[moneydance] Observe Payment Date Restrictions ignored in MD 528

[William A Callahan]

The process of turning paper checks into an image for presentment  
(which can be done at any part of the process) is called "Check 21".  
The image can be reprinted at any time, and will always display the  
disclaimer "This is a legal copy of your check. You can us it the  
same way you would use an original check". This transaction should  
not be confused with a check turned into an ACH transaction, as the  
check is immediately destroyed and does not take the same route a  
paper check would (although both would still likely go through the  
local Fed).

As for the online bill payment system and the float, regardless of  
the system the bank uses (payment out of account immediately or wait  
until date of payment), they're still likely going to be able to earn  
interest on the float. That is because most people will pay their  
bills the same way, once the money is in their own account and let it  
sit their until the check is presented (or ACH withdrawal). This is,  
of course, because a bank makes money on their deposits, regardless  
of what account the money is in (either a general ledger of their own  
or a customer's checking).

With all that said, I'm also a huge fan of bills being paid out of my  
own account, just because I'd like to see if the recipient received  
the payment. The only bank I work with that seems to pay items this  
way is U.S. Bank.

William

On Jun 23, 2006, at 7:31 PM, David Carlson wrote:

> Jon, et alia,
>
> In the U.S., at least, there is a fairly new form of payment called  
> the "Electronified Check" where a certified electronic image of the  
> check is used by the Federal Reserve clearing house rather than the  
> paper check.  This reduces the float for paper checks to same day  
> processing. Vendors, after some delay, are now starting to pick up  
> on this to get their money faster.  I had two "Electronified  
> Checks" clear last month, after writing paper checks.
>
> Dave
>
> Jon D. Slater wrote:
>> It actually depends on whether the paper checks being mailed have  
>> your
>> account and routing information on them, or if your bank transfers  
>> the money
>> into some Mega-pool of money and writes checks from it.   
>> Transferring the
>> money into their pool will immediately deduct it from your  
>> account.  Then it
>> may take, up to 7 days before the check clears the banks account.
>>
>> The advantage for the bank using the pool-o-money approach is they  
>> can earn
>> money on the pool until their check (on your behalf) actually clears.
>>
>> This is how many banks are able to offer free on-line banking.  A  
>> large
>> financial institution can more than recoup their costs (in software,
>> postage, labor, and processing fees) this way.
>>
>> Say you and 5000 fellow bank customers all send a $2000 mortgage  
>> payment,
>> which the bank pays from their mega-pool.  If it takes 7 days for  
>> the check
>> to actually clear, they have $10,000,000 of their customers money  
>> to 'play
>> with' until the checks actually clear.
>>
>> Add to that all of the electric/water/phone/etc bills they process  
>> in a
>> month.
>>
>> Just a possibility.
>>
>> Jon
>> (A former bank employee)
>>
>>
>>
>>
>>> -----Original Message-----
>>> From: moneydance-info-bounces at moneydance.com [mailto:moneydance- 
>>> info-
>>> bounces at moneydance.com] On Behalf Of Joe Menola
>>> Sent: Friday, June 23, 2006 5:19 PM
>>> To: General discussion related to Moneydance
>>> Subject: Re: [moneydance] Observe Payment Date Restrictions  
>>> ignored in MD
>>> 528
>>>
>>> On Friday 23 June 2006 10:13 am, Kevin O. Lepard wrote:
>>>
>>> For eft payments, the day it is sent is day it is received (the  
>>> transfer
>>> actually happens in a matter of seconds), so deduction at that  
>>> time is
>>> appropriate.
>>> As for sending paper checks on your behave...the issue of the  
>>> check, is
>>> much
>>> the same as the receipt of one you've written, when a check  
>>> you've written
>>> is
>>> presented to the bank, they don't wait until the other person has  
>>> those
>>> funds
>>> available to deduct it, it gets deducted when the receive it do  
>>> they?
>>> Once they send that check it must be deducted from their assets and
>>> therefore
>>> from yours to balance the books.
>>> Funny, I noticed no complaints about not having to pay the  
>>> postage to send
>>> that check...;)
>>>
>>> -jm
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>>
>>
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>
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