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Thread: Guide to Banking - payment clearance cycles etc

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    Default Guide to Banking - payment clearance cycles etc

    Written by Natweststaffmember, posted at his request. This is a draft so if you have any questions please feel free to ask.


    Working Days

    This is what makes the Bank work and will explain a lot of things as I go through them. The basics is that it is Monday to Friday excluding Saturday and Sunday. The Banks usually state that the funds needs to be in the account the working day prior to the item going out, ie Friday for Monday, Monday for Tuesday, etc,etc,.


    Direct Debits
    This is an agreement between yourself and a company to pay a bill directly from your account usually at an agreed time. You have the right to cancel the Direct Debit. Some banks will allow you to reinstate the Direct Debit if it is done
    within a short period of time. Any mistakes or errors by the bank or the company themselves is covered by the Direct
    Debit Guarantee Scheme.(part 2).*


    Standing Orders
    This is a fixed amount payable to a company or individual in which you yourself determine the amount. It can be set up
    for a minimum 2 payments and there is no maximum. The Standing Order can be amended at any time but banks may
    have minimum timescale prior to the payment being sent for it to be amended or cancelled.


    Direct Debit Guarantee Scheme
    The Direct Debit Guarantee Scheme overs all banks and Building societies. It states that : (1) If there is a change to the
    amount to be paid or the payment date, the person receiving the amount(the originator) must notify the customer in
    advance. (2) if the originator or the bank/building society makes an error, the customer is guaranteed a full and
    immediate refund of the amount paid. (3) Customers can cancel the Direct Debit at any time by writing to the bank or
    building society.


    Debit Card transactions
    This is where you pay a provider either online/over the phone or at a shop for goods. The transaction once it has been
    authorised via CHIP and PIN machine, is valid for up to 6 months, however, usually it is debited from the account
    within 2 to 3 working days and the funds set aside by the bank for the transaction. With regards to refunds onto cards, the retailer has up to 21 days to put the transaction through even if there is a gap of only minutes between the debit and refund.

    There is cases of what is called 'ghost' transactions. That means that the company has appeared to debit the account and yet the money reappears in your account. This means that the transaction has not been done properly and usually will mean it being debited a few days later.

    There is cases of transactions being authorised but the individual being told it has been declined. There is a third party in this transaction which is the merchant. Transactions authorised usually will drop off the system within 3 to 5 working days as that is the time scale they have to process the authorisation code even though it is valid for 6 months.

    There are cases in which if the goods are damaged, do not arrive or you do not get the service you paid for, you will able to ask the bank for a chargeback. This applies to Visa Debit cards specifically. Here is a link to the bbc article
    BBC NEWS | Programmes | Working Lunch | Visa debit card refunds


    The clearance of Cheques.
    When you receive a cheque it needs to be paid into an account so that the cheque clears and the money is effectively transferred from the sender to you. This is called the Clearing Cycle. The basic clearing cycle is only 3 days, however
    banks and building societies work under the rules called 2-4-6 or for some savings accounts 2-6-6. I will try and explain this and what is happening on the ground.

    DAY ONE: Cheque paid into the account and processed by large centralised Voucher Processing Centres) This is known as Transaction Day.

    DAY THREE: The cheque is debiting the drawer's account and may show up as cleared in the bank. The cheque is cleared for interest purpose. This is known as Transaction Day plus 2.

    DAY FIVE: You can withdraw the money. This is known as Transaction Day plus 4.

    DAY SEVEN: At the close of business on this day the cheque cannot be returned. This is known as Transaction Day plus 6.

    So the reality: Day One=Monday, Day Three=Wednesday, Day Five= Friday and Day Seven=close of business Tuesday the following week.

    Source: http://www.apacs.org.uk/payment_opti...s2007FINAL.pdf


    Faster Payments Service
    Since the 27th May 2008 a new service has been provided called Faster Payments which are transfers bank to bank which take approximately 2 hours. The founding members are: Abbey, Alliance and Leicester, Barclays, Citi,
    Co-Operative Bank, Clydesdale and Yourkshire Banks, HboS, HSBC, LloydsTSB, Nationwide Building Society, Northern Bank, Northern Rock, NatWest, Royal Bank Of Scotland and Ulster Bank.

    The current situation is that payments via telephone banking and online banking will go within 2 hours as a faster payment. It is anticipated that, at the time of writing this, that Standing Orders and Credit Card payments will be fully
    operational by the end of 2008, if not earlier.

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    Default Re: Guide to Banking - payment clearance cycles etc

    Announcement from Alliance & leicester.

    We are improving our service to you by taking part in a payment scheme being introduced across the banking industry called Faster Payments. This means that when you move money electronically either by internet or telephone banking it will usually be available for you to use on the same day*.

    What this means to you

    Currently, if you move money between accounts or make bill payments, it will normally be available 3 to 4 working days later. Faster Payments means your money will usually be ready to use on the same day.

    We are now able to receive money by Faster Payments and have started to send money by the scheme. We plan to have the Faster Payments scheme fully implemented later this year. Certain conditions will apply**.

    You can easily make transfers or bill payments 24 hours a day, 7 days a week using our internet or telephone banking services.

    Internet banking

    Our internet banking service is safe and allows you to access your money when it suits you - visit alliance-leicester.co.uk, click on 'Log in' underneath 'Internet banking' and follow the simple on screen instructions.

    Please note that if you set up a payment or transfer to be sent that day, it will not show in 'Pending payments' underneath the 'Manage money' section of internet banking. You will also not be able to amend or cancel your request. However, when you request to move money on a future date this will show in 'Pending payments' and you will be able to amend or cancel your request up to the day before the payment or transfer is due.

    Telephone banking

    Our telephone banking service allows you to move money without having to speak to an advisor. To use this service please call the telephone number which can be found on our website within the 'Contact us' section under 'Customer services'.

    The Faster Payments scheme will allow you to keep your money in your account for longer.

    *Other types of payments such as direct debits and the time it takes for a cheque to be available will not change. Payments to Alliance & Leicester Credit Card will not be sent using the Faster Payments scheme. This means that the time it takes for these to go through will also not change.
    **If the bank (or account) you have requested the money to or from is not part of the Faster Payments scheme, your money will continue to be moved using the BACS (Bankers' Automated Clearing Services) scheme and will be available for you to use 3 to 4 working days later. The Faster Payment scheme limit is £10,000 for immediate transfers and one off transfers that are set for a future date. The limit for standing orders is £100,000. Standing orders move money to another account on a regular basis. To start with we will have lower limits. These limits may change at any time without us telling you first. Other banks' limits may be different. Additional security checks may be carried out to protect you from fraud. If this happens your money may not be available on the same day.
    Borrow money from a pessimist -- they don't expect it back.

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    Default Re: Guide to Banking - payment clearance cycles etc

    Halifax also do this and when you telephone to check yuor account the automated system informs you of this.Halifax have been doing it for a while.

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