Why are some US bank deposits on hold days after a ‘processing error’ delayed 850,000 payments

Hundreds of thousands of payments did not reach US bank accounts last week due to a “processing error.” Days later, the private company responsible for the mistake is still grappling with the repercussions.

The clearinghouse, which processes a large portion of bank-to-bank electronic transfers that occur in the U.S. every day, said Tuesday in a statement that some payments were delayed last Thursday because instructions were sent to financial institutions “with the account number.” And the names of the masked agents.”

This made it impossible for banks to process and post payments immediately on Thursday or Friday. The clearinghouse, which is owned by 22 of the country’s largest banks, said that “in many cases” these transfers continue to be delayed.

The flaw affected approximately 850,000 transactions. That represents a small percentage, or roughly less than 1%, of the 130 million payments that moved through the Automated Clearing House, or ACH, network last Friday.

This network, which has been around for decades, allows banks to route payments to each other electronically. Banks use the system to send direct deposit checks or transfer funds that customers use to pay mortgage and utility bills.

It processed 7.8 billion transactions during the third quarter of 2023, according to National Association of Automated Clearing Houses (Nasha).

The clearinghouse’s ACH process essentially handles half of the US commercial ACH volume. The Fed has a separate ACH network in the US, which it said was not affected by last week’s glitch.

“We know that for consumers and businesses affected, the impact is meaningful,” the clearinghouse said.

To resolve this error, banks that attempted to send money last week will have to resend their original payment transfer instructions. When affected customers will see their funds “depends on when the original bank resubmits the transaction,” JPMorgan Chase (JBM) said the speaker.

“For a few days, JPMorgan has been refunding overdraft fees to affected customers who did not have enough money in their accounts to pay bills,” this spokesperson said.

JPMorgan, the nation’s largest bank, was still seeing higher than usual reports of problems from its clients as of Tuesday.

American bank (Buck), Wells Fargo (WFC) Citigroup (C) has also seen a wave of customer complaints related to the flaw, according to Downdetector, which monitors reports of problems in financial institutions. So did military lender USAA, according to Downdetector.

Some bank customers also took to social media to complain about delays in payment.

“Maybe it’s time to find a new bank,” said one Bank of America customer.

The clearinghouse tried to make clear in a statement that the banks were not at fault, saying the error “was not caused by the financial institutions that originated or received the payments or the companies or other account holders who initiated them.”

She added: “The November 2 mistake was an unfortunate and isolated case, and immediate steps have been taken to prevent a recurrence.”

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