Faster Payments from May 27 - confirmation from APACS

MarkyMarkD

You'll find out when each of your building societies decides to tell you, I suppose.

The amount of money you lose moving money by BACS is trivial unless you:

(a) move so much that it becomes material - in which case it's worth paying to CHAPS it; or
(b) move it too often to chase trivial differences in interest rate.

I honestly challenge you to tell me how much BACS delay costs you in a year, and then to demonstrate that it's an amount worth fretting about!

meatandtwoveg

MarkyMarkD wrote: »

You'll find out when each of your building societies decides to tell you, I suppose.

The amount of money you lose moving money by BACS is trivial unless you:

(a) move so much that it becomes material - in which case it's worth paying to CHAPS it; or
(b) move it too often to chase trivial differences in interest rate.

I honestly challenge you to tell me how much BACS delay costs you in a year, and then to demonstrate that it's an amount worth fretting about!

Why should you lose a penny in lost interest, someone is holding your cash, so someone is paying interest on your cash through the borrowing facility?

Why is it down to a figure, moreso based on principle and the greedy banks!

MarkyMarkD

Why shouldn't you lose a penny in interest? It's your choice to move the funds.

Why should people be able to move money around for nothing, and instantly?

It's not like a God-given right, you know!

ps646566

MarkyMarkD wrote: »

You'll find out when each of your building societies decides to tell you, I suppose.

The amount of money you lose moving money by BACS is trivial unless you:

(a) move so much that it becomes material - in which case it's worth paying to CHAPS it; or
(b) move it too often to chase trivial differences in interest rate.

I honestly challenge you to tell me how much BACS delay costs you in a year, and then to demonstrate that it's an amount worth fretting about!

I would not agree about CHAPS. Suppose you are moving £10000 into an account that pays 4.5% net. In a worst case scenario, with funds having to go in and out of your current/nominated account, weekends/holidays falling in the wrong place (*) and delays in the banks' own processing systems this can take 10 calendar days. If interest is lost for that whole period it equates to about £12, whereas a CHAPS transfer typically costs £20. You would have to be moving about £16000 to even break even with CHAPS. But because of the vagaries and uncertainties of the electronic transfer systems you never really know how much of a delay you are faced with, so using CHAPS is a gamble.

You can't always plan to avoid weekends, if for example you are trying to open a limited issue account before it closes or the before rate drops. And if because of these delays you do lose the opportunity to participate in a particular account, or bond, or fixed interest rate, then the real cost can be substantially more then the apparent interest cost of the actual days' delay.

It may not be a God given right to move money about quickly. But in this day and age it's certainly feasible, and if the banks wants to improve customer service and allay the suspicion that they are essentially a bunch of sharks, then it is something that they could do, and as someone says above -- sort out this mess.

MarkyMarkD

ps646566 wrote: »

I would not agree about CHAPS. Suppose you are moving £10000 into an account that pays 4.5% net. In a worst case scenario, with funds having to go in and out of your current/nominated account, weekends/holidays falling in the wrong place (*) and delays in the banks' own processing systems this can take 10 calendar days. If interest is lost for that whole period it equates to about £12, whereas a CHAPS transfer typically costs £20. You would have to be moving about £16000 to even break even with CHAPS. But because of the vagaries and uncertainties of the electronic transfer systems you never really know how much of a delay you are faced with, so using CHAPS is a gamble.

I don't understand your comment here. My point was precisely that there is a breakeven, and that if you are transferring more than that breakeven amount, you should pay for CHAPS. The breakeven amount varies depending on the number of days involved and the rate.

What you gain with CHAPS is certainty.

But your point that £12 is a worst case impact on moving £10,000 illustrates how insignificant this all is. Nobody sensible is going to move their money more than a few times a year - if that - to chase rates. So BACS delay costs them £24-£36 on their £10,000. Big wow! That's 0.24% to 0.36% - 0.12% for each transfer - on the worst possible scenario.


Regarding the fact that banks can do something about it, they are doing! But the lack of urgency is surely down to the fact that personal customers don't want to pay anything for anything. If the original proposition for the banks had been: "introduce faster payments because customers will happily pay £5 a throw for it" then I'm sure it would have been in 15 years ago. But that wasn't what anyone was suggesting customers would accept.

malc_b

I seem to remember there was a TV program on this. Sweden or somewhere has transfers that take just hours. The technology exists and in that country the government made it law that the banks do it. It was talked about being a law in the UK but typically self-regulation was continued with the banks allowed to put their house in order and we are still waiting! Plus, we don't yet know if there will be a fee. Seems to me that had we followed Sweden or where every it was we would have had faster transfers years ago (this was an old TV program).

MarkyMarkD

I don't know whether Swedish "faster payments" are free or not.

We could definitely have had faster payments a long time ago, if there was any significant desire to have it, or if people had been happy to pay for it.

I don't honestly believe there is both. People who want it just want it to be free.

Meltdown_2

malc_b,
if you haven't already seen it, this
http://www.oft.gov.uk/shared_oft/reports/financial_products/oft789b.pdf
might be of interest - particularly chapters 5, 7 and para 8.23.

MarkyMarkD

That's a helpful link. So Swedish banks don't charge per transaction for electronic faster payments, but they do typically charge fixed fees for running current accounts.

Whereas in Britain people expect faster payments to be free and to pay nothing as a fixed fee either. :rolleyes:

Meltdown_2

Nothing is of course really free, MarkyMarkD, as you no doubt know.
It's just that the banks in the UK get their money via a more indirect route.

It was interesting to note the bits, though, where the oft/report suggested that UK banks could compete in terms of cut-off times as well as any charges for the improved service. I wonder whether that will happen ...