Handling Bank Account Transfers Worldwide

People in different countries use bank drafts to transfer money between bank accounts, while this is one of the cheapest ways to move funds. Are you aware of the two types of systems which make it possible? There are one-phase and two-phase systems.

In one-phase systems, a merchant simply sends the file with transactions to be funded to the clearinghouse. Then within one or two days, the requested funds are given to the merchant by the clearinghouse. And finally, the clearinghouse sends the requested transactions to the respective banks for verification. The verification process is a time consuming one, and sometimes the answer can be obtained after two months.  But the tricky thing is that if the bank declines the transaction due to any reason, the money is automatically transferred back to the clearinghouse (this phenomenon is called an ACH return). ACH/Federal Reserve in the USA is an example of the one-phase system.

In two-phase systems, one additional step is added. If, to be specific, at first, a merchant needs to register all the accounts (through which he/she is going to process transactions) within the nation-wide system. When the registration is completed, the merchant obtains necessary mandates and gets the opportunity to process transactions. And then the process similar to the one used in one-phase systems takes place. Examples of such systems are BACS (the UK) and SEPA (EU).

So now it is obvious that both systems have their advantages and disadvantages. It is easier to use one-phase systems, but two-phase systems are more secure. Interested in the additional information? Read the article at #UniPayGateway. Those who want to learn more about ACH returns can visit #Paylosophy Blog; the selection of articles on this topic is available there.