Due to a “processing error,” hundreds of thousands of payments never reached US bank accounts last week. The private corporation that made that mistake is still dealing with the consequences many days later.
The Clearing House, which handles a sizable amount of the daily bank-to-bank electronic transfers that take place in the US, said in a statement on Tuesday that instructions were sent to financial institutions “with the account number and names of customers masked,” which resulted in some payments being delayed last Thursday.
Due to this, banks were unable to process and post the payments on Thursday or Friday right away. The Clearing House, which is controlled by 22 of the biggest banks in the country, stated that these payments are still being delayed “in many cases.”
There were about 850,000 transactions impacted by the bug. That is a negligible portion, or just under 1%, of the 130 million payments that were processed over the Automated Clearing House, or ACH, network on Friday.
Having been in place for many years, that network enables banks to electronically transfer payments to one another. The method is used by banks to deliver paychecks to customers who get direct deposit or to transfer funds used to pay utility and mortgage obligations.
The National Automated Clearing House Association (NACHA) reports that during the third quarter of 2023, it handled 7.8 billion transactions.
Nearly half of the US commercial ACH volume is handled by the Clearing House’s ACH business. The US branch of the Federal Reserve claims that the malfunction from last week did not impact its own ACH network.
We are aware that the effects are significant for the impacted businesses and consumers,” the Clearing House stated.
Banks that attempted to transmit money last week must redo their first payment instructions in order to correct the problem. The time that the impacted clients receive their money “depends on when their originating bank resends the transaction,” according to a JPMorgan Chase (JPM) representative.
JPMorgan is compensating overdraft penalties for impacted clients who did not have sufficient funds in their accounts to cover invoices, the spokeswoman stated, “for a few days.”
As of Tuesday, JPMorgan, the biggest bank in the country, was still receiving more client complaints about issues than usual.
In an attempt to clarify, the Clearing House stated that the error “was not caused by the financial institutions that originated or received the payments or the businesses or other account holders that initiated them.” This meant that banks were not at blame.
It stated: “The November 2nd error was an unfortunate and isolated issue, and immediate steps have been taken to prevent a reoccurrence.”