Faster Payments from May 27 - confirmation from APACS

Mikeyorks

MarkyMarkD wrote: »

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..

Certainly - and that does add very much to the overall complexity. The 'instant' element looks to be aimed at the 'low value CHAPS' market and the 'DS or DD needs urgent funds at Uni' market! Hence why I think they would get away with charging. Quote re the 'immediate' payment :

24 hours a day, 7 days a week (i.e. including Saturdays, Sundays and Bank Holidays) whenever the payer wants to make the payment

Whereas 'diarised' payments and bog standard SOs are - respectively :-

In principle these can run 24 x 7 however, many banks may restrict them to the same changes/ times as Standing Orders.

These will be paid on bank working days. They will be scheduled to run between midnight and 6:00 am on the day of payment

But I think they do have to deal with the 'visibility' aspect. Bear in mind all (3) of these payment types arrive 'in day' .... so they have to be picked up outside of existing Batch processes? Dovetailing into ATM code may be possible I suppose .... mine is instantly visible on the rare occasions I touch cash!

MarkyMarkD

The reason I talk about ATM infrastructure is that it is already required to be online pretty much 24/7/365. There is no way that banks' core systems can achieve that level of availability.

Biggles

I was surprised to see that the BACS system will apparently continue to run alongside FP (I had assumed it was being replaced by it), also that it seems the banks haven't decided (or haven't said) whether there will be a charge for FP. That opens a few more cans of worms.

As 'consumers' using online banking, will we get the option of paying by BACS for free or by FP for a charge?

Or might FP be the only option, and might a charge for that be one way banks recoup the cost of the penalty charges that have now become less profitable?

It would have to be a very small charge for me to find it worthwhile, except for very large or urgent payments. I'm reasonably satisfied with the way LTSB's online banking handles BACS (set it up on a Mon, funds leave my account on Tue, land in payee's account on Wed) but I accept that other banks (especially ex-BSs etc) may not do it so promptly.

MarkyMarkD

I personally doubt that any bank will charge for FP, although as I've previously said I don't see why they shouldn't do so.

Your point about LTSB is interesting. Effectively they have already eliminated the "float" benefit to themselves, as they take the money out of your account when the money leaves them. The only "float" in the process you describe is accruing to the recipient's bank.

YorkshireBoy

Biggles wrote: »

I was surprised to see that the BACS system will apparently continue to run alongside FP (I had assumed it was being replaced by it)...

I think that's because not everyone will be onboard by 27th May, or maybe the old BACS system will remain as a back-up method in case of problems with FP's?

...I accept that other banks (especially ex-BSs etc) may not do it so promptly.

MarkyMarkD mentioned A&L above, but Halifax also have an extra day built in for 'on the spot' transfer requests...even during banking hours. However, for SO's or advance notice 'one-off' BACS transfers, Halifax seem to be able to then do it in the standard 3 days.

Biggles

MarkyMarkD wrote: »

Your point about LTSB is interesting. Effectively they have already eliminated the "float" benefit to themselves, as they take the money out of your account when the money leaves them. The only "float" in the process you describe is accruing to the recipient's bank.

Well, almost. In the above scenario, Mon would be BACS Day 1, Tue Day 2 (= Processing Day) and Wed Day 3 (ie = Entry Day, when the money would actually be debited from LTSB and credited to the recipient bank).

But I'm not too unhappy with the money being in limbo (ie a suspense account at LTSB presumably) for only one day, considering the size of most of my payments of this kind.

MarkyMarkD

YorkshireBoy The same applies to A&L as to HBOS i.e. pre-instructed payments don't have the extra one day at the start of the process.

Biggles The APACS website states the following:

The payer's bank submits the instruction to the clearing on the first working day (Day 1) when the payer's account is debited. The payment is processed and reaches the destination bank on Day 2, which updates its accounts and makes funds available on the destination customer's account from the start of Day 3.

That reads to me that the recipient's bank gets the benefit of one day's float (Day 2 to Day 3) whilst the payer's bank gets the benefit of one day's float (Day 1 to Day 2) - the part which you are telling me doesn't apply for LTSB customers.

gt94sss2

MarkyMarkD wrote: »

Your point about LTSB is interesting. Effectively they have already eliminated the "float" benefit to themselves, as they take the money out of your account when the money leaves them. The only "float" in the process you describe is accruing to the recipient's bank.

HSBC do something similar - if you make a BACS payment on Monday, it arrives on Wednesday.

While HSBC's systems will show the money removed from your account immediately on the Monday they continue to pay 'credit interest' on that amount until Wednesday..

Regards
Sunil

Mikeyorks

Biggles wrote: »

I was surprised to see that the BACS system will apparently continue to run alongside FP (I had assumed it was being replaced by it), also that it seems the banks haven't decided (or haven't said) whether there will be a charge for FP. That opens a few more cans of worms.

As 'consumers' using online banking, will we get the option of paying by BACS for free or by FP for a charge?

Both BACS and CHAPS will remain as fully functioning systems - 'faster payments' removes surprisingly small numbers. BACS will continue to be used for direct credits and for DDs (which don't create float .. and apparently we customers 'are happy' with the 3 day system!). Faster payments will undoubtedly take a chunk out of the bottom value end of CHAPS .. but not the top end (eg house purchase payments). As the value of an 'immediate' faster payment will be a max of £10k (£100k for SOs).

A fee for faster payments remains undecided and is the usual 'commercial decision' for individual Banks. But as the prime driver is to remove float (voluntarily ... before it's legislated against) ... I can't see Banks getting away with charges across the faster payment board. But I can see them happily charging a fee if you select the 'immediate' variant? After all you're not likely to get a choice with currently established SOs and 'bill payments' .... those will go the faster payment route from the off. But their timing will be as the quotes in post #32

Biggles

MarkyMarkD wrote: »

That reads to me that the recipient's bank gets the benefit of one day's float (Day 2 to Day 3) whilst the payer's bank gets the benefit of one day's float (Day 1 to Day 2) - the part which you are telling me doesn't apply for LTSB customers.

That link relates to SOs, not to BACS direct credits as used in payroll etc. Mysteriously, the APACS website doesn't have an FAQ for BACS or for FP, I assume the new ones are being written as we speak?