Bank Payments Priority Order

barafear799

Hi

Here's hoping someone might know the answer.

Is there a specific order that payments to come out of a current account occur.


For example, if I have a DD due to come out on the 27th, and I also have a couple of Standing Orders dated the same date, and then during the early hours, a retailer claims some money via my debit card (thru a continuous payment authority) -

if I only had enough money to pay one or two of these payments, is it possible that the DD and SO would both bounce (causing me bank charges) but the debit card payment would go through?


Many thanks

iblametheparents

Depends which bank.

Consumerist

Generally speaking, banks do not process transactions in any particular order.

It is often a requirement to have sufficient funds in your account on the [banking] day before any DD is due to be paid. DDs are normally processed at midnight (i.e. just before 00:01) on the date the payment is requested.

Some banks tally up just once a day, usually midnight (i.e. just after 23:59), and make any charges on the basis of the balance at that time. Others, however, require that sufficient funds are available at the time of each transaction. You will need to check your bank's Ts&Cs to establish which process they use.

jambosans

Anything which runs through BACS will be processed in and out in batch. When this takes place depends on the bank (i.e. many will state the early hours/ midnight/ etc.). BACS Direct Credits, Direct Debits, and some* Standing Orders will run in batch, as they all go through BACS (one off bill payments and external transfers can also be processed in this manner). Even though there may be an order, your bank will not recommend you send and receive payments on the same day - you're often quoted both verbally and in T&C's money should be cleared in the account the working day before. This removes liability in expecting (for example) your mortgage Direct Debit to be paid when your salary is paid in during the same process.

Card payments are a separate process entirely. Again, generally speaking, card payments can debit at any point, and depending on your bank should be posted to your account instantly when the merchant settles (i.e. collects payment). So when your CPA will debit largely depends more on the merchant than your bank.

You cannot really second guess the order because there are so many variables. Even if we knew the bank, it does not account for variables such as when a merchant requests settlement on a CPA. Add the real-time Faster Payments Service* to the mix and you're best heeding the general advice of having cleared funds in the account the working day before.

* Many banks now send Standing Orders, immediate and future-dated external payments via Faster Payments. This service runs real-time, ergo payments can technically debit (or credit) at any point.

iblametheparents

I know with Barclays that cleared funds have to be in by 1:30am the day the direct debit/standing order is due out, or debit card transaction clears. They normally do credits/direct debits/standing orders between 00:00 and 02:00 every morning, except for Sundays. Theoretically, a direct debit could be debited at 1:00am and you could transfer money from your Barclays savings at 1:25am and it would still be paid.

Mikeyorks

jambosans wrote: »

* Many banks now send Standing Orders, immediate and future-dated external payments via Faster Payments. This service runs real-time, ergo payments can technically debit (or credit) at any point.

Agree with your general sentiments that trying to second guess the order of processing can lead to problems. But I would have thought that in general Banks will process incoming credit files in advance of debits? Just as, logically, one would expect institutions to process changes of address before they do a statement / reminder run?

But (as quote) I'm fairly certain that SOs are Batch processed into Faster Payments .... they're not 'real time'. And future dated are at the whim of the institution ...... they can either deal with them as 'immediate' or tag them on (more likely as they have a strategic fit) to the Batch process used for SOs.

jambosans

Mikeyorks wrote: »

But I would have thought that in general Banks will process incoming credit files in advance of debits? Just as, logically, one would expect institutions to process changes of address before they do a statement / reminder run?

I agree, TBH I don't know for definite, however have known banks to charge on the basis of a BACS Direct Credit being posted to an account after a Direct Debit has attempted and failed. The matter becomes slightly more confused as some banks do a second "run" later on in the day, which can rectify a previous failed attempt.

Mikeyorks wrote: »

But (as quote) I'm fairly certain that SOs are Batch processed into Faster Payments .... they're not 'real time'. And future dated are at the whim of the institution ...... they can either deal with them as 'immediate' or tag them on (more likely as they have a strategic fit) to the Batch process used for SOs.

Again, I agree, and as you've suggested, would assume future-dated payments and SOs via Faster Payments are sent during their own batch run. I should have specifically referenced immediate payments.

It's also worth mentioning internal account adjustments, credits or debits (e.g. application of charges, interest, etc.) will no doubt have their own batch process. This further strengthens the argument that it's a little foolhardy to second guess the way a bank processes their transactions.

Apologies, I should have made my point clearer in regards to Faster Payments, but it seems like you got the gist.

barafear799

Many many thanks for all the replies to my original question.

I understand that the safest option would be for me to have available funds in my account the day before - however, this is not possible, but I could have enough funds to pay the DD and SO for example - so if they DEFINITELY went first, then I wouldn't care about the CPA debit card payment bouncing (as there would be no bank charge attached to that).

I think it's safer looking for another option.

Once again, many thanks.

zppp

barafear799 wrote: »

then I wouldn't care about the CPA debit card payment bouncing (as there would be no bank charge attached to that).

Card payments don't bounce, once authorised they will be presented. Most banks levy additional charges, not only overdrawn fees, but card misuse fees.

barafear799

Shame I didn't read the above reply on the day it was made.
I do not understand the system at all - I have read a few threads on here and elsewhere - and am still not much wiser.

I have had a few emails/texts from the PDL companies I owe money stating that my debit card payment was declined. Therefore, I was of the understanding that if the funds were not available in my account, then the card payment would not be made.

However, I have just found out that despite having only 11p of available funds in my account over the weekend, 4 payments (totalling more than £220) have been applied to my account; I telephoned my bank (LTSB) and was on the phone for 25 mins+ and pretty much got nowhere.

It appears that a company can apply for a debit card payment for any amount (does not have to be within my Chq G limit) and it will be paid regardless of whether there are available funds.

In that case, why do I get messages from my creditors stating that payments have been declined.

Is anyone able to explain why some payments seem to be made (causing me to go over my limit) and others are "declined"?

Many thanks

Mikeyorks

barafear799 wrote: »

It appears that a company can apply for a debit card payment for any amount (does not have to be within my Chq G limit) and it will be paid regardless of whether there are available funds.

A payment taken via Debit Card has no read across whatsoever to your Cheque Guarantee limit ...... the latter only applies to physical cheques.

If a company applies for a Debit Card payment (quite unwise to file your card details with them and allow relatively free access to your account - if that's the implication?) - your Bank will authorise it based on funds / overdraft available at the time. If it's authorised and then the debit applied for within a few days - your Bank will honour it. Unusual to take your account into negative territory as - at the point of authorisation - the Bank will generally restrict your access to those 'promised' funds (by reducing your 'available' balance).

If the Bank decide not to authorise the requested Debit Card payment - then no funds can be taken.