CHAPS/BACS transfers/charges

gordonjazz

Like Saddlebag I also twitch less. Many thanks

eslick

gt94sss2 wrote: »

The banks are due to introduce 'faster payments' in May 2008 - it is a replacement for BACS transfers and will lead to online transfers between different institutions to be made within a couple of hours (i.e. on the same day).

The new system was originally due to be introduced in November 2007, at the same time that the new rules covering cheque clearing came into existence but have been delayed until May 2008.

More details here and here

Regards
Sunil

Faster payments wont actually replace BACS is supposed to be compliment the other services. There is a limit of 100K for transfers so you cant use it for buying houses and not all banks will be able to offer it. What hasnt been said is the cost no one is saying at this moment in time.

On the cost of Chaps payments I work for a multinational company and we are charged 2 euros per payment we make through Chaps so you work it out. Dont agree on the time it takes all of these systems are automated so the man power cant really be claimed as a factor.

dunstonh

Dont agree on the time it takes all of these systems are automated so the man power cant really be claimed as a factor.

They are not automated. It takes a mangagement level clerk to input the data and another management level clerk to verify the data. This is at both ends. There is also virtually no ability to recall payment so there is a liability risk as well. Along with it being time sensitive and often requiring staff to be called out of their lunch break or off another job to process them.

eslick

dunstonh wrote: »

They are not automated. It takes a mangagement level clerk to input the data and another management level clerk to verify the data. This is at both ends. There is also virtually no ability to recall payment so there is a liability risk as well. Along with it being time sensitive and often requiring staff to be called out of their lunch break or off another job to process them.

I can only say how I see this from the corporate side, we make thousands of chaps payments per day. We pay directly into chaps and also through websites and through other connections with the majority been automated. If our side is automated then surely the banks should be to. Agree that autorisation is needed but we to have the same problem and the costs dont add up to what the banks charge. You can also use automation and systems so that only one piece of authorisation is needed.

The point about lunch time is also a little incorrect as you can make a chaps payment right up to the cut off time for them and thats late in the afternoon.

Agree on the piece about not been able to recall the funds but if you have the systems in place so that you order the transfer in a secure way the account details are then put into a file and sent then you know the details are correct. We as company cant be the only ones doing this with the automation and correct approvals so if the banks arent then all I can add is they should be.

dunstonh

I can only base my views from the time I spent working in a bank and actually processing these.

The point about lunch time is also a little incorrect as you can make a chaps payment right up to the cut off time for them and thats late in the afternoon.

What if its a Wednesday afternoon and you know full well that you have all the Suffolk County Council schools paying the dinner money in so wont have any cashiers free, the lending team are up to their eye balls in Wednesdays waste transactions due to all the weekend transactions hitting the accounts and maybe the business managers or senior managers are out on call. That leaves a limited number of staff available to transact by a certain time and we were frequently getting our lunch interrupted. Certain days of the month you knew the boatbuilders or the solicitors would flood you with requests for CHAPs and you cant put them off without risk of not getting them all done.

I can only say how I see this from the corporate side

A lot of things are different at corporate level and many businesses do take on a chunk of the transactions themselves. This thread is more about the individuals that dont though and require the branch to do them.

gt94sss2

eslick wrote: »

Faster payments wont actually replace BACS is supposed to be compliment the other services. There is a limit of 100K for transfers so you cant use it for buying houses and not all banks will be able to offer it. What hasnt been said is the cost no one is saying at this moment in time.

While Faster Payments may not officially replace BACS, I think you will find that, in practice, for most people transferring money between accounts it will.

As the new system has been designed to cope with large volumes of payments unlike CHAPS, the cost per transaction is expected to be similar to a BACS transaction - i.e. a couple of pence per transaction not pounds.. It will also operate 24/7, not just UK banking days.

Also, the vast majority of transfers are under 100K and the institutions taking part count for over 97% of all automated payments.. therefore I expect personal customers a banks to be offered this system 'for free' - if one doesn't, their competition will.. and retire their older IT systems were possible.

I also expect to see these new systems lead to another fall in the number of cheques used each year..

UK CHEQUE VOLUMES
2006: 1778 million
2005: 1931 million
2004: 2088 million
2003: 2251 million
2002: 2394 million
2001: 2567 million
2000: 2702 million
1999: 2859 million
1998: 2988 million
1997: 3091 million


Regards
Sunil

Milarky

Cheques are often generated by smaller finanicial organisations - when returning our money to us. They should already be moving to BACS and I hope that trend accelarates because it is silly for the banks to 'blame' customers using cheques they have been paid with rather than cheques they write themselves.

[Oh and no one has mentioned ISAs - are 'cheques' actually a requirement of the 'audit trail' when making transfers or not?]

eslick

"While Faster Payments may not officially replace BACS, I think you will find that, in practice, for most people transferring money between accounts it will.

As the new system has been designed to cope with large volumes of payments unlike CHAPS, the cost per transaction is expected to be similar to a BACS transaction - i.e. a couple of pence per transaction not pounds.. It will also operate 24/7, not just UK banking days.

Also, the vast majority of transfers are under 100K and the institutions taking part count for over 97% of all automated payments.. therefore I expect personal customers a banks to be offered this system 'for free' - if one doesn't, their competition will.. and retire their older IT systems were possible.

I also expect to see these new systems lead to another fall in the number of cheques used each year.."


Lets hope so but from the discussions I have had with the major banks involved in the process they are not expecting that to happen and this is one of the reasons they havent mentioned costs as yet. All of the banks love the idea but the truth will be when it actually goes live and the true costs are released.

We had the same discussion about the limit been 100k and to be honest, those that were involved in the discussions didnt really understand how most transactions are under 100k. yes the average might be but by keeping the limit that removes house purchases and in reality these are the type you really want to see happen faster.

"A lot of things are different at corporate level and many businesses do take on a chunk of the transactions themselves. This thread is more about the individuals that dont though and require the branch to do them"

I bet that most people wont go into the branches now a days and do most of their processing on line.

Agree its for individuals but at the end of the day if corporates can do this and the costs are much lower wouldnt you expect the banks to be able to do this as well so that they reduce their costs and hopefully pass these on to us and not line the shareholders pockets.

These are only my views I really hope it all comes off and the costs are cheaper but from what we have been told they may not be, really only time will tell.

gt94sss2

eslick wrote: »

Lets hope so but from the discussions I have had with the major banks involved in the process they are not expecting that to happen and this is one of the reasons they havent mentioned costs as yet. All of the banks love the idea but the truth will be when it actually goes live and the true costs are released.

I suspect by now the banks all know what costs they will face and the system is probably up and running at most banks - with them just ironing out any bugs..

HSBC actually updated their personal banking T&C last Autumn and included:

During 2008, we will be introducing a faster way that bill payments can be made (faster payments). This will then be extended to standing orders later in 2008.
We will give you 30 days prior notice of the exact date on our Rates and Charges Notice in our branches. For immediate bill payments, provided we receive your payment instructions by 11.45pm, each single payment is for less than £10,000 (£100,000 for standing orders) and the recipient’s bank is able to accept the payment via this new service, the payment will be deducted from your account immediately and will normally be credited to the recipient’s account within 2 hours.We will tell you at the time you ask us to make an immediate payment if the recipient’s bank has been able to accept it.

hence, it certainly sounds as if it will their default method of transferring funding between accounts..

Regards
Sunil

Mikeyorks

eslick wrote: »

We had the same discussion about the limit been 100k and to be honest, those that were involved in the discussions didnt really understand how most transactions are under 100k. yes the average might be but by keeping the limit that removes house purchases and in reality these are the type you really want to see happen faster.

The 'faster payments' limit is £100k max only for SOs. For 'immediate payments' and diarised bill payments .. a much lower level of £10k applies (and individual Banks may even lower that). Bit unsure about the reference to house purchases where a derivative of CHAPS is currently used .. and that's unlikely to change. There's no 'float' on CHAPS so faster payments was never intended to replace it .. albeit it will obviously take some of the lower value urgent traffic. Simply by virtue of same pace but less cost - and easier to organise (one hopes).

Equally, on the wider front, it doesn't undermine large chunks of the BACS traffic. As DDs and Direct Credits will still use that route.

But ... will it be born at the end of May? I remain doubtful