Where is the money?

The_Pensioner

I pay many bills regularly using the Direct Debit system.

Recently a DD was taken from my bank account on a Friday and as of Tuesday still had not been credited to my utility account.

Whilst I understand there should be a small delay (hours if using BACS), who has the money and the use of that money in the intervening days. My simple estimate is that the DD system has >£ 500 million is there pocket over any given weekend.

Do the banks use it on the money markets??

MikeJXE

No Idea.

My energy DD is set up for the 1st but my energy company sends me an email prior to when it's going to be taken, sometimes the 3rd or 4th

My bank account shows it gone on the 1st but has it really gone or is it still there ? 

jbrassy

Paying by direct debit using BACs does not take hours, it takes days (3 working days to be precise). Therefore, you might want to wait until tomorrow. 

https://www.hsbc.co.uk/current-accounts/what-is-a-bacs-payment/#:~:text=A BACS payment normally takes,by Wednesday the next week.

I do not believe banks invest the money on the MMFs. It's just an antiquated system. 

MattMattMattUK

The_Pensioner said:

I pay many bills regularly using the Direct Debit system.

Recently a DD was taken from my bank account on a Friday and as of Tuesday still had not been credited to my utility account.

Whilst I understand there should be a small delay (hours if using BACS), who has the money and the use of that money in the intervening days. My simple estimate is that the DD system has >£ 500 million is there pocket over any given weekend.

Do the banks use it on the money markets??

The money is either in transit, or is in the utility provider's account but has not yet been reconciled. No, the banks to not "use it on the money markets". 

wmb194

The_Pensioner said:

I pay many bills regularly using the Direct Debit system.

Recently a DD was taken from my bank account on a Friday and as of Tuesday still had not been credited to my utility account.

Whilst I understand there should be a small delay (hours if using BACS), who has the money and the use of that money in the intervening days. My simple estimate is that the DD system has >£ 500 million is there pocket over any given weekend.

Do the banks use it on the money markets??

Should be same day, see picture below. The delay is with your utility provider not updating its system / the customer portal. This could be because it wants to be 100% certain that the payment didn't fail before stating in the portal that it was successful.

https://gocardless.com/direct-debit/timings/

jbrassy

wmb194 said:

The_Pensioner said:

I pay many bills regularly using the Direct Debit system.

Recently a DD was taken from my bank account on a Friday and as of Tuesday still had not been credited to my utility account.

Whilst I understand there should be a small delay (hours if using BACS), who has the money and the use of that money in the intervening days. My simple estimate is that the DD system has >£ 500 million is there pocket over any given weekend.

Do the banks use it on the money markets??

Should be same day, see picture below. The delay is with your utility provider not updating its system / the customer portal. This could be because it wants to be 100% certain that the payment didn't fail before stating in the portal that it was successful.

https://gocardless.com/direct-debit/timings/

The diagram proves my point. It takes three working days for the money to be received in the utility provider's account.

wmb194

jbrassy said:

wmb194 said:

The_Pensioner said:

I pay many bills regularly using the Direct Debit system.

Recently a DD was taken from my bank account on a Friday and as of Tuesday still had not been credited to my utility account.

Whilst I understand there should be a small delay (hours if using BACS), who has the money and the use of that money in the intervening days. My simple estimate is that the DD system has >£ 500 million is there pocket over any given weekend.

Do the banks use it on the money markets??

Should be same day, see picture below. The delay is with your utility provider not updating its system / the customer portal. This could be because it wants to be 100% certain that the payment didn't fail before stating in the portal that it was successful.

https://gocardless.com/direct-debit/timings/

The diagram proves my point. It takes three working days for the money to be received in the utility provider's account.

Yes, but it's timed so that the debit from your account and the credit to the originator's account are made on the same day.

MikeJXE

jbrassy said:

wmb194 said:

The_Pensioner said:

I pay many bills regularly using the Direct Debit system.

Recently a DD was taken from my bank account on a Friday and as of Tuesday still had not been credited to my utility account.

Whilst I understand there should be a small delay (hours if using BACS), who has the money and the use of that money in the intervening days. My simple estimate is that the DD system has >£ 500 million is there pocket over any given weekend.

Do the banks use it on the money markets??

Should be same day, see picture below. The delay is with your utility provider not updating its system / the customer portal. This could be because it wants to be 100% certain that the payment didn't fail before stating in the portal that it was successful.

https://gocardless.com/direct-debit/timings/

The diagram proves my point. It takes three working days for the money to be received in the utility provider's account.

I will see how that works out next month 

My email. Advance warning say my energy company is taking it out on the 1st as is set up 

I will check my energy account and bank account to see if it has arrived in zero days not as stated 3 days 

molerat

Arriving in the supplier account and showing in your energy account are completely different things.  The latter being controlled by the supplier and nothing to do with the banking system.

EDF credit the energy account on the day the DD is due, it often shows before it is actually taken.  Eon don't credit for maybe 5 or 6 days.

Lumiona

Some direct debit systems do take a few days to be credited to the receivers bank account. Then it may be a manual transaction to allocate the payments to the customer account which is why payments can be allocated and reconciled incorrectly. Although automated systems are becoming more popular to reduce time and human error.

flaneurs_lobster

molerat said:

Arriving in the supplier account and showing in your energy account are completely different things.  The latter being controlled by the supplier and nothing to do with the banking system.

EDF credit the energy account on the day the DD is due, it often shows before it is actually taken.  Eon don't credit for maybe 5 or 6 days.

I've worked on billing systems for a couple of large companies and this, as @molerat says, is typically how it happens. The customer account system assumes that all of the DDs it has requested will be paid 3 working days later and applies the credit accordingly. Whether they choose to show this credit on the bit of the system that the customer can see is a business decision.

Some will choose to wait a time until they have processed the "delinquent" transactions notified by their banking system where payment was declined and they have updated the customer system accordingly.