You would think, with the development of online technology and instant access to account information, that all electronic transactions would take place in real time. So why, when you pay a bill electronically, does it take at least the next business day for the payment to be credited to your account?

There are two steps when remitting an electronic bill payment to a payee. The payee’s bank account must be credited with the funds and the remittance information (your name, account number and the amount you paid) must be forwarded to the payee.

In most cases these are two independent steps and both have to take place before your account can be credited. There is rarely a direct channel between a bill payment service provider and a payee (one exception would be a financial institution and their “in-house” credit card). That means an arrangement has to be made between a payment provider (i.e. Telpay) and the payee so that a mutually accepted method of sending and receiving the remittance information is in place.

Often this exchange is done overnight or at a certain period during the day. The payee also has to reconcile the remittance information to the amount credited. For example, the payee receives $10,000 worth of bill payment remittances. They will need to verify that amount has been credited to their bank account. They would also update their internal databases with the remittance information before your bill is officially “credited”. That can create another delay.

Until the processes are in place for “instant” bill payments, there will be a bit of a lag between you making the payment and when your payment is actually credited. It’s something to take into consideration when making payments.