What does a CHAPS fee actually cover?

[Deleted User]

Apart from being able to transfer money on the same day what exactly does the process involve?

Is it just an electronic exercise?

If so, is £20 upwards a reasonable amount to pay for trying to access your own money quicker?

Just wondered if fees like this might be 'challengable' as being overpriced for what is involved? Maybe someone in the banking industry can tell me what is involved in a CHAPS transfer?

Bean_Counter

At work I pay £24 for a CHAPS fee.

That means once I send the details to the bank, they then take those details, put them in the system and about 1.5 hours later the funds are in the other bank, assuming it is a standard UK bank.

Hence you are buying the interruption factor and speed, rather than the longer BACS system.

Is it worth it? I guess that's for the individual to decide.

dunstonh

Apart from being able to transfer money on the same day what exactly does the process involve?

It requires management level staff at both ends and two of them as well (at least it did when I used to do them). Anything that involves asst manager or above will cost more than if the normal bank clerks do it.

If so, is £20 upwards a reasonable amount to pay for trying to access your own money quicker?

Yes it is due to the level of staff involvement, risk, guarantees (it cannot be bounced/recalled once sent) as well as the time each one takes the two management level staff to act upon it. The infrequent nature of them as well means you are interrupting the normal workload of the individuals in question.

tarajayne

It is checked in branch twice by 2 levels of staff, then again at a processing office before being sent as it also comes under the money laundering regulations, a lot of time is taken and quite a bit of paperwork.

kennyboy66_2

The charge seems reasonable given that it is checked both ends & there is zero chance of it being challenged as unfair.

However the question should be "Why is the UK bank clearing system so poor & slow".

This has been covered by the Cruikshank report in 2000 which was highly critical & even the governor of the bank of england think that its a joke.

The UK has the slowest payment clearing system of any G10 country.
It is understandable that phyical cheques take a while but why BACS, or internet banking payments take so long is a puzzle.

The banks as a whole make an estimated £35 - £50 million from the payment delays. Not much - but a disincentive to invest in systems to speed up the process. Frankly it is because the banks are taking the pee.

tom188

http://www.fastpayments.co.uk/

PosterBoy77

tarajayne wrote: »

It is checked in branch twice by 2 levels of staff, then again at a processing office before being sent as it also comes under the money laundering regulations, a lot of time is taken and quite a bit of paperwork.

Why does there have to be so much paperwork this day in age with computers? Also, it must be the case that BACS transfers must be scrutenised for money laundering just as much as CHAPS transfers?

RayWolfe

Because CHAPS is instant ... no recall. BACS takes 3 days one of which is for recalls.

tarajayne

Bacs is for regular payments, not one-offs, you will also find that if you try and pay a large sum of money to an individual or company yourself with online banking, it won't let you. Regular payments are more easily tracable and as said before can be stopped at a certain stage, once a chaps payment is gone, then that's it. Solicitors will only accept large payments now by chaps to cover their own money laundering regulations. The checks done in branch also check where the money has come from, not just where it's going.

dunstonh

The banks as a whole make an estimated £35 - £50 million from the payment delays. Not much - but a disincentive to invest in systems to speed up the process. Frankly it is because the banks are taking the pee.

Changes are going to occur on BACs and the clearing cycle but a lot of it is governed by law and requires legislation to be changed to allow changes to occur.

In reality, people can gain as well as lose on the clearing cycle. For example, if you pay a cheque into your savings account from your current account, you earn double interest with most accounts. So, who is losing out?

jamesd

Deleted_User, you may have a basic misunderstanding: there's no requirement at all that charges for services be reasonable. They can be set as high as the bank desires and you can choose whether to use the service or not.

There is a requirement that penalty charges for a breach of contract be reasonable and that's where there has been activity about some bank charges. But this is completely different from fees for services when the contract hasn't been broken.

The faster payments system will make this irrelevant for payments up to 10,000, since those will normally happen within seconds.