Finality Of Payment

Refers to the instant that a payment to another party is completed, at which point the receiving institution has irrevocable access to the money. This is more commonly referred to as the moment when funds are "good" in an account.

The concept and definition are especially important in an environment where one or more banking institutions could cease operations at any given moment. By having a strict operational definition of the finality of payment, a receiving institution does not have to worry about recently received funds disappearing from its account because the transferring institution suddenly became insolvent.

With the rise of online bill payment services, many consumers have gotten a practical lesson in the finality of payment. Since many online banking and bill payment services use the Automatic Clearing House (ACH) system to process payments, which doesn't result in an immediate transfer, many companies do not consider a bill paid until after they're assured of the finality of payment. Of course, that has taught many people the painful lesson that initiating an automatic bill payment on the due date usually results in a late payment.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Real-Time Gross Settlement payment system — Real Time Gross Settlement (RTGS) payment system International A payment system through which transactions are processed and settled continuously (in real time ) rather than being deferred to the end of the trading day. Each transaction is… …   Law dictionary

  • Real Time Gross Settlement payment system — Real Time Gross Settlement (RTGS) payment system International A payment system through which transactions are processed and settled continuously (in real time ) rather than being deferred to the end of the trading day. Each transaction is… …   Law dictionary

  • Real-Time Gross Settlement (RTGS) payment system — International A payment system through which transactions are processed and settled continuously (in real time ) rather than being deferred to the end of the trading day. Each transaction is settled individually rather than on a net basis and… …   Law dictionary

  • real time gross settlement (RTGS) payment system — International A payment system through which transactions are processed and settled continuously (in real time ) rather than being deferred to the end of the trading day. Each transaction is settled individually rather than on a net basis and… …   Law dictionary

  • stop — I. verb (stopped; stopping) Etymology: Middle English stoppen, from Old English stoppian, from Vulgar Latin *stuppare to stop with tow, from Latin stuppa tow, from Greek styppē Date: 13th century transitive verb 1. a. to close by filling or… …   New Collegiate Dictionary

  • Wire transfer — or credit transfer is a method of electronic funds transfer from one person or institution (entity) to another. A wire transfer can be made from one bank account to another bank account or through a transfer of cash at a cash office. Wire… …   Wikipedia

  • Charon's obol — Charon and Psyche (1883), a pre Raphaelite interpretation of the myth by John Roddam Spencer Stanhope Charon s obol is an allusive term for the coin placed in or on the mouth[1] of a dead person before burial. According to …   Wikipedia

  • List of Statutory Instruments of the United Kingdom, 2006 — This is an incomplete list of Statutory Instruments of the United Kingdom in 2006. NOTOC 1 100* Public Contracts Regulations 2006 S.I. 2006/5 * Utilities Contracts Regulations 2006 S.I. 2006/6 * M6 Motorway (Junction 36, Town Head Bridge Parapet… …   Wikipedia

  • ASMAKHTA — (Aram. אַסְמַכְתָּא; support, reliance ), legal term with two connotations in the Talmud. (1) In rabbinical exegesis it denotes the use of a biblical text merely as a support for a halakhah without suggesting that the halakhah is thus actually… …   Encyclopedia of Judaism

  • Article One of the United States Constitution — United States of America This article is part of the series: United States Constitution Original text of the Constitution Preamble Articles of the Constitution I  …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.