WhyOWhy does it take '5 days to clear'

Can someone please explain why a revenue cheque takes 5 days to 'clear'??? Surely a revenue cheque is guaranteed?? I dont understand the 5 days to clear thing ANYWAY? Could someone working in a financial institution explain why, with all their staff, why it takes 5 days to process a cheque??? Or is this one of lifes mysteries??

many thnks!!

I dont work in a bank but this is the wau it was explained to me

Day 1 Cheques are bundled together to be brought to the clearing house of the bank the next day
Day 2 Cheques are brought from the banks clearing house to the overall clearing house
Day 3 Cheques are exchanged between the different banks at the clearing house
Day 4 Cheques are brought back to the banks clearing house and divided amount branches
Day 5 Cheques arrive at each branch and are then credoit to accounts

Why O Why use a cheque at all? Using Credit Transfers is far quicker.

Also, from reading the papers recently, I believe that the EU wants to make the use of cheques redundant across the eurozone by 2010 - only 4 years away! Easy in countries such as Netherlands, not so easy in Ireland, the only country in the Eurozone that still relies on this form of payment in any great degree....

marksa said:

Why O Why use a cheque at all? Using Credit Transfers is far quicker.

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lollipop is the payee here so doesn't have much choice in the matter of the payer using a cheque.

homerjay said:

I dont work in a bank but this is the wau it was explained to me

Day 1 Cheques are bundled together to be brought to the clearing house of the bank the next day
Day 2 Cheques are brought from the banks clearing house to the overall clearing house
Day 3 Cheques are exchanged between the different banks at the clearing house
Day 4 Cheques are brought back to the banks clearing house and divided amount branches
Day 5 Cheques arrive at each branch and are then credoit to accounts

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Normally on Day 2 the money leaves the drawers account. Why does it take 3 days to reach the payees account? 3 days of interest for the bank me thinks.

I'm with ptsb and do most of my banking online but had to go in the other day for the first time in ages to lodge a cheque. Usual queue of people so I was about to turn around and leave when I noticed they have a atm-like machine
in store that also accepts cheques. It scans the cheque and can read the amount payable which was then lodged to my account the same day.

Not sure if this service is unique to ptsb or even new but its very very handy if you have to go into a branch to lodge a cheque.
The machine also takes cash lodgements.

It doesn't improve the clearing time, sadly.

ClubMan said:

lollipop is the payee here so doesn't have much choice in the matter of the payer using a cheque.

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Hi, in the recent past, Revenue have paid me direct to my current a/c for overdue TRS. They just asked me for my current a/c no.

Interesting - I have never received a refund from Revenue other than by cheque. Maybe this is peculiar to backdated TRS?

homerjay said:

I dont work in a bank but this is the wau it was explained to me

Day 1 Cheques are bundled together to be brought to the clearing house of the bank the next day
Day 2 Cheques are brought from the banks clearing house to the overall clearing house
Day 3 Cheques are exchanged between the different banks at the clearing house
Day 4 Cheques are brought back to the banks clearing house and divided amount branches
Day 5 Cheques arrive at each branch and are then credoit to accounts

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Day 1 - bank accepting cheque remits it through clearing system
Day 2 - clearing house exchange
Day 3 - arrives in payer branch/bank and debited from payer account
Day 4 & 5 'Grace period' for payer bank to return cheque for credit or technical reasons (e.g. no funds, date invalid, signature invalid, customer stop cheque instruction.

For some banks it can take quicker. For example, last year I put a cheque in the post to Donegal on a Tuesday and it was debited from my account in Dundalk the following day. Not sure when the payee got full value, but that turnaround is possible if it is all within the same bank.

As long as people use pieces of paper for payment, it will take some time for all of those items to be exchanged and evaluated.

What happens if a cheque is not cleared within 5 days? Are you entitled to any interest as you do not have access to the funds?

ClubMan said:

Interesting - I have never received a refund from Revenue other than by cheque. Maybe this is peculiar to backdated TRS?

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I've only ever received refunds from Revenue directly into bank account for good few years now. Perhaps they don't have your bank details? Perhaps that's no bad thing either!