Faster Payments from May 27 - confirmation from APACS

ps646566

MarkyMarkD wrote: »

The primary basis of your argument, up to this point, has been lost interest. As I've pointed out that this is trivial, you've now moved onto a convenience argument. That's fine, but it's a different point. And frankly, the inconvenience of a few days' delay when moving savings around isn't very great. When you say inconvenience, don't you really mean that it's a pain for people who can't plan a few days ahead?

On virtually all internet fora, the last refuge of the lost argument is to start trying to discredit the poster rather than just refuting the points he/she makes. All this nonsense about "changing tack" is characteristic of this. In the initial post that I made I said, "For me that is an acceptable price to pay for elimination of the inconvenience and uncertainty caused by unpredictable built-in delays in the electronic payments system.". Lost interest is maybe the biggest concern, but not the only one by any means. There is no changing tack, but I can see your difficulty in trying to defend the indefensible.

MarkyMarkD wrote: »

There isn't any "uncertainty posed by these delays". If you pay money from your bank by BACS, you know it will arrive two working days from when the transaction is initiated by your bank - which will be at most one working day after the time you instruct it online or on the phone (if you miss the cut-off time for the transaction to start on the same day, or your bank doesn't start them the same day).

You previously said "ten or so working days" which was rubbish. Obviously weekends don't count if you are talking about working days. The delay is NOT often considerably more than three working days. If you choose to erroneously include weekends in your calculation, then you'll get a result more than three on some occasions.
By choosing the day on which you start a transfer between savings accounts to be a Monday, as I've stated, you can minimise the total number of days' lost interest by avoiding weekends

It does sometimes take five working days, whatever you and banks say about how long it should take in theory. And it's not always feasible to set things running on a Monday. If there are two transactions involved, and in and an out as I described earlier, then it can take ten days. Not only it can, but in my experience, it has.

MarkyMarkD wrote: »

The banks aren't seeking to not co-operate for any ulterior motive; the development has simply taken a long time because it's very complex.

We we'll see, won't we. After the various PR disasters that the banks have suffered recently, if they have any sense they will make sure that this does change speedily and efficiently.

Rafter

Blimey you two - I think you are going to have to agree to disagree.

The principle about whether the banking system should make profit out of the delay, in order to subsidise or offer free services is a tricky one.

Faster payments could encourage a fervent minority of money savers to switch their cash very regularly every time a new higher interest rate savings account comes along just to make a few pence extra interest.

Problem is that there is a cost. There is a risk too, particularly the speed a fraudster can get money into their account without the current delays for their activity to be spotted.

Personally I'd be happy to pay a 50p charge for each cheque or each ATM cash withdrawl from a competitor bank in return for a higher rate of interest on my money and lower, fairer penalty charges for those who don't manage their money so closely. Seems fairer. But I'm in a minority and it will be a brave bank who tries to introduce charges and face the wrath of customers and the daily mail.



R.

MarkyMarkD

PS
Your second post, to which I was responding, was entirely centred on the supposedly material financial cost of interest delay. Your first post mentioned inconvenience once. Even now you are suggesting that interest delay is the biggest factor, when your previous post suggested that inconvenience was the big deal. If anyone really finds interest delay their biggest problem in life, they need to get a sense of perspective.

I don't need to seek to discredit the poster; your arguments do that for you.

You can keep suggesting that BACS transfers take 5 working days; they don't. If a transfer takes more than 2 working days, it's not due to BACS but due to the bank's (or building society's) processes which take place before the BACS transfer is actually initiated. I agree that you can't always start transactions on a Monday, but it is one mechanism for minimising the cost of interest delay which is worthwhile advice for anyone who has a choice about when the transfers are made.

I'm not sure which PR disasters you are referring to the banks having suffered recently.

MarkyMarkD

Rafter I think that I am tending to agree with you regarding disagreeing with PS.

The whole "free banking" structure encourages inefficient behaviour.

People pay by cheque when they could use debit cards, to get an extra few days' payment delay, because they aren't charged the true cost of processing cheques.

People withdraw cash frequently and in small amounts, because they aren't charged the true cost of using ATMs (particularly other banks' ATMs).

People move money around to chase tiny differences in interest rate, because they don't incur significant transaction costs for doing so.

It would definitely be a better and fairer system if banks charged a reasonable transaction fee for each transaction, and paid higher rates of interest/charged lower rates of interest (as applicable) as well as providing Faster Payments.

But we are where we are, and like you say I don't see many banks eagerly accepting the PR flak associated with introducing charging.

IIRC it was Girobank (in its government-owned days) who started the "free banking" band-wagon rolling? They have a lot to answer for IMHO.

ps646566

Well maybe some people do move money for a 0.1% advantage in interest rate. As it happens I don't -- the differential needs to be significant, and also appear to be sustainable. If a lot of people do start moving money willy nilly then they will only have themselves to blame if the banks do start to impose transactions charges as a result.

I'm sorry if my earlier posts gave a misleading impression about emphasis. I think it's about interest and also about inconvenience/uncertainty. Let's face it, if there were no substantial issues around either, the OFT, Consumer's Association etc would not be making an issue of it.

Maybe some of the delays are in fact in the banks' own systems. If so an improved BACS process may lower the water level so that the rocks show, as it were, and induce banks to improve and speed up their own processes too where appropriate.

By PR disasters I meant primarily the unwise lending policies which have contributed largely to the present credit crunch situation, and the resistance to compromise and play fair over punitive charges, which has now ended up in the courts.

As you will have gathered I'm not a great fan of banks, nor of :- utility companies, oil companies airports and airlines, train companies, and in fact anywhere that a market is dominated by a cartel to the general detriment of the customers.

MarkyMarkD

Thanks for your comments, ps646566.

I think you are absolutely right about the rocks showing: it will be impossible for banks to blame BACS for payment delays and very evident whether they are causing additional delay themselves. For example, A&L take one extra day to make all BACS payments because the standard BACS two working day cycle doesn't start until the day after you instruct a payment. That's an "old systems" type of delay which will definitely have to get swept away under Faster Payments.

I'm sure that many other banks will have archaic processes wrapped around the archaic BACS process, and it will be great to see them all improved.

zx2011

Banks can't blame BACS as they own it! It's a not for profit company owned by 13 banks and building societies.

http://www.bacs.co.uk/BACS/Press/Resources/Corporate+information/

MarkyMarkD

I appreciate that, but they can and do blame BACS because its payment cycle is something no bank can do anything about without a wholesale change that they all agree to - exactly like Faster Payments.

Mikeyorks

MarkyMarkD wrote: »

... but they can and do blame BACS ...

Mainly from ignorance ... as it's the Bank systems at the start and the end than induce most of the delay. But, having said that, BACS isn't exactly manipulable as it was designed to convey material between one Batch system and another. So it's essentially a file based transfer mechanism with the inherent difficulties that creates if you suddenly want to send prioritised individual records down it. A bit like trying to run 200mph trains down old English track .... you come off at the points!

So faster payments gives the options of streaming both individual records as high priority ('immediate payments') ..... or file based batches of records (current SOs and possibly diarised bill payments) in day, but at a lower priority.

But that, of course, is just the part of it. No point having a money transfer that can go from Halifax to Barclays in 2 seconds ..... if you can't initiate it at Halifax on demand and then see it instantly at Barclays when it arrives? So therein is the biggest cost / risk ... as the Banks have to uprate their systems to be genuinely realtime. And as the 'immediate payment' is supposedly available every day (SO's will remain 'bank working days') .. that also implies Banks have to run their systems 7 days ..... which virtually none but Halifax currently do.

Big change / high cost / high risk! If users do have to pay for it ... I suspect it will be only the 'immediate payment' option that carries a charge? The rest is just getting rid of the 'float' that has been pestering Govt etc (allegedly) for a little while. And the Banks would be brave / stupid to put a levy on that.

MarkyMarkD

I hadn't actually thought about the availability of Faster Payments on "non-banking days". Is that definitely the case, Mike? It seems an unnecessary "gilding the lily" to me, to be honest.

The banks don't have to make their core systems real-time, if they don't want to. They may have a core banking system which is still batch based, but use a real-time (or sort of real-time) system which manages available funds within the course of each day, and which is currently used for ATM withdrawals etc.

What I mean by that is that you won't necessarily see the received funds on a transaction listing, but it might be available for you to draw upon.