When are funds truly safe? BACS, faster transfer, CHAPS etc

kateandpete

Sorry if this has been answered upteen times before...

We are in the process of selling our car and will need to take payment in the region of £6-7k. My preference is to take cash during bank orening hours and hand over the vehicle after it's been counted out and paid in there.

I realise that people are wary to handle large sums of cash though (me included!) and wondered about other payment options. My understanding is that payments such as faster payments can appear very quickly but are not entirely safe from fraudulent reversal. Is this right? If so how long do I need to give each of the various payment methods before I can count the money as truly ours and not at risk of being reversed in future?

Thanks

agrinnall

I believe CHAPS payments cannot be reversed, but of course there's a charge to make the payment, it's same day but could take several hours to arrivem and you need to watch the end of day cut off time if the transaction is being done in the afternoon.

FP is normally within 2 hours and in my experience has been pretty much instantaneous. I don't think it would be easy for a customer to get a payment reversed, they have initiated it so their bank would have no reason to believe they have any grounds to get it back. the main issues are whether the buyer's bank does FP, what their single/daily transaction limits are and whether the bank makes the first payment to a new payee by FP or BACS.

BACS payment will take 3-ish days to arrive.

To be honest there's no ideal answer, cash is great for you (assuming it's not counterfeit) but your buyer probably won't be keen on turning up to a stranger with £6-7K. The best way I did it was when both the buyer and myself had Nationwide accounts and we went into a branch and they transferred the money from his account to mine.

tagq2

If the sending bank convinces the receiving bank that any payment was made in error/fraudulently, the receiving bank could debit its customer's account and send the money back. Some people claim to have been caught by same-hour FP where the buyer has walked into his branch a few minutes later and apologised for making a "mistake" with the transaction, getting his funds back. BACS certainly has a refund mechanism on the day of payment as part of the BACS process, but that doesn't mean the two banks couldn't negotiate some other way. If - worst case scenario - X has nicked Y's account details and transfers £7k from Y's account to you via FP, I wouldn't bank on keeping that £7k. But then the same would apply to stolen cash, since a car sale (hopefully) isn't anonymous. Escrow?

tl;dr Early same day CHAPS, FP 24 hours, and BACS 4 days should be low risk. (With the 2-4-6 cheque thing, after 7 days with UK cheque should be low risk too. I think.)

kateandpete

Thanks everyone. Wondering if CHAPS may be the best bet. I realise there is a charge but would be happy to pay a small sum for the convenience of not having to mess around with cash. Is this still open to reversal if claims of fraud are later made?

Also, I had assumed if I do not hand the keys/reg doc over until cash has been counted and entered by the teller this was pretty much bomb proof. Still could be returned though?

Cheers,
Kate

Sceptic001

Judging by the number of threads that start "Help, I've accidentally sent money to the wrong account and can't get it back", one might assume that it is not possible to reverse transactions (especially instantaneous faster payments). However, it is never safe to assume, so it would be nice to hear a definitive account from someone who knows how these things work. Maybe one of our friendly bank employee posters will be able to help (presumably after hours )

tagq2

kateandpete, if you pay bank notes into the account then there's no danger of reversal because you were the one performing the credit. In the case of electronic bank transfers it's the other party who performs the credit.

The only risks I perceive then are (i) the buyer succeeding in some legal process against you; (ii) the authorities find that the cash wasn't the buyer's to give to you in the first place. But, when dealing with strangers, these are unlikely yet possible whichever method you select.

If you like paper, there's also the banker's draft, drawn on the bank itself rather than on the buyer's account. If you accompany the buyer to the bank to prepare it then you know it's genuine. And it'll probably cost less than CHAPS.

abbas5001

Sceptic001 wrote: »

Judging by the number of threads that start "Help, I've accidentally sent money to the wrong account and can't get it back", one might assume that it is not possible to reverse transactions (especially instantaneous faster payments). However, it is never safe to assume, so it would be nice to hear a definitive account from someone who knows how these things work. Maybe one of our friendly bank employee posters will be able to help (presumably after hours )

With FP, payments cannot be recalled. With BACS, the payment can be typically recalled as long as it is done before 4pm on the day it is due to leave the account. Although that is not a guarantee, some banks process payments quicker and i have been unable to cancel payments before, despite the fact it has been prior to 4pm. Basically, if you need to cancel it is best to instruct the bank within a few hours of having made the payment.