FD: any other faster-than-expected payments?

Milarky

This is not much of a subject to raise really, but just to report that a payment made from First Direct bank account to Egg Visa credit card this week - which would normally take '3 banking days' [eg Wed to Fri] went across in 2 - [i.e. Wed to Thu]. This sort of thing seems to have cropped up quite a bit lately [e.g. Nationwide VISA to Egg VISA - 1 day, Nationwide bank a/c & Egg Savings to Halifax VISA - 1 day] and I can't think that others haven't noticed certain transactions going through faster than the 2 days cited by BACS.

Has anyone else got any examples to mention here, I wonder?

BACS is designed to take '3 banking days' which consists of

DAY 1: [instruction] gathered by bank and passed to BACS
DAY 2: [24 hour process cycle]: BACS then collates all payments ready for
DAY 3: [morning] cash arriving in destination accounts.

If DAY 2 is somehow being by-passed - implying that that Bank 'A' can deliver a 'processed-ready-to-pay' instruction straight to BACS - then the payment would take only 24 hours to arrive.

I've asked this sort of thing before, but has anyone got banking industry insights, such as whether there has been any 'merging of DAY1 and DAY2 of late?

Thanks all

ED

Milarky - this interests me, also. Wonder if experiments are underway, perhaps for same-day transfers said to be aimed for in the UK by the end of next year...?

Anyone got banking industry insights whether this shortening of external transfers has - or will - occur not only with BACS but also with Standing Orders?

Milarky

Just to add to this:

I have now checked payments made from FD on the same date to 3 different issuers:

14 March: To Sainsburys Bank - 'arrived' 15 March [one day 'early']
14 March: To MBNA - 'arrived' 16 March [as expected]
14 March: To MINT - 'arrived' 16 March [as expeced]

Sainsburys Bank credit card is an HBOS 'clone' of course, so they are using the same banking services as the Halifax - which was found to take one day. It is not therefore surprising that Sainsburys will be as quick as Halifax also,

MBNA and MINT took longer however - so this suggests that the payments are being quickened by particular 'receiving' organisations/mechanism rather than the 'sender' itself.

The alternative suppostion [to some banks being able to 'short circuit' the ususal BACS cycle - and therefore any/all payments being made arriving sooner than would be expected] is that there are single 'bank-to-bank' arrangements in place that are effectively by-passing BACS. This is what I have noted between Nationwide and Halifax [both were building societies -NW still is- and share a 'LINK' network] when making 'bill payments/transfers'. Going by BACS these whould have taken 3 days [NW allows 1 extra day] for another organisation to receive, yet they only took a single day. Payments to Egg might go quicker because they may also use the 'LINK' network - eg for Cashcard a/c withdrawals for these - as well as 'VISA'. It is notable that use of debit and credit cards -which use VISA/MC serives- can allow the value of a transaction to appear as 'pending' in real time on the other account - and therefore VISA/MC charges only take a day to appear.

So it is beginning to look a bit as though alternatives to sending payments via BACS are used by individual banks as a sort of 'arterial' system around the 'trunk' network which handles the bulk of them.

[Hmmm?]

ED

Highly informative, Milarky.

Coventry Bdg Soc is also part of the 'LINK' network. Anyone here experienced speedier BACS than previously?

pinkfluffybabe

Yes, same as above - 2 days between first direct and egg.

MarkyMarkD

Every bank and building society is a member of LINK nowadays, so that is scarcely a reason for this.

My suspicion, and this is not an informed one in this case, is that some banks/BSs are using the VISA system to transfer funds to credit card accounts, rather than BACS. Credit card companies show credit card transactions far more quickly than the 3 days BACS cycle - they are processed on the day of the transaction and sometimes can be seen on your account that day, or certainly the next day.

I'm not sure why an individual bank would choose to use VISA rather than BACS.

Standing Orders (ED's post) occur via BACS so the same timescale changes (if any occur) would affect them as well. Standing Orders are just recurring BACS transfers.

ED

Interesting idea about VISA, MarkyMarkD - waiting for input from in-the-know MSE participants...

davidcampbell

have to say ive neither nopticed it nor heard anything re any change.

ill certainly do some diggin at work though. interesting


DC

ED

Glad to have you on the case, dc!

Caped_Avenger

Well, they must simply be quicker-than-normal BACS transfers. Perhaps, as has been said before, BACS are processing quicker or the banks are getting the info to BACS quicker.

At work, we still use BACS for credit card payments, not the Visa system. They would have informed us of any migration to a different system, i'm convinced of that.

Looking on the BACS Website, there's no evidence of a speeding-up of the process, but maybe they're keeping it under their hat if it is just a pilot.

Interesting...

ED

The Link network is being used in 'pilots'. I've obtained confirmation about it.

Lloyds TSB's director of operations Paul Baker stated, "We are running pilots at the moment, and if we are honest we don't know whether this will work. But crucially the Link network already offers instant transactions, so we are examining whether this could be harnessed for other purposes."

Mr Baker also stated it is one of three proposals on the table, "We could simply speed up the existing BACS system by rewriting all our programmes. However, this could be quite expensive because everything is built around the existing cycle times."

The third option involves the CHAPS sytem which could possibly be expanded to handle more frequent and smaller money transfers. To date the customer generally pays £20 - £30 per CHAPS use.

I gather Lloyds TSB is the only bank paying interest on money during the 3-day BACS transfer period. The customer making a payment continues to receive credit interest. S/he also will not be charged overdraft interest until the money reaches the destination account. "Real-time banking" sounds useful, also, whereby a cheque from one Lloyds TSB customer is instantly cleared into the account of another Lloyds TSB customer.