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Little today is real-time or near-free … but this will change and here’s why

was recently hired as a keynote for an American client.  Those who know me, will know my message.  Everything has to be real time and near free, based upon mobile P2P connectivity (real-time) and shared ledger (near free) technologies.  This is the theme I use regularly now and I cite examples like an $81 million blockchain transaction taking place on a Sunday morning for virtually no charge and processed in minutes as my illustration.  I use the example of Bob Greifeld announcing at Money 20/20  that Nasdaq can now clear and settle in minutes, so what does that mean for the DTCC?  I use the example of Africa moving from no connectivity to millions of mobile subscriptions in a decade, and the fact that a quarter of African mobile users have mobile wallets, far higher than in Europe or America.  This is because Africans didn’t have the ability to network or network money before the mobile phone arrived. I use lots of examples … and then the American client paid me.


I received their cheque on 25th October, dated from 21st October, and immediately paid it into the bank.  I then get a letter from the bank on 30th October, dated 29th October, confirming receipt of said cheque and that it will take time to process.


Letter reduxed to maintain confidentiality

I was surprised to see what I saw, after presenting for this US client about our new world of real-time and near-free.

We are pleased to confirm that we have received the above cheque and have forwarded it for collection to the bank and country on which it is drawn.  Due to the nature of international cheque clearance, we would like to inform you that payment is typically received within two to three weeks but, on occasion, can take up to six weeks.

I called the bank and my relationship manager said yes, this is normal for cheques, especially American cheques.  He reckoned that with 99.99% certainty it would be paid into my account 28 days after I gave the cheque to the bank.  On the basis I paid the cheque into the bank on 25th October, that would make it 22nd November for the funds to reach my account.

It took 30 days.

On 25th November, I received this letter from the bank.


Letter reduxed to maintain confidentiality

I also took note of their conversion rate GBP£1 = USD$1.5394.  Other market player conversion rates would have given me £100s more into the account, based upon more competitive market rates for GBP:USD on 24th November.

Equally, the bank also applied a £60 charge for the costs of processing.

So my presentation that I gave in America about real-time near-free processing of value resulted in a cheque clearance process that took 39 days in total (cheque drawn on 21st October and paid 24th November) and, bearing in mind the combined costs of processing and loss on currency conversion, cost me about £500 to process.

This is the 21st Century?

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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