10 working days for a cheque to clear - why so long?

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Ger1966

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I completed my tax assessment last week and received a small refund from the Revenue Commissioners. This was sent to me via a cheque.

I live close to my Credit Union, so rather than driving to my bank, I decided to lodge the cheque there. There was no problem lodging the cheque, but I was told it takes 10 working days for it to clear. Why does it take this long for a cheque to clear?
 
Yep, I know, but I've chosen not to avail of it. I've a couple of friends who work with An Post (they don't deliver the post) so by me opting to get a physical cheque sent, rather than an electronic transfer, I feel that I'm keeping them in a job - for now. The Revenue Commissioners will probably insist on bank details being provided for refunds in the future, but I'll make that switch when I have no other option.

Similarly, I've decided to not get a SMART electricity meter. My meter reader is an elderly man, so by me not getting a SMART meter, it means he needs to visit my house (6 times per year, I think) to read the meter and get paid for that, so that keeps him in a job. He might not be doing it out of necessity, but if he is, I'm happy to have my meter read by a person and him getting paid whatever he gets paid for reading my meter. I'd rather do that than have my meter reading sent back to the ESB every 30 minutes. I'm sure that ultimately the price tariffs will change which will make it more economic for me to use a SMART plan, but, for now, I'm happy to remain with a "non SMART" meter.

But back to the original question, is there any reason that it takes 10 days for an Irish cheque (Bank of Ireland) to clear with my Credit Union?
 
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Personal FAQs - Banking & Payments Federation Ireland

Banking & Payments Federation Ireland (BPFI) is the voice of banking and payments in Ireland. Representing over 100 domestic and international member institutions, we mobilise the sector’s collective resources and insights to deliver value and benefit to members, enabling them to build...
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How long does it take to clear a cheque?

It normally takes three to five business days to clear a cheque if it is drawn and payable on a member bank of the Irish Paper Clearing Company Limited (IPCC).

The cheque is lodged on Day One. It is exchanged with the bank on which it is drawn on Day Two. The customer on whose account the cheque is drawn is debited on Day Two or Three. In the event that the cheque is to be returned unpaid for any reason, it will be returned by close of business on Day Four to the payee’s bank. It will therefore be Day Five before the payee’s bank knows that the cheque is being unpaid.

While the clearing cycle normally takes three days, certainty of payment can actually take up to five or six days. Depending on a particular bank’s policy in relation to risk control, customers are not always permitted to draw down the funds ahead of this timeframe, in order that the bank may be certain that the cheque will not be returned unpaid.

If your bank or building society is not a member of IPCC, you should contact it directly to confirm its clearing cycle.
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The credit union is probably not a clearing bank which will introduce another delay as the CU has to physically take the cheque to the bank
 
The credit union is not a member of the paper clearings.
Day 1: Cheque is lodged in the credit union
Day 2: CU lodges then cheque in their bank (the collecting bank). It gets processed overnight ready for the physical exchange of paper on Day 3
Day 3: Collecting bank exchanges the cheque with the drawing bank in Dublin, Drawing bank processes the physical cheque and updates their customer account overnight
Drawing bank has until the close of play on Day 5 to bounce the cheque, either for lack of funds, technical reasons or as instructed by their customer (ie a stop). So in other words, if you lodge the cheque on a Monday, the drawer has until COB on Friday to bounce it
COB Day 5, drawing bank sends the bounced physical cheque back to the collecting bank together with electronic financial entries
Day 6, physical cheque arrives back at the collecting bank for processing, they update the payees bank account (in this case the CU) and send the cheque back to the CU

So in reality, it should be cleared by around Day 8 but the CU and the banks add a couple of days into the process to account for processing/courier delays etc and to give themselves some cover

UK (Including NI) now have a digital exchange for cheques were the physical paper is not moved and an image of it is moved instead meaning a cheque there is normally cleared in a day or 2. Volume of cheques in ROI means the investment in similer processess wouldn't be justified
 
As above, CU not a clearing bank so they have to go through a main bank account same as regular customers so time added on for this extra admin.
 
I had no idea Credit Union accept cheques. Just out of curiosity, which bank clears these cheques?

Do Credit Union issue their own cheques?

KBC issued cheques are cleared by Ulster Bank, which is ironic.
 
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Lisboa said:
I had no idea Credit Union accept cheques. Just out of curiosity, which bank clears these cheques?

KBC cheques are cleared by Ulster Bank, which is ironic.
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Different CUs would have accounts in different banks, not all the same one and they could have accounts in more than one so cheques would go through whichever one they were lodged in. Years ago they would have been big investors across different institutions too when interest rates were higher.
 
Lisboa said:
I had no idea Credit Union accept cheques. Just out of curiosity, which bank clears these cheques?

Do Credit Union issue their own cheques?

KBC issued cheques are cleared by Ulster Bank, which is ironic.
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KBC were not full members of the clearing so had to "hang" off Ulster in an Agency Agreement. Aside from the big banks you would expect, the other full members are Danske (which still have a presence down south), HSBC, Central bank, Barclays, BNP and Bank of America. Everybody else has to enter an arrangement with the member banks, have accounts as customers to manage fund transfer and that adds an additional day to the timeframe.
 
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