Not to defend corporations and banks, but it’s kinda true. When you swipe your debit card, your bank allocates those funds for that transaction, but whoever you’re paying doesn’t actually have it yet, and your bank hasn’t sent it yet. That’s just the way the banking system works. It can take days for them to actually get your money, depending on weekends, holidays, etc. When you request a refund, the process just goes in reverse.
Think of it like a check. If I write a check and give it to someone, I write the amount in the check register as if it’s spent, but until that person takes my check to the bank, they don’t actually have the money yet.
I’ve worked for multiple different financial institutions. I’ve been on the banker side and the consumer side of the industry and I can assure you banks absolutely do have the ability to send your money back instantly.
While there are certain federal and international laws that could impact transfer times, this is rare and not something your average Joe would run into.
Most banks want to hold onto your money for as long as possible because that’s how they earn their money. And banks aren’t the only ones who do this. Companies will hold out on issuing refunds for the same reason.
It’s sort of the perfect way to show the penny savings example I guess. Because yeah, the interested earned is pennies, but when you have a million pennies earning another million pennies… it adds up.
[EDITED: to changed an autocorrect from warned to earned]
I deposited a large check once — nothing that would get the attention of the IRS or anything, other than that I’m normally poor — to a regular national bank. They held it for about two weeks to “verify” it, aka invest and profit off it, so I immediately went over to the local credit union (who doesn’t do shit like that) and opened an account there. Got a good chunk of it transferred with little-to-no fuss and closed out my bank account with a middle finger.
I can assure you banks absolutely do have the ability to send your money back instantly.
USAA does this for certain refunds, but they take on a bit of risk to do so. They make the funds available to spend before they’ve actually been settled
This avoids OP’s point. When you get charged, the charges appear instantly, sure it might not be fully verified.
But when you get a refund, it does not appear instantly. There is absolutely no reason why it shouldn’t.
Also, I’m always very annoyed that banking apps can’t do a simple and proper summary in which verified and unverified transactions just appear normally with a little tag and the total charges just adds those up.
It’s just simple math and accounting, idk why they have to make the interface painful. Regardless of what the status of the transaction is, it’s verification status should be a label, not make it appear in purgatory only to disappear for a day to finally show up.
I think you’re missing a point. Person A spends X dollars at person B’s store. Person A immediately sees X dollars reduced from their bank account, and it shows as pending. Person B does NOT immediately see X dollars added to their account. For some duration, that money is just on hold while the bank verifies and processes the payment. Meanwhile Person A gets whatever they bought for X dollars on the promise and expectation that the bank will soon pass along that payment. Person B may not actually retrieve that money for several days, though.
Now Person A comes back for a refund, so Person B submits that refund back to them. The exact same process happens in reverse with the bank. Depending on the company, there may be an extra internal accounting/fraud review process for the business before the refund is actually submitted to the bank, which adds more time. But whether it does or doesn’t, the time it takes for that money to transfer between accounts is entirely out of the business’ control.
My family owns and run multiple retail fireworks stores, and I work in sales data for a major retail chain. I have personally handled many times when someone got overcharged for their transaction, like if an item got scanned twice by mistake. We immediately run a refund for the over charge in such cases. We are not delaying it at all. It still takes days to hit their account again, though. It has nothing to do with us or our processor how long that takes. If you have a problem with it, talk to your bank. They are choosing not to front you the money we refunded. It is already gone from our account, and is sitting in pending state.
I agree completely; I often do credit card refunds and that can take me a minute on my end, but your own bank might not release your funds back to you for days or weeks.
I know it can be weeks because I had to check in with the same customer a few times to confirm that their bank was being the problem rather the payment processor we had.
I worked in retail for 15 years, and this came up all the time. Yes, your money has been “accessed” in your account, but if I run my journal and show it to you, you would see we don’t actually have it yet.
What often happens is that your bank is making a profit on the interest off of your money for a few days, which is the reason they delay giving the money back to you right away.
Some places clear all their receipts on a weekly basis, not daily and definitely not hourly. I think for smaller restaurants and stores they pay lower transaction fees for handling it in bulk.
Not to defend corporations and banks, but it’s kinda true. When you swipe your debit card, your bank allocates those funds for that transaction, but whoever you’re paying doesn’t actually have it yet, and your bank hasn’t sent it yet. That’s just the way the banking system works. It can take days for them to actually get your money, depending on weekends, holidays, etc. When you request a refund, the process just goes in reverse.
Think of it like a check. If I write a check and give it to someone, I write the amount in the check register as if it’s spent, but until that person takes my check to the bank, they don’t actually have the money yet.
I’ve worked for multiple different financial institutions. I’ve been on the banker side and the consumer side of the industry and I can assure you banks absolutely do have the ability to send your money back instantly.
While there are certain federal and international laws that could impact transfer times, this is rare and not something your average Joe would run into.
Most banks want to hold onto your money for as long as possible because that’s how they earn their money. And banks aren’t the only ones who do this. Companies will hold out on issuing refunds for the same reason.
It’s sort of the perfect way to show the penny savings example I guess. Because yeah, the interested earned is pennies, but when you have a million pennies earning another million pennies… it adds up.
[EDITED: to changed an autocorrect from warned to earned]
I deposited a large check once — nothing that would get the attention of the IRS or anything, other than that I’m normally poor — to a regular national bank. They held it for about two weeks to “verify” it, aka invest and profit off it, so I immediately went over to the local credit union (who doesn’t do shit like that) and opened an account there. Got a good chunk of it transferred with little-to-no fuss and closed out my bank account with a middle finger.
USAA does this for certain refunds, but they take on a bit of risk to do so. They make the funds available to spend before they’ve actually been settled
That’s interesting, I’m not familiar with their practices specifically but that is interesting!
This avoids OP’s point. When you get charged, the charges appear instantly, sure it might not be fully verified.
But when you get a refund, it does not appear instantly. There is absolutely no reason why it shouldn’t.
Also, I’m always very annoyed that banking apps can’t do a simple and proper summary in which verified and unverified transactions just appear normally with a little tag and the total charges just adds those up.
It’s just simple math and accounting, idk why they have to make the interface painful. Regardless of what the status of the transaction is, it’s verification status should be a label, not make it appear in purgatory only to disappear for a day to finally show up.
I think you’re missing a point. Person A spends X dollars at person B’s store. Person A immediately sees X dollars reduced from their bank account, and it shows as pending. Person B does NOT immediately see X dollars added to their account. For some duration, that money is just on hold while the bank verifies and processes the payment. Meanwhile Person A gets whatever they bought for X dollars on the promise and expectation that the bank will soon pass along that payment. Person B may not actually retrieve that money for several days, though.
Now Person A comes back for a refund, so Person B submits that refund back to them. The exact same process happens in reverse with the bank. Depending on the company, there may be an extra internal accounting/fraud review process for the business before the refund is actually submitted to the bank, which adds more time. But whether it does or doesn’t, the time it takes for that money to transfer between accounts is entirely out of the business’ control.
My family owns and run multiple retail fireworks stores, and I work in sales data for a major retail chain. I have personally handled many times when someone got overcharged for their transaction, like if an item got scanned twice by mistake. We immediately run a refund for the over charge in such cases. We are not delaying it at all. It still takes days to hit their account again, though. It has nothing to do with us or our processor how long that takes. If you have a problem with it, talk to your bank. They are choosing not to front you the money we refunded. It is already gone from our account, and is sitting in pending state.
I agree completely; I often do credit card refunds and that can take me a minute on my end, but your own bank might not release your funds back to you for days or weeks.
I know it can be weeks because I had to check in with the same customer a few times to confirm that their bank was being the problem rather the payment processor we had.
I worked in retail for 15 years, and this came up all the time. Yes, your money has been “accessed” in your account, but if I run my journal and show it to you, you would see we don’t actually have it yet.
Wouldn’t this create inflation… all that money “in transit?”
Only one party can access it at a time, so I don’t see how it could.
Plus someone always has the money.
What often happens is that your bank is making a profit on the interest off of your money for a few days, which is the reason they delay giving the money back to you right away.
“That’s just the way the system works” say people who built, maintain, and rely on the system working that way for their profit.
Yeah, not true in the EU. Money must reach the recipient within seconds.
But it’s the same thing. The banks just front the money essentially. The actual transaction doesn’t clear until later.
Nope. SEPA SCT clears in 1 day. SEPA SCT-Inst (already mandatory in Euro area, mandatory in rest of SEPA area from next year) clears in 10 seconds.
Then they can do that the other way as well
Seems like a good job for a bank, and something reasonable they could do in other countries too.
You got any source for that? From what I read they settle it immediately.
Some places clear all their receipts on a weekly basis, not daily and definitely not hourly. I think for smaller restaurants and stores they pay lower transaction fees for handling it in bulk.