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Author Topic: Wire transfers - reality versus theory  (Read 3074 times)
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July 14, 2012, 02:17:22 PM

I ran across this funny post about wire transfers on Askville that I thought was worth reposting here. It might be helpful for those making wire transfers and wondering what the holdup might be, and also as a reminder of one of the reasons Bitcoin is awesome. The original post by "JBENZ" is here:

Reality versus theory
In theory, wire transfers are instantaneous. In practice they usually take at least an hour often more. In cases where somebody screws up they can disappear for days (my record is 7 days).

Example: This is based on a mortgage funding transfer which is what I do. It may be more or less complicated depending on your particular circumstances.

Somebody at the mortgage lender decides that a wire transfer has to be done. She contacts the in house person who sends the orders to authorize soon as she gets back from lunch.
The sender contacts the funding bank and orders the transfer to be made from the lender's commercial account...when he gets back from his late lunch.
(Of course the mortgage lender and funding Bank are in California and I'm in Connecticut, so the process doesn't even start until after 9AM California time, noon local time.)
At the funding bank the order comes in and sits in somebody's in-basket for a couple of hours because two people are out sick and they are short handed.
Money finally gets put on the Fed wire at 3:05 PM (California time, 6:05 local time)..after the end of the banking business day, and sits in the ozone until 9AM next day.
Next morning, the wire is received by the recipient's bank where it sits in the keypuncher's in-box until he gets around to typing the information into his computer, at which point it shows up in the recipient's account.
Two hours later the recipient checks with customer service to see if the wire has been received. They say call back after lunch 'cause Fred is the only one who can check that and he's at the Dentist.
Ol' Fred gets back (after lunch) and gets the second call about the wire and confirms that the money has been received.
Total time of transmission on the wire: 2 seconds.
Total time from "we'll send it right away" to "OK, it's here": 28 hours.

And...a wire transfer involves at least two checking accounts (with long account numbers) and two long routing numbers. Anybody in that long chain makes a typo on any of those numbers at any step along the way and the money goes to Neptune for a week. (My 7 day delay was caused by the guy at my bank who was supposed to type the received transfer into the computer. He didn't. We called for 6 days screaming for the money and they kept telling us that it hadn't come in because the customer service guy was checking the bank's computer and it didn't show up in my account. On the seventh day I got a letter in the mail saying it had been received 6 days earlier.)

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July 14, 2012, 02:38:44 PM

Not so long ago wires used to take typically to travel 3-7 business days.

Recently domestic wires usually get transferred within the same day if sent early in the day and international within 24hr period but can take up to 3-5 business days.

If there is screw up, and it must be noted again, it is very easy to screw up something with wires (you, bank clerk or intermediate bank) then funds are lost in limbo for a great period of time. During this period your bank can't easily tell where are the money, what is the problem/status and whether it got to recipient or traveling back to your account

Few years ago I had multiple wires concurrently screwed up, each wire took 2 weeks to get posted back to my account, each time I've been hit with none-refundable bank wire fees and on occasion additional intermediary bank taking their cut as well.

In short, wires have high possibility of screwing up something with wire details and then becoming significantly unreliable in such cases if there are any time constrains for getting payment to a receiving side in timely matter.

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Gerald Davis

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July 14, 2012, 02:42:43 PM

Well while screw ups can happen most wires are automated now.  I would point out that in MtGox case wires take 18-21 days because MtGox doesn't do anything for 17+ days.   When they finally get around to submitting the wire to their originating bank the process is very fast; usually 1-2 business days depending on timing.
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