So, anyone actually KNOW how the BACS process works?

[Deleted User]

In light of the ongoing KaupthING dramas, one thing seems to be abundantly clear - beyond the actual act of setting up a transfer online, very few people (myself included) actually understand how BACS/CHAPS works at a technical level. I'm vaguely aware of holding accounts and clearing banks, but that's it, and I can't seem to find any proper details online. In view of the current problems and general panic, might it be an idea for an MSE "how BACS works" posting, if only to head off some of the more outlandish conspiracies and accusations about how ING are stealing interest and whatnot?

If people understand what's actually involved in the process, it might help allay fears that money has gone missing, and perhaps give people an idea of what ING are currently having to do? Just a thought.

Hazzanet

http://www.bacs.co.uk/BACS/Software+suppliers/Resources/Literature/

The PDF - Bacs Direct Credit - an introduction

Gives a simple overview.

Biggles

The BACS cycle is explained here http://www.bacs.co.uk/BACS/Businesses/Bacs+Direct+Credit/Paying+by/Getting+started/

But the BACS cycle isn't the problem. The problem is that when you initiate a transfer with any form of online banking, all you are doing is submitting a polite request to the bank to make the transfer when it's convenient for them. You can't submit a payment direct to BACS, only the bank can do that.

They will remove the funds from your account and initiate the BACS transfer in whatever way their own systems and software permit, but the date the funds leave your account will definitely be earlier than Day 3 in the BACS cycle, probably earlier than Day 2 and it may even be before Day 1. In the meantime, the funds will still be with your bank (earning them interest, obviously, though I'm not suggesting the delays are built in for that purpose, I suspect it's just sloppy programming; but you never know.....).

Every bank will do it to a different schedule, hence the confusion on this board when people start discussing BACS transfers.

iltisman

Wow I did not know it was so complex I thought HBOS had a herd of lame donkeys that slowly moved about the country and had the weekend off.

odowdchr

Biggles wrote: »

In the meantime, the funds will still be with your bank (earning them interest, obviously, though I'm not suggesting the delays are built in for that purpose, I suspect it's just sloppy programming; but you never know.....).

I remember this being discussed before on Today....these days there's no reason why it can't be instantaneous..but there's no incentive for the banks to do it any quicker...you either wait the term or have to pay them extra fees for CHAPS. They've got you by the balls if you need to do a quick transfer.

Maybe this collosal spring cleaning of the banking system will legislate and make them do it.

barak

Biggles wrote: »

.....You can't submit a payment direct to BACS, only the bank can do that .....

.....and it's pretty clear that last week firstly Icesave and then Kaupthing were NOT submitting account holders' requests to be processed by the BACS or CHAPS processes.

Squibbler

Hmmm... I requested my BACS transfer before noon on 7th. Kaupthing went under 2pm on 8th. It does beg the question...why were they sitting on my money for over 24 hours? I can understand it being acted upon later the same day, but it wasn't.

I think they knew they were in trouble, hence the panicky strong reassurance messages that were placed on the Kaupthing site on the Mon/ Tue of that week.

iamesbo

Basically it's just an electronic method of transfering data isn't it, as opposed to paper.
It's only when the money has physically been transfered that the 'deal is done' all the rest is just numbers on a screen, as many people find out when they go overdrawn due to your lovely bank displaying false balances so they can charge you when you go overdrawn.

agsnu

The slowness of BACS is why Faster Payments have been set up. The banks are dragging their heels though.

Robertpestonrules

Squibbler wrote: »

Hmmm... I requested my BACS transfer before noon on 7th. Kaupthing went under 2pm on 8th. It does beg the question...why were they sitting on my money for over 24 hours? I can understand it being acted upon later the same day, but it wasn't.

I think they knew they were in trouble, hence the panicky strong reassurance messages that were placed on the Kaupthing site on the Mon/ Tue of that week.

I think you may be right. There was a post a couple of days ago in another thread giving very informative details about this. It was suggested that late on in the week ending 3rd October, in the wake of the Landsbanki collapse loads of people decided to jump ship from Kaupthing. KE, realising there was a run on the bank, stopped transfers out while the powers that be were brought in. That was the jist of the post - it was far more eloquent!!

silps

iamesbo wrote: »

Basically it's just an electronic method of transfering data isn't it, as opposed to paper.
It's only when the money has physically been transfered that the 'deal is done' all the rest is just numbers on a screen, as many people find out when they go overdrawn due to your lovely bank displaying false balances so they can charge you when you go overdrawn.

Do they even physically transfer the money in this day and age? If your wages are paid electronically to your bank and then you spend it electronically on your credit card I wonder if any hard cash ever gets moved about.