Why can't DDs be processed on a weekend?

carl.waring

Does anyone know? Unusually, I can't find anything on the internet about it.

Just seems weird that, as they are entirely automatic, they can only be processed on a weekday.

Croesus_IfOnly

It is to do with banking systems used and need. 

DDs are processed using BACS rather than via newer faster payments (FPS) and BACS is an older established process that takes 3 days. Dare I say most DD payments are setup and forgotten with the onus on the recipient to collect the payment. It’s likely why there’s generally more tolerance towards DDs only during the week vs faster payments which tend to be used for Standing Orders and many account to account transfers.

TheBanker

As the poster above says, DDs use BACS which only operates on weekdays.

A lot of salary payments, and all state pension/benefit payments also use BACs.

If you had DDs going out at weekends, but salaries and benefits only being credited on weekdays, it would cause potential problems for customers who might go overdrawn.

DDs are not generally time critical so why invest a huge amount in changing a system that works perfectly well? 

Rob5342

There's no reason why they couldn't be, as you said they are all automated. I'd imagine it's a hangover from the days when they were done by hand and needed someone to manually process them, the same reason why bacs payments aren't processed at weekends.

It could be changed if they wanted to, but as mentioned the whole system is based on outdated practices and everyone coordinates things based on that, so it could be quite difficult to modernise it. Modern banks like Monzo are starting to improve things by making scheduled payments at the weekend, and letting you have Bacs payments the day before they'd show up otherwise.

SiliconChip

The question is, are you (and all bank users) prepared to pay for it? Technically there isn't any great issue with 7 day DDs, but because the legacy systems used by the majority of banks operates only on banking days (5 days a week, excluding bank holidays) the IT changes required would be significantly more extensive than just changing how DDs work. Banks are not going to ask shareholders to pay for this, which means customers will have to pay, most likely through increased interest on borrowing and reduced interest on savings, but possibly by introducing charges for operation current accounts and making charges for specific facilities (such as DDs). Is that what you want?

Olinda99

weekends are typically reserved and used for IT maintenance - for example taking backups and applying patches

tetrarch

All banks need to fund themselves and maintain accounts with each other and with Central Banks like the Bank of England.

All these items processed on a business day need to be cleared (the "C" in BACS) - this process is always overnight. All balances in all accounts are effectively frozen at night and then reopened the next day. You don't earn or pay interest intra-day, only overnight.

The cost to add Saturday and Sunday to this would be astronomical. 

Regards

Tet

Ballard

I doubt that there’s much of an appetite for expanding DDs or BACS in general to the weekend.

Originators (e.g. BT, Sky) who receive funds over the weekend wouldn’t be able to do much with the money until the Monday, unless they wanted to work over the weekend. Firms paying salaries on a Sunday, for example, would need to fund the account on the Friday so they’d not have use of it for a couple of days anyway.

People whose accounts might be debited over the weekend would not have the option to credit cash into the account until the Monday so would either get charged interest or a return fee if they can’t transfer electronically. 

To my mind, the downside greatly outweigh the benefits. 

HobgoblinBT

Back in 2019 Faster Payments were paid based on the cleared and available balance so they don’t create an unauthorised overdraft.  Direct debits are presented. If there is insufficient funds available they appeared on a referral list so that a bank officer could make a pay or no pay decision. This had to be done on a working day, rather than on a non working day ie Saturdays, Sundays and Bank holidays.  

I am sure banks could change this process to be similar to be similar to payment of faster payments but I can foresee that it would create issues for businesses, many of whom fund their accounts on the day payments are presented.

carl.waring

All very interesting and enlightning.

Thanks to all who took the time to reply.

Zopa_Trooper

I just moved to NatWest and had a standing order that paid out on the 2nd of the month. It didn't pay out but I needed the money moving so I cancelled the Standing Order Saturday and transferred the money out manually. Today I received a message from NatWest saying they had paid out the standing order I'd cancelled and I was therefore overdrawn and needed to pay money in by 2pm today or be charged. So I went to the recipient to transfer the money back but it hadn't arrived. So, after 30 minutes waiting on the end of a phone line, I got through to NatWest who said they had recalled the money as it shouldn't have been sent and they would get it back tonight and for me to ignore the message I received. They also assured me there would be no charges levied against me.

I've been humming that Boom Town Rats song, "I don't like Mondays."