This has been fantastic information. I just wanted to thank Crotalus for this information. I work for major Canadian ISP and always wondered why it took so long for us to get payment from our customers.
And in regards to the need for doing batch payments, it’s my understanding (and I’m no expert on this) that one of the most demanding things a computer can do is sort through large lists, especially in a real-time manner.
Theoretically you could have everything going real-time but theory and practice often don’t mix.
Skipping the jokes about zombie payments and lack of braaiins, can anyone (Crotalus?) update us on what has changed in the last five years? Here in the UK more and more transfers use “faster payments” that only take few hours. Is this still a batch process - just more frequent?
I know that this is a zombie but the situation is still basically the same as it was back in 2007.
The internet enables people to “authorize” real-time payments (in the case of credit/debit cards). This is still just a tacked-on solution to what has to happen behind the scenes to actually move the money. This movement still depends on batch processes between the banks involved (see my years ago post). When it comes to “authorization” for merchants its dealt with as if its real money since Visa/MC guarantees it. Payment processors (like PayPal) that “authorize” ACH payments do so at a huge risk (since there is no guarantee) which is why they’ve succeeded in this space.
Computers having to process large files has little to do with it. Its actually what they do really well. The thing is the processing of these large batch files are done slowly (like daily or a few times a day) by the banks. There’s no particular urgency since the “authorization” step is generally trusted.
Computing power and networking has moved on - near realtime transactions have become the norm, so “faster payments” interconnects have become more prevalent. However, implementation is selective, depending on the bank and entities involved.
I am a contractor. Every 4 weeks, my agency makes a payment to my umbrella, who then pay me. The Agency uses a BACS transfer - 3 days. The Umbrella also pays by BACS, but (for a large fee) can pay with an expedited next day payment. These are deliberate choices (particularly for the Umbrella) to slow down and make money on the payment process, and it really annoys me - there is no reason for it in the modern connected age. The banks and payees will argue that “faster payments” leaves less time for checking details, and risks making more mistakes. But they suck money from the accounts of payers as fast as they can, and if they make a mistake drag their feet about sorting the problem. :rolleyes:
I was a real time zealot at the start of my career. Then I learned about the audit trails, archived DB’s kept for rollback purposes, and holdings/holders cross-reference files required for large scale processing. Also not to be underestimated is the regulatory governance requirements placed upon the processing.
Those that have never experienced a SHTF moment at 3 a.m. have no idea of the complexity.
5 years later, stock trades **still **settle in 3 business days. This shocks the average retail trader under 50 or so. If you sell a stock in a cash account, you have to wait 3 business days for the funds to be available for withdraw.