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Why does it take so many days to transfer money between two banks in the US? I have accounts with two different banks in the USA, and whenever I transfer money online between those two banks, it takes around 3-4 days.

When I transfer money, it is debited from my source account instantly. However, it takes 3-4 working days for it to reach the destination bank. I know that the transfer goes through the ACH, but in the interim period, who has the money?

Why do banks want to slow down this process? Why do they want to keep money with them for a longer period of time?

EDIT: How is the situation now since Zelle is implemented?

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  • Use cash, and a few $thousand is easily moved the same day.
    – ChuckCottrill
    Commented Feb 27, 2014 at 2:45
  • Yes, that is true. But cant keep on visiting the bank everyday.
    – Jay K
    Commented Feb 27, 2014 at 9:21

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Why? Because they can get away with it, of course. In short - why not?

You may want to read the answers to this similar question (my answer is the one accepted by the OP).

Who has the money? The banks, who else. I have found that some banks are capable of sending/receiving ACH transfers faster than others. I have accounts in two banks, lets call them A and B. If I send money (push) from A to B, it may take several days. But if I decide to pull the money from A to B by originating the transaction through my account at B - the money arrives the next day! So the actual transfer only takes a night, one business day. Its just the direction that matters - if the bank has to give the money out, it will do all it can (including taking 2-3 days for "processing") to keep the money as long as possible. But when another bank charges them - they have no choice but to pay. By the way, bank B behaves better - when I send the money from my account at B, it arrives to A the next day as well.

Try a similar experiment. Instead of originating the transaction at the sender bank - try to originate it at the receiver bank, see how long it takes then for the money to appear on your account after it disappeared from the other one.

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  • Yes, I have already tried that, it takes even more time, as the bank B, sends a physical cheque on my behalf to Bank A. But the question is why do banks want to slow down this process? Why do they want to keep money with them for a longer time?
    – Jay K
    Commented Feb 26, 2014 at 5:50
  • @JayK because every day they hold the money is a day they can leverage it.
    – littleadv
    Commented Feb 26, 2014 at 6:07
  • I have a kind of doubt in this, I mean I work as a programmer and in the age of information this transfer should last for seconds, not days. For example in BitCoin, PayPal these procedures really take seconds. I doubt it is an unsolvable problem to make it this fast.
    – CsBalazsHungary
    Commented Feb 26, 2014 at 13:52
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    @CsBalazsHungary: While the actual transfer process takes less then a couple of seconds, many banks, lenders, etc... run batch jobs over night that reconcile the accounts. So typically you are limited to one day with traditional institutions, where more modern companies can be instantaneous.
    – Pete B.
    Commented Feb 26, 2014 at 14:28
  • @PeteBelford what I suspected: they are working with outdated methods or having fun with your money for a few more days. Your statement sounds like supporting the first one.
    – CsBalazsHungary
    Commented Feb 26, 2014 at 14:55
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The US (in fact the global) banking industry is subject to Anti-Money Laundering & Counter-Terrorism funding laws, slowing down funds transfer eliminates a great deal of fraud.

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    Except that in other countries, transfers take one day, or seconds in some instances.
    – Najel
    Commented Dec 12, 2017 at 18:01
  • @Najel if I log into my bank and see that there is a Pending outbound transfer of $3000, then I can call the bank, see if it's valid, and possibly tell them to cancel it. If the money's gone instantaneously... then I'm hosed. Three cheers for the slow electronic transfer of money!!!
    – RonJohn
    Commented Dec 14, 2017 at 6:35
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    @RonJohn True, that is the typical trade-off between convenience and security, we find this in all areas of life. In the UK, where transfers are instant, there is a limit (1000 GBP I think), anything over that takes a full day.
    – Najel
    Commented Dec 14, 2017 at 14:01

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