Bank profits from on-line banking

[Zvezda]

Is it a regular practice for banks to debit an account for on on-line bill pay even before the payment is processed by the vender?

I recently experienced a disconnect of service from a vender even though payment had been made (and deducted from my account) 7 days prior. Upon investigation, I was told the payment had not yet been received.

I was surprised, first of all, to learn that in some cases banks do not make payment by electronic transfer. In this particular case, the vender was a large national company, which for some reason I did not comprehend chose not to accept electronic payments. Do banks really take the time, when not using electronic transfer, to write out a check, put it in an envelope and stamp it, and send it through the mail? Do they not have other means, such as fax, etc., to expedite payment?

But, more to the point, if a bank has deducted the funds from my account and the vender has not received it, exactly where is that money? If during that interim it belongs to the bank, is that another means they are employing to make money. One check is not much, but if that one check is multiplied by the number of daily users, I would assume the amount a bank has temporarily appropriated for their own use is substantial.

Is this legal? If I wished to express a concern about this, where and how would I do that?

[ubasses]

Depending on the Banks involved an electronic trnsfer can leave your account on day1 and arrive at the payees Bank on day 3 for credit to account. if it is rejecterd and has to go back through the system to be returned to your account which would arrive on day 5. These are working days so if any weekends are involved 7 days getting back to you would not be unusual. Of course that relies on the payees bank returning it immediately.

[dzug2]

It would be universal for banks to debit an online transaction then send it to the vendor

I suspect you were misinformed that the payment had not been received - almost certainly it had been received by them but not processed - ie it was sitting in their bank account waiting to be allocated to your purchase, probably since the day you sent it, two days after at the latest

Of course it's legal. Complain to the company you paid for having outdated systems.

[twix123]

Here in the UK, Electronic Funds Transfers normally take one day, although from next year the Faster Payment Service will ensure payments are received the same day.

From your spelling I imagine that you are based in North America/Canada and therefore their payment systems may not yet be so advanced as ours!

As suggested previously, complain to the companies concerned, and/or, if you have one, an ombudsman service.

[CheekyChops]

I'm still smiling at thr thought of some bank clerk writing out a pile of cheques and posting them out individually ;-)

[bednobs]

you can't expect your bank to give money to someone else without first taking it from your account

[boxtops]

Yes, this is normal here in the UK. I made some on-line transfers myself recently - they left my account but took 3 days to show up in the other organisation's account. This is quite usual - it will have reached the receiving organisation but doesn't get credited directly against your account until it's been processed.