Online banking
Did you ever wonder how online banks can make money by offering free electronic checking and bill paying?
In addition to the normal accumulation of money sitting in accounts waiting for checks to be written or bills to be paid (the cache of cash which makes it possible for all banks to work), the online banks have one distinct further advantage -- advantage to them, disadvantage to the customer. The online payment is immediately debited to your account, precisely on the date you specify for payment.
If the payee accepts money electronically, it may get to the payee on the same date, but if so this will probably happen at the end of the business day. If the payee is one which does not, however, then the online bank will print out a check and put it in the mail, where it will take several days to get to the payee, be processed, be presented, and make its way through the Federal Reserve System and back to the online bank, where it is then honored and paid. Perhaps three, perhaps thirteen days will pass before the online bank has to make good on the check, while the money has been gone from your account all that time. If you had paid the bill yourself, by contrast, the money would have stayed in your account until the check made it to your bank and was honored.
This small "reverse float", money which is freely available to the online bank and on which no interest is paid, becomes an enormous sum when multiplied over several payees per user and thousands of users per month.
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