Why some US bank deposits are held up days after 'processing error' delayed 850,000 payments

Hundreds of thousands of payments never landed in US bank accounts last week because of a “processing error.” Days later, the private company responsible for that error is still wrestling with the fallout.

The Clearing House, which processes a large portion of the bank-to-bank electronic transfers that happen in the US each 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 names of customers masked.”

That made it impossible for banks to immediately process and post the payments on Thursday or Friday. “In many cases” these transfers continue to be delayed, said the Clearing House, which is owned by 22 of the nation’s largest banks.

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

That network, which has existed for decades, lets banks route payments to each other electronically. Banks use the system to send direct deposit paychecks or transfer money customers use to pay mortgage and utility bills.

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

The Clearing House’s ACH operation essentially handles half the US commercial ACH volume. The Federal Reserve has a separate ACH network in the US that it said was not affected by last week’s glitch.

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

To unwind the error, banks that tried to send money last week have to resend their original instructions for payments to be transferred. When the affected customers see their money "depends on when their originating bank resends the transaction," a JPMorgan Chase (JPM) spokesperson said.

“For a few days,” this spokesperson said, JPMorgan is refunding overdraft fees for affected customers who didn’t have enough money in their accounts to pay bills.

JPMorgan, the nation’s largest bank, is still seeing higher-than-normal problem reports from its customers as of Tuesday.

Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C) also experienced a surge of customer complaints, according to Downdetector, which monitors reports of problems at financial institutions.

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

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

The Clearing House tried to make it clear in a statement that banks were not at fault, saying the error was "was not caused by the financial institutions that originated or received the payments or the businesses or other account holders that initiated them."

It added: "The November 2nd error was an unfortunate and isolated issue, and immediate steps have been taken to prevent a reoccurrence."

Correction: An earlier version of this story reported that military lender USAA had experienced higher amounts of problem reports Tuesday because of a network-wide payment processing error. A USAA spokesperson said it was not affected by the glitch.

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