie, humble consumer peon, or choie, owner of ChoieCo Worldwide Industrial MegaCorp Inc.?

[paperbackwriter]

Originally Posted by choie

Maybe I do, maybe I don't (a lady doesn't give up ALL her secrets). But isn't it the bank that's supposed to be doing the scanning and the check destroying? IOW, when I hand them a check, I thought the idea was that they enter it electronically, destroy the paper version, and zip it over automagically to the issuing bank for verification. So why would it really matter if the depositer is choie, humble consumer peon, or choie, owner of ChoieCo Worldwide Industrial MegaCorp Inc.?

You can go to, say, an Old Navy or Stop&Shop, write a check for your purchases, and they will immediately cancel and return the check to you. They then submit the substitute document generated by the register to the Fed for check clearing. The merchant can even skip their institution and start the clearing process themselves. This instant cancellation is the real difference from Check 21. Check imaging by the bank has been around for some time.

[Barbarian]

That $5 fee sounds like your bank is screwing you. There's no reason to slap a fee for depositing a cheque in what appears to be US Dollars, even if it did come from another country, but you are with the overcharging Bank of America, after all.

Just to reiterate, it's very common to have U.S. dollar accounts with Cdn Banks. Even the Canadian govt will issue a U.S. dollar cheque if you ask (such as for the GST refund I just got).

[tracer]

You know, we could all avoid a lot of confusion if Canada changed the name of its unit of currency to something else -- something unambiguous, like the Canadian Currency Unit (CCU) or the Canado or the Eh.

[Balthisar]

Originally Posted by tracer

You know, we could all avoid a lot of confusion if Canada changed the name of its unit of currency to something else -- something unambiguous, like the Canadian Currency Unit (CCU) or the Canado or the Eh.

It'll all be moot anyway when we trade in the dollar, dollar, and peso for the americo.

[GingerOfTheNorth]

I would contact your client and ask if the cheque was drawn on a US dollars account.

I live in the US and have an account here, but I keep a Canadian account for Canadian dollars. I should get a US$ account next time I'm home.

[Barbarian]

Originally Posted by tracer

You know, we could all avoid a lot of confusion if Canada changed the name of its unit of currency to something else -- something unambiguous, like the Canadian Currency Unit (CCU) or the Canado or the Eh.

It's called the loonie.

[MikeS]

Originally Posted by Barbarian

It's called the loonie.

That's the name of the one-dollar coin, not the unit of currency. It's analagous to calling the U.S. dollar the "greenback" — sometimes people will substitute one for the other in speech, but properly speaking they're different.

[Barbarian]

You just got whooshed by the Canuck who put the woman who broke her toonie on national TV.