Making Electronic Banking Easier

Banks have made it very easy to deposit money, pay bills, and keep track of your finances through their websites and/or ATMs. However, understanding how electronic banking works can be daunting.

Many banks offer free or discounted accounts if you do your banking electronically, such as having your paycheck automatically deposited, paying your bills online, or only using ATM machines and not tellers.

Each bank may be different in the types of accounts and services offered, but there are still some basic similarities in electronic banking that a user needs to understand.

The following questions and answers may help you understand electronic banking a little more and will hopefully help you feel more comfortable using it.

Q. When can I use the money I just deposited in the ATM?
A. If your bank allows some of the money in an ATM deposit available when the deposit is made, then you will be able to withdrawn that money from the ATM right away. However, do not use more than what the bank makes available, including writing a check. The funds not immediately available may have a hold placed on them, depending on the amount of the check, where the check is drawn, and anything else that may make the processor question the collectibility of the funds. Some banks may not allow any of the funds to be available for use until the envelope has been opened and the check reviewed and posted to the account.
Collectibility means how quickly and efficiently the bank will be able to collect the funds on that check. For instance, a check drawn on a bank in another country may need to be sent for collection. A personal check that is many times more than your usual deposit may cause a red flag to go up, warning the processor that something may be wrong. There is a federal regulation that governs when holds can be placed and for how long. If a hold is placed on your ATM deposit, a notice must be mailed to you with the date the hold will be released.

Q. Why does the ATM have a cut over time?
A. ATM cut over refers to when the ATM is balanced at the end of the business day, just like a teller. When the ATM is again available to accept deposits, those deposits will not be credited to your account until the next business day. It is very important to understand that time and exactly how much of your money is immediately available when you make any transfers or pay bills with money into an ATM that is on the next business day.

Q. When you pay a bill online through your bank's website, when does the money come out of your account?
A. Generally, when you pay a bill electronically through your bank's website, the funds for that bill come out of your account immediately and you can see it in the amount available. If it doesn't come out immediately, it will come out that night during the processing of all electronic transactions. There should be a notice somewhere on the website stating what the deadline or cutoff time is for any bill to be paid that same day.

If you pay your bill on your merchant's website, the money may be held on your account immediately or it may not be processed for a few days. Either way, deduct it from your account on your check register so you do not use the funds for anything else before the money comes out.

Q. How soon does a bill paid online through the bank reach the merchant?
A. Most banks use a vendor to do the processing of their electronic bill payments. This vendor may send a check or an electronic transmission to the merchant to be paid. Some vendors do not "bundle" their bills, meaning, that your bill payment is sent individually to that merchant with only your name associated with it. For some vendors, it may work better for them and be more cost-effective, to group bills paid to the same merchant together in one check or one electronic transmission. Some merchants may not post that payment until they are certain that the whole group of payments balances correctly and they know exactly where to post each payment. If there is any problem with even one of the bills, a merchant may hold the entire payment until it is resolved, causing a delay to the posting of your bill.

There should be a disclosure on how much time to allow for bills, generally, to be paid on your bank's website. However, understand that it is not going to be paid immediately. There is always a delay. If you have a bill that is due on the 1st, make sure you allow a good 5-10 business days for the payment to get there.

For example, if you are paid on the 1st and the 15th of the month, be sure to have any of your bills due on the 15th come out of the 1st's paycheck.

Q. Why do some businesses give me back my check and then later it shows as an electronic transaction on my statement?
A. Those are referred to as Point of Purchase transactions. You may see the acronym POP next to the transaction information on your statement. Changes to Regulation E will soon require all merchants who use POP transactions to prominently post a message explaining that they are using electronic check conversions and a written copy of the message must be provided at the time of the transaction, such as on the receipt.

Q. Sometimes when I pay a bill, it shows as an electronic transaction and I never get my check back in my statement. Why is that?
A. That is called an account receivable conversion or ARC. The new regulations will affect those also, requiring a notice to be printed on the billing statement indicating that if a check is sent as payment it will be converted to an electronic transaction.

Q. What happens if they enter the wrong amount when sending in the transaction?
A. All personal electronic transactions are governed by Regulation E. Transactions such as ATM deposits and withdrawals, automatic withdrawals and transfers, and POP and ARC transactions all fall under Regulation E. When there is a problem with one of those types of transactions, the point of contact is your bank, not the company who made the mistake. Your bank will return the transaction to the originating company who will then research it and fix the problem. There are specific deadlines for reporting electronic transaction errors, so it is very important that any mistake is reported immediately.

Q. Why should I use online banking when I get a statement in the mail every month?
A. Besides the reporting deadlines for electronic transaction errors, there are many things that can happen to your account before your next statement. With the amount of fraud and identity theft happening, it is important to keep on top of your account regularly. Also, it is now so easy to use debit cards everywhere, that it can be hard to keep track of all those transactions and write them down in your check register. Keeping a regular eye on those transactions to ensure you are not overdrawn is a very good idea. With the amount of overdraft and non-sufficient funds fees going up, a $1.59 snack using your debit card could end up costing $30-$40 if it overdraws you.