If online banking is widespread, why do checks still take a day to clear?

Asked Aug 10, 2013· 1 answer
Faisal KhanAnswered Aug 10, 2013
There can be very many reasons for this, some of them are:

  • Check truncation (physical to digital) takes time to process and is probably batched processed.
  • RTGS processes clearing transactions in batches
  • Banks like to get a little bit of float on the money they have (overnight)
  • Absence of a central bank (financial) switch to do instant interbank funds transfer
  • Financial regulator's role in checks and balances, which create added delay
  • Banks belonging to opposing clearing houses and they clearing houses probably batch process between themselves at fixed times.
Checks and ChequesPayment ClearingPayment InfrastructureLegacy Payment Systems
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