Bank forcing FPS over BACS.

Maarek

Hey, First time poster here. I run a small business.
Since the price of stamps has increased, I've decided to finally pay all my suppliers via some form of electronic payment system.

In order to make payments easily via Sage accounting software, I have to sign up for their "Bussiness Online" service (£10 month).
They state in their tariffs that BACS transfers cost 15p per transation, where FPS costs double that at 30p. Naturally I'm making the switch over to save money, so I'd like to use BACS where possible.

However, it seems that on receiving the paperwork, they have limited the BACS credit and debit on the contract to only £1! After phoning and asking why, I'm told that they are being forced by the government to move over to the FPS/EFT system and are phasing out BACS.

Now, forgive me for thinking the worst in people, but this sounds to me like they are bullying me into using FPS simply because they earn double the fees.

I'd like to know how much truth there is in this before I make any decisions on whether to sign up for the service.

Thanks,
Jon.

Hazzanet

Section 70 of the Payment Services Regulations requires:

70.—(1) Subject to paragraphs (2), (3) and (4), the payer’s payment service provider must ensure that the amount of the payment transaction is credited to the payee’s payment service provider’s account by the end of the business day following the time of receipt of the payment order.

BACS does not comply with this which is why they will be pushing you to use FPS.

Maarek

Ah,
Thank you for the prompt response. I guess I shall just have to swallow the cost and move on. It's a bit cheeky that the banks are charging more for a service that they are being forced to move over to.

Are the increased costs to cover the fact that the banks will no longer be gaining interest on your money for the few days it takes to transfer via BACS?

opinions4u

How does the charge compare to CHAPS or a cheque?

Maarek

I've never used CHAPS, so I'm not sure on the tariff. Cheques are also 30p, but then there is the price of the stamp/envelope/paper and printer to add on top of that.

On the flip side, I'm having to pay £10 per month for the privilege of using FPS so all in all, it's probably not much of a saving.

gt94sss2

Some business bank accounts don't charge for FPS payments - for instance HSBC Business Direct.. so shop around and choose the best one for your needs.

Regards
Sunil

Gromitt

At work we say that sending someone a cheque costs £1 due to the various administration costs, material costs, bank costs, etc. We've just moved from BACS Direct Credits to FPS (by request). Its more expensive, but it also means we pay the invoices 2 days later, so its swings and roundabouts. We also have agreements with some suppliers that we don't pay any invoice under a certain amount (some >=£100, some >= £1K), but rather roll it into the next invoice until its over (or a time limit is hit). Saves processing and costs on both sides.

We now also support payment by Paypal, and have agreements to pay some suppliers via Paypal.

Have you talked to your suppliers about paying your invoices?

noelphobic

Maarek wrote: »

Are the increased costs to cover the fact that the banks will no longer be gaining interest on your money for the few days it takes to transfer via BACS?

BACS payments took 3 working days and payments could be recalled on day one or two of the cycle. That is not possible with Faster Payments so there is a higher risk of loss to the customer or the bank.

Not sure whether that effects the costs or not though.