11 May 2018
Given that 247Moneybox is one of the leading online loans providers in the UK it knows a thing or two about how to send money around. That can be transmitting funds to successful applicants or collecting loan repayments from customers. The former, that of sending money, is the topic that the company wants to explore. Given this, the firm is in the right position to analyse and potentially lift the lid on a system that is not particularly well understood by the general public.
Faster Payments is a payment service which permits almost all UK bank customers (and some building societies) to be able to send and receive payments (in GBP) to and from UK bank accounts in around 2 hours. In most cases it's not 2 hours but more or less instant which is exactly how it should be, in the lender's opinion. However, the firm is keen to stress that you should check with your bank exactly how it works as some banks buffer up instructions depending on if it was made via telephone or internet banking or exercise various cut off times such as 3pm or 5pm.
Yes, there are and choosing which one depends on the type of payment and the amount you wish to send. For example, if you have a high value payment or a payment of high importance then CHAPS might be the method you choose to make an electronic transfer. This is because Faster Payments in theory has a cap of £250,000 however individual banks impose their own caps and limits and for some institutions that can be as low as £10,000. In addition to CHAPS there is also BACS which is also an electronic method of sending money but can take 3 working days. Generally, this would be used for transfers of low importance in terms of speed of receipt.
Generally speaking when someone makes a Faster Payment, it will work like this:
John needs to square his friend for some cinema tickets (they went to see the latest summer blockbuster and were thoroughly underwhelmed). Mary, (the friend), banks with a different bank to John.
John calls his bank on his mobile and goes through security with the agent. He then asks (nicely) if the agent can set up a payment to a new recipient (Mary) to transfer 20 quid (Mary bought the snacks as well).
As well as asking John the amount he would like to send, the agent at John's bank also asks for the sort code and account number of Mary. This is required so that John's bank knows where to wire the money to. The agent goes on to ask John if he would like to include a reference with the payment. This is important as it will help the recipient work out why and whom has sent money to them. This is very important when you are paying bills or something of similar importance. John says he would like to use the reference "cinema" which makes sense. The agent reminds John that any reference will appear on the recipient's bank statement.
Before John's bank will permit the payment to be sent, it will go ahead and check that John's account has enough money in it and that the request to make a payment is genuine. Sometimes, the bank may need to hold the payment to carry out further checks to protect John.
Once John's bank is satisfied that all is in order, it will then go ahead and send the funds through the Faster Payments network. From this stage onwards, John is committed to actually making the payment, i.e. it cannot be recalled, so hopefully John has the correct banking details for Mary!
Faster Payments then gets to work sending the payment instruction to Mary's bank (officially this is known as the "receiving bank") after checking that all the relevant details are included and properly formatted.
Mary's bank receives the instruction from John's bank and searches its systems to validate the account is known to them and is valid. It's important here to note that Mary's bank does not verify the account name and number match. Mary's bank then sends a message back to Faster Payments that it has accepted the payment (or indeed rejected the payment).
Faster Payments will then credit the receiving bank (Mary's bank account) with the money. The Faster Payments will then send a success message to John's bank informing them that the transaction has been made successfully.
Upon receiving this success message John's bank will note the transaction as being complete. John then receives a text message telling him the transfer was made successfully. This notification method can vary bank to bank. Some banks will show this message on the sending screen if you have made the transfer online, or the phone agent will tell you over the phone if the transfer has been a success. However, in all cases, there is always a confirmation message sent between the sending and recipient bank.
Now Mary's bank will swing into action and credit the £20 to her account. Job done and Mary and John are settled up and the best of friends. In theory this should all happen within seconds or at most minutes if both bank accounts are participants in Faster Payments. However, glitches and system downtime can occur so it could take longer. Of course, if Mary's bank is not a participant in Faster Payments the funds can take longer to be credited, perhaps as long as 3 working days.