When transferring money electronically between bank accounts (within
Europe, please note), the money disappears from the debited account
immediately, but isn't accessible on the credited account for 3-5
days. Who is "borrowing" my money without my permission? Is this
legal?

Hi,

It does seem like someone is holding on to your money for days,
doesn't it? Actually, what happens with Electronic Fund Transfers
(EFT) is that the bank that has your money pulls the funds from your
account and enters the withdrawal amount as a deposit on an electronic
"file" that then gets sent to the bank that is to receive the funds.

When the computer at the bank holding your money sends the information
to the receiving institution, the computer there reads the file and
credits your account. The withdrawal is made in "real time," but the
payment still needs to be processed.

If the payment is lumped together with other payments in a "batch" and
there is a problem with one of the entries in the batch, the whole
list gets held up until the problem is identified and fixed.

It is more efficient than a paper check transfer, but not by much.

This site has a simple diagram that shows the process:
http://www.isis.com/settlements%20sysD2.pdf

It would seem that in the days of ATMs and the Internet, EFT would be
a real time transaction, and possibly some day that will be the case.
In the meantime, the banks do have your funds floating around for
days, lost in virtual processing. What EFT does is eliminate
"processing float," the time a check is held by a payee before it gets
deposited. It doesn't eliminate the "clearing float."

Float management is a specialization in banking. The funds that are
generated are substantial.

The legality for electronic funds is no different than for paper
transfers. You probably signed some sort of agreement when you opened
the account that stipulated the waiting period for payments to
"clear." The only instance I could find that questioned the practice
was a Texas ruling that specifically dealt with funds held in trust
(http://www.banking.state.tx.us/legal/opinions/99-19.HTM).

search terms: EFT international regulations accessibility funds float

http://www.cato.org/moneyconf/14mc-7.html
has an interesting discussion of digital currency. If that catches on
the "float" that you noticed - where the bank has access to your funds
and makes interest on your money and you don't - will be eliminated.
You may even be able to get interest paid on the digital "cash" in
your pocket!

bcguide-ga

Quick response, covered the point pretty well. Rather vague about
what one can do about it. But very good nevertheless.

Hi psp,

Like you, I'm vastly annoyed by the EFT float.  Unfortunately, there
isn't *anything* that can be done about it, unless you want to do wire
transfers between accounts, instead of regular EFTs.  Wire transfers
are fine if you're moving a large sum, but charges are too steep
(between $15 and $25 per wire!) for them to be practical.

--Missy

What one can do about it?

   switch to PayPal or similar service.