Clearing of Bacs transactions

splodge266

I am renovating a bungalow I have just bought, I have agreed a contract with a Builder which involves me paying him in agreed stages. I have recently paid him via my bank's bacs system on the internet. I did the transaction on Friday January 15th. The amount was deducted from my bank account On Monday January 18th. It has not yet arrived in my builder's bank account. My bahk has said it will be there tomorrow or at the latest Thursday Whilst accepting the need for clearing & a delay before the payment is made can anybody tell me where does the money go between leaving my account & being received in the new account & more importantly who has the interest that money makes. It was afour figure sum

jambosans

Normally speaking, BACS take three working days.

Funds debit your account the first day; process/ slowly make their way through BACS the second day; and should be applied to the recipients account on the third day.

The banks own Bacs, which operates BACS.

splodge266

Thanks I did know that but my specific question was when the monies leave the payee's account several days before being received by the recipient where does the money go & who has the interest the money makes during that couple of days

Mikeyorks

I suspect you did the transaction after normal close of business on the Friday ....... that's why it's showing for Monday?

Should be showing in his account by morning of Thu 21st. You need to check if your bank (and his) supports faster Payments if you want to get it there more quickly.

jambosans

splodge266 wrote: »

Thanks I did know that but my specific question was when the monies leave the payee's account several days before being received by the recipient where does the money go & who has the interest the money makes during that couple of days

The money goes through some magical processing service operated by Bacs, who are a "not for profit" organisation, owned, as I've said, by the banks. I would assume any interest gained would be absorbed in operating costs (electronic payment systems aren't free).

Mikeyorks

splodge266 wrote: »

& who has the interest the money makes during that couple of days

The Banks do ...... it's called 'float'. And they've been instructed to get rid of it. Which is why Faster Payments has been introduced ....... but most are dragging their heels and getting away with it.

splodge266

No I did the ransaction at 9.30 AM on Friday Morning. How ever iIunderstand the delay in reaching the recipient's account but where is the money in those three days. It has left my account but not entered the builder's account

splodge266

Thanks Mike but which bank mine or the builder's

jambosans

splodge266 wrote: »

No I did the ransaction at 9.30 AM on Friday Morning. How ever iIunderstand the delay in reaching the recipient's account but where is the money in those three days. It has left my account but not entered the builder's account

Different banks have different cut-off times for BACS. From personal experience, BACS transfers are sent out in batch the following working day (overnight normally). I would give an example, but it can get a little complicated depending on the bank.

In your situation, your bank have sent the payment via BACS the following working day (i.e. Monday), this is when the three day cycle begins (Friday does not count).

splodge266

Thanks Jambosan. Perhaps, if the banks have been told to get rid of the float & dragging there feet about faster payments we should start a campaign. You never know it might end up in the High Court. My builder is not too happy.

jambosans

splodge266 wrote: »

Thanks Jambosan. Perhaps, if the banks have been told to get rid of the float & dragging there feet about faster payments we should start a campaign. You never know it might end up in the High Court. My builder is not too happy.

Well the UK Payments Council has advised consumers to "vote with their feet" if a bank's Faster Payments Service isn't up to scratch. HSBC (including First Direct), Barclays, and RBS Group (NatWest & RBS) all have an upward limit of £10k on Faster Payments, so there are alternatives out there.

Link below to an article with the information I'm referring to:-
http://news.bbc.co.uk/1/hi/business/8450060.stm