Why does it take up to a day to process my internet payment?

One of the pervasive rumours that you see flying around on the internet is that that the money disappears for a day and someone in the background earns some interest on it while the payment is being processed.

The use of online banking websites and mobile banking apps has increased a lot in Australia.  We have one of the fastest uptakes in the world of that sort of technology.  One of the side effects of this is that people are now much more aware than they used to be of how quickly a payment they are expecting is going to hit their account.  And that’s led to a lot of discussion and chatter about how quickly payments take place.

One of the pervasive rumours that you see flying around on the internet is that that the money disappears for a day and someone in the background earns some interest on it while the payment is being processed.  That’s just not true.  What actually happens with the payments system is driven by the fact that everyday there are around 8 million electronic payments in Australia.  The organisation to deliver all of those 8 million payments safely is quite complicated and takes a little bit of time, the way the system is set up at the moment.

What that means is that when you start off your payment, your bank needs to get it into a clearing cycle, which is where a whole bunch of payments are wadded together and sent off in one hit.  There are six of those every day.  In fact, it’s quite likely that if you get your payment organised early in the day through your online banking or mobile phone, it will go through on the same day.  But otherwise it will happen tomorrow.  It’s that cycle of bundling the payments together to put them through efficiently and get them all allocated that causes the delay.  So next time you are sitting there waiting for the payment, remember that there’s a lot of other payments going on at the same time.