Faster Payments from May 27 - confirmation from APACS

ps646566

MarkyMarkD wrote: »

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.

If the deal is just above the CHAPS break-even then the £20 is going to eat away most of the interest saved so you're not really well off from the deal. What we are hoping for is a quick method which is automated so it doesn't cost the banks much and therefore they can offer it preferably free or for a nominal amount -- I would hope £1 rather than £5 if they must charge. One reason the banks might prefer not to charge is that they will get a lot of complaints if people are charged and then the transfer time turns out to be longer than standard.

As I said it's just not about the interest whilst the money is in transit, it's also the convenience and greater certainty, which might help to clinch better rates of limited offer duration.

There may be people who keep moving money in order to chase minimal differences in rates. But I think most of us are more circumspect. However, whilst the banks and others continue the practice of offering high rates in order to suck in money, and then dropping them substantially at a later date, hoping to rely on inertia, then I think we have to chase rates to a significant extent.

MarkyMarkD

I agree that every prudent MSE will chase rates, but to a logical extent. Most introductory rates last for at least 6 months (often a year, often longer). Moving money more frequently than this - say because a competitor beats a rate by 0.05% - is simply silly.

So for anyone to lose a material amount of money due to BACS delay doesn't make sense.

ps646566

MarkyMarkD wrote: »

I agree that every prudent MSE will chase rates, but to a logical extent. Most introductory rates last for at least 6 months (often a year, often longer). Moving money more frequently than this - say because a competitor beats a rate by 0.05% - is simply silly.

So for anyone to lose a material amount of money due to BACS delay doesn't make sense.

In the context of what you describe, yes, although some people might argue that £20-£30 is in fact a material amount.

But if you are trying to move from say a 5.5% gross account to a limited offer of say 6.25% and you miss the boat because of the time it takes to move the money, then it is about 0.6% which on £10,000 amounts to £60 in a year. On £25,000 it would be £150. That is a material amount, and the vagaries of BACS can cause that -- it's happened to me. Okay you can than try again to transfer to an a alternative account paying a bit less, but at a time when interest rates are volatile and falling it's all uncertain and aggravating, and there a loss involved.

MarkyMarkD

£20-30 isn't a material amount, because people will only lose that amount if they have a very substantial amount in savings. It's a proportionate thing.

I understand your point about missing limited offer accounts. But I suppose most people tend to stick to instant access (and not normally limited offer) accounts, or fixed accounts. In between times on fixed accounts, it makes sense to keep the money liquid.

Incidentally, I always keep money I am going to (even potentially) need urgently in a savings account with my current account provider, precisely because I can transfer funds to my current account instantly to move it on elsewhere. That's a commonsense approach, surely - and if your current account provider doesn't offer anything near reasonable on savings accounts, maybe they aren't the one to use?

jonesMUFCforever

I have a little information about what faster payments will mean to my bank - cash paid in over the counter (or cheques) to a Head office collection account such as credit cards, catalogues and finance companies will still take 3 days using BACS .
Same day payments will include standing orders and internet and telephone banking payments - the moral is here - register NOW for both if your bank offers this because if you can't use one the other method will be available.

If you walk into your bank and want an immediate transfer to another bank then you will have to pay, just like now, for a CHAPS payment.

Most banks will operate a limit for transactions per day as a security measure .

MarkyMarkD

Faster payments was never intended to do anything to speed up over-the-counter transactions. The sort of transaction you described are still very paper-based and labour-intensive.

But as you say, electronic payments (initiated by phone or online) will be faster.

LeifGR

I have lived in both Sweden and the UK so I can compare. Sweden introduced instant payments between banks in the late 1970s. Having a current account is typically free, unless you hold a very old account type. I still have a free account with Skandiabanken, which allows me to pay anyone in Sweden instantly for free -- and I get a very competitive (by Swedish standards) interest when I am in credit.

What Swedish banks do charge for are things like credit cards, overdrafts, share trading accounts, etc.

natweststaffmember

NatWest/RBS have been using faster payments system for the last few weeks. They are building up the system internally. Most people have not noticed the change as it has affected payments of £5 or less. As at 3rd April it will be payments of £300, HOWEVER this is just for payments going within the RBS Group, so NatWest/RBS/Ulster Bank.
From today, any Standing Orders wanting to be cancelled on the day it goes out will no longer have the ability to do so as they are irrevocable.

Mikeyorks

There's a vague sort of update here :

http://www.computing.co.uk/computing/analysis/2213960/faster-payments-plan-gets-slow-3942915

I particularly like :

Not all customers will be able to send and receive payments under the timescales that have been talked about from day one,” she said.
The initial stage of implementation will focus on addressing operational issues, as well as staff training and customer response to the system, according to Apacs.

....... it sounds awfully adjacent to Heathrow T5? Is it old fashioned to think the staff should be trained before Day 1. ... as 'during' sounds a bit risky? If the conveyor misbehaves 'cos the staff don't know how to operate it ..... will they ship all our SOs abroad to be sorted!

ShelfStacker_3

The initial stage of implementation is probably located a month or two before it becomes available to consumers. Doesn't smack of T5 to me.