# Clearing a sterling cheque



## lfcfan (27 Aug 2013)

I lodged a sterling cheque today in my PTSB bank account and was told it will take 21 days to clear. Can someone please explain how it could possibly take this long? I know the cheque has to be sent over to the UK but after that, why so long? 

Also, there was a €4 currency exchange fee taken for this but it was taken instantly. How is this fair? I won't see the money from this for a month but they are able to charge me for currency exchange straight away??


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## callybags (27 Aug 2013)

dems banks for ya 

Unfortunately they are a law unto themselves.

Of course it doesn't take 21 days to clear.... they could email the issuing bank and receive an instant reply as to the validity of the cheque, but that would be far too logical.

It would also make disappear all the billions of € floating around in banking cyberspace and leave them short in their petty cash fund to pay their bonuses.


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## Gerry Canning (27 Aug 2013)

Fairness and Banks are not happy bed-fellows.

As Callybags states looks like another neat way to buffer their cash flow for 21 days.
Ps . Did they thank you for the 4 euro donation ?

Gerry (stop being so cynical!)


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## Jim2007 (27 Aug 2013)

callybags said:


> Of course it doesn't take 21 days to clear.... they could email the issuing bank and receive an instant reply as to the validity of the cheque, but that would be far too logical.



Ah but this is flawed logic - it fails to take account of the law!  

A cheque is drawn on a customer's account and bank is not allowed to reserve a customer's balance in respect of outstanding cheques even if it does know about them nor is it allowed to comment on a customer's balance for that matter.  So there is no way for the issuer's bank to provide you with any kind of comfort as to the outcome until the cheque is physically presented and either paid or refused.

At this point I think the UK & Ireland are the only European countries still using cheques!  I have not seen a cheque over here (Switzerland) in may be 15 years.  These days it is either cash, card or a transfer via IBAN.


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## lfcfan (28 Aug 2013)

Jim2007 said:


> until the cheque is physically presented and either paid or refused.



Which should surely happen within a couple of days once the cheque is actually sent to the issuing bank? It's the 18+ days after the cheque is physically with the issuing bank for the funds to clear that is clearly just wrong. There is no way in the age of electronic payments that funds should take 21 working days to clear. Other than the physical movement of the paper cheque, what exactly is happening that means so much time elapses between this and the funds entering my bank account? 

As stated above, it's just yet another way for banks to hold on to our money as long as possible. Will this change with the new SEPA laws?


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## Jim2007 (28 Aug 2013)

lfcfan said:


> Which should surely happen within a couple of days once the cheque is actually sent to the issuing bank? It's the 18+ days after the cheque is physically with the issuing bank for the funds to clear that is clearly just wrong. There is no way in the age of electronic payments that funds should take 21 working days to clear. Other than the physical movement of the paper cheque, what exactly is happening that means so much time elapses between this and the funds entering my bank account?



Well first of all first of all if they were to deal with each cheque on an individual basis the fees would be crazy, so I'd expect they are batched up and sent as a batch and secondly your bank has no control over how long the UK banks take to process the cheque.



lfcfan said:


> As stated above, it's just yet another way for banks to hold on to our money as long as possible. Will this change with the new SEPA laws?



No, because it is not a SEPA payment.  But  the power to change it rests with you, do like other Europeans - stop accepting cheques and tell people to pay you via an IBAN transfer.  You are no obliged to accept cheques.


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## so-crates (28 Aug 2013)

lfcfan said:


> There is no way in the age of electronic payments that funds should take 21 working days to clear.



And there you have the crux of the matter. This isn't an electronic  payment. The fund transfer between the banks in the end may be but the  payment you have agreed to isn't.

As Jim2007 says, don't accept cheques - request they transfer the funds electronically - it is a lot quicker.


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## lfcfan (28 Aug 2013)

so-crates said:


> And there you have the crux of the matter. This isn't an electronic  payment. The fund transfer between the banks in the end may be but the  payment you have agreed to isn't.



Like I said, the physical movement of the cheque takes time and I accept that but once the cheque has been verified by the issuing bank, it all becomes an electronic transfer at that stage.


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## so-crates (28 Aug 2013)

It is immaterial whether the banks (eventually) transfer the funds  electronically, the 21 days is to take account of the inbuilt  inefficiencies that handling cheques introduces (note that the 21 days  is generally the outside case, the money may arrive sooner but there is  no guarantee it will).There is no international clearing house for  processing cheques. And I think you are being a bit hopeful as to the  number of days before it is presented to the bank on which it is to be  drawn. 

Have a look at these two links if you want to depress yourself further:


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## Sunny (28 Aug 2013)

Cheque clearing is extremely manual. Each cheque has to be individually handled by a member of staff numerous times before it is cleared. If you lodge a foreign cheque in your branch, it is processed there, then it probably has to be processed centrally before being sent to your banks UK correspondent bank. The cheque might not be drawn on this bank so the correspondent bank will have to forward it on to the bank that the cheque is drawn on. This cheque will then have to be centrally processed and might even have to be sent to the specific branch for clearing. Once all this happens the money have to be transferred from this bank to the UK Correspondent bank to credit your banks account. Once your bank gets the funds, it probably has to a fx deal to exchange the funds into euro. They then need to credit your branch who then credit your account.

The last few steps are quick but it could take a few days to process your actual cheque in every location.


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## Jim2007 (28 Aug 2013)

lfcfan said:


> Like I said, the physical movement of the cheque takes time and I accept that but once the cheque has been verified by the issuing bank, it all becomes an electronic transfer at that stage.



Not really, cheques are from another age and have to be processed according to the law, which requires that cheques are met in the order that they are presented to the branch where the customer holds is account, so even the electronic process has to be sequential in order to meet the legal requirements - so banks have to use the slowest electric process around!

This is entirely different to SEPA payments where transactions are just fired off into the 'network' and no one really cares who clears the transaction as long as it is cleared within a given time period.  In this case it is just bad luck if your request for payment hits the customer's account after the money is all gone.  But in the case a cheque if they were to process a cheque electronically that reached the bank after yours was presented, but before yours was loaded on to the system for processing then that would be illegal.

The whole cheque process is just not suited to the electronic age, which is why it is being abandoned by most European countries.


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## huskerdu (6 Sep 2013)

I lodged a sterling cheque with PTSB 21 days ago and was told that it would take 21 days to clear. Daty 21 and the money has not been credited to my account yet. 

lfcfan : Did your cheque clear yet ?


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