CHAPS- Is £20+ a fair charge?

[Guest NATTIE]

Tried to widen my thread on another thread so I hought, I might start a new one.

Does a charge to input data and send it on the same day to either the same bank or another seem fair? According to APACS, by the end of 2007, most banks will be able to offer a tranfer same day or within a few hours,(states online, telephone banking, ect,etc). I ask the question so what does everyone think?

[Ihatebanks]

how long does it take to input data? a few minutes at most, correct me if im wrong sort code account number name for both parties and a reference number

therefore a half descent proccesor could do say 20 per hour on an hourly rate of £9.00 so that 45p for recieving and the same for sending

 

Surely with all the modern technology electronic payments should be processed same day,but then the banks wouldn't make there money would they,

 

Had a conversation last week at my branch (ltsb) i paid in cheques 1 ltsb and 2 others the ltsb was clear there and then the others i have to wait 3 days

A building society cheque and 4 postal orders also 3 days and a bankers draft 3 days forgive me but the last three are as good as cash aren't they and the bloke you sent the bankers draft had to pay £10 extra the banks must be making an absolute fortune during these 3 days

[alanfromderby]

Certainly this would class as a service, and it is reasonable that a profit be made for that service. It also requires some manual intervention. When compaired to services like Western Union, it seem to be reasonably competitive for larger cash amounts.

 

I suppose that as instant transfers become the norm we will see a more competitive market developing and the price will drop.

[Ihatebanks]

yes alan I agree that for large sums of money £20 is reasonable but not if you were sending say £100.00

I used send money by Moneygram to the US which if I remember was quite costly I now use Paypal just as quick no cost to me;)

However the recieptant pays 50c +2.75% being in the US he has a paypal debit card goes to the atm and his money is there

We timed the whole process once (sad I know) 2 mins 42 secs from me sending to him drawing out now thats what I call a quick service:)

[alanfromderby]

I think the point with CHAPS is that it is designed for larger amounts. Certainly paypal is much cheaper, and if the banks are wanting to move into the mass cash transfer market, they will have to reduce fees dramatically.

 

My view is that the CHAPS fee will eventually become a percentage, and will be fixed by market forces.

[pcr1]

I can't say £20 is unfair as it is clearly a service. It is disproportionate for small amounts, but personally for small amounts I use a standard transfer (4 days) which is quick enough and free. I've never been in a situation where small amounts have a sense of urgency that require a CHAPS payment, except in a past job paying to employees mistakes I'd made, but that was the company's money so I was happy to keep paying all day!

[Andy999]

A building society cheque and 4 postal orders also 3 days and a bankers draft 3 days forgive me but the last three are as good as cash aren't they and the bloke you sent the bankers draft had to pay £10 extra the banks must be making an absolute fortune during these 3 days

 

No they aren't. A bankers draft or building society cheque can be returned if it is found to be a forgery. Bankers Drafts are not as secure as people think - in a couple of years spent working on a branch counter, I saw three forged drafts.

[Guest NATTIE]

Guys, thanks for your posts as I do appreciate your points of view and Andy99, i totally agree with your point in relation to Bankers Drafts. What I am saying is that if a CHAPS payment goes from uk bank 1 to uk bank 2 or even within Bank 1 to Bank 1.Is that a good priced service if at the end of next year the banks should have a service that will be free to do exactly the same thing? (see APACS and new technolgies section)

[pcr1]

Here's the APACS link:

APACS - New Technology and Development - Faster Payments in the UK

[Guest NATTIE]

Cheers pcr1

[JonCris]

The whole point I think being alluded to is that the CHAPS are normaly same day transfers so the banks lose the benefit of YOUR money over the normal 3/5 days they usually hang onto it. The normal clearing systems including BACS which is commonly used to transfer wages etc still takes 4 days from the time of instruction by the employer until receipt by the employee. The reason? the banks are playing the money markets using your money & charging you for the priviledge.

This is the reason the banks want to retain the current clearing system. The only reason they are working towards it is because they don't want legislation brought in to force them.

 

Incidently their much claimed future improvements already exist & they could if they chose to clear payments instantly

 

Heres an interesting point. When you purchase your home on the day of completion the money is transfered from your solicitors account to the sellers solicitors account that same day using Chaps & costs £5 which is added to your bill which is a lot less than the £20 most consumers get charged.

 

Word of warning don't rely on PO's or bank drafts as being like cash as has already been stated they are not. Also if you accept such a payment don't take the banks word that it's OK because they claim its cleared. It can return to haunt you some days later when the issuing bank tells your bank it's a forgery & if you have already spent the money??????????????.

 

My advice is that if you receive a bank draft pay it into your account using a branch of the paying bank That way you can release the sold goods a bit sooner & it won't come as a surprise many days later should it bounce

[Giveitback]

I always thought that going from Bank 1 to bank 1 was instant anyway.

 

i had a Chaps payment recently and was told that there's absolutely no way it could possibly be from abroad. I knew of course that it was. For that, the payer and I Both got stung.

 

thing is, you kind of elect to make the payment and put it through faster, so I guess that it'd be hard to claim it as unfair. you have the choice to not pay it when the transaction happens.

 

I tend to just take the time and walk to the other bank I want the money to go into.

[Guest NATTIE]

That is slightly off topic but I'll mention the foreign aspect to CHAPS. I'm aware of payments from abroad that will route through HSBC will add or take off £12 for forwarding on the payment. This £12 is for a CHAPS payment, except I'm sure HSBC charge more for UK to UK CHAPS payment. I always ask customers wanting to do a CHAPS payment as to why they need to do this, because other methods are cheaper(cash,cheque or online payment). That all depennds on amount, what it's for, and whether the payee is happy to do this. One further note:most people using CHAPS are for deposits for house purchase or completion. Now correct me if I'm wrong but solicitors cannot accept cash payments directly to their accounts from private individuals for legal reasons. This does not mean that you cannot give cash to a solicitor's office, simply it cannot be paid in cash directly by you to their bank.

[andyinlondon]

the question is does £20.00 accuratly reflect the actual cost to perfom the service plus a Reasonable profit, or is it a rip off?

 

of course it is a rip off as the actual cost is less than a pound as shown earlier in this thread, so then making £19.00+ profit on it is a rip off.

 

especially when others (comercial customers) are only charged £5.00 for the same service!

[Guest NATTIE]

My understanding of commercial banking is that they use a slighly different system to CHAPS, you may not be aware but according to APACS a quicker service for transferring amounts will be introduced at the end of next year. My gut feeling tells me that it is already in use with commercial customers and therefore is not a CHAPS payment per se, however, saying this it would support what you are saying about it being a rip off. However having said that it is not unlawful or illegal as it is a service.

[andyinlondon]

Hi I was not suggesting it was illegal or unlawfull, just a rip off ...

 

bank transfers chaps bacs etc are very common in europe and are easy and cheap to do.

 

try selling anything on ebay to a german and then try and explain to them that it is to expensive to do a bank transfer for the money!

they will not believe how expensive it is to do here, they want to use bank transfer services rather than paypal as in germany it is the cheaper and far more common option.

 

it is only here that they are such a rip off

[One of Them]

You pay for your banking in europe, you get it for free in britain.

[freebird]

I didn;t get it bloody free, it's cost me over £3000 to date !

[JonCris]

You pay for your banking in europe, you get it for free in britain.

 

Oh pleeeease. If you think that what you doing here!

[bwfs2003]

Article on Fool.co.uk recently:

 

The Cash-Transfer Swindle! - 12/07/2006 - The Motley Fool UK

[bwfs2003]

The most telling paragraph from the above article:

"

The true cost of arranging a same-day CHAPS transfer from one bank to another is estimated to be around £3, thanks to large-user discounts of around 90%. (Transfers between your accounts at the same bank normally don't attract this fee.) Indeed, if the bank sending the payment is itself a member of the CHAPS Clearing Company Limited, then the effective marginal cost is close to zero."

[JonCris]

Yes & lawyers who usually instruct the money transfer from the buyer to the sellers account on the day of completion are only allowed to charge their client the actual cost to them, about a fiver. Anymore & it is a breach of the solicitors rules. If the the seller or buyer are paying more then its a rip off by the lender

[indebtstudent]

I work for Nationwide and the thing with this sort of transfer is... Well in branch you don't really have somebody sat around all day to do this sort of transfer yet people quite reasonably expect to be able to walk in and do it.

 

Also, though the process sounds simple, you would not believe the errors people make. This means the employee has to explain very clearly that the customer is responsible for any errors in the data entered and has to sign to that effect.

[lsba02853]

With the introduction of the Faster Payments system, Chaps will be pretty much redundant.

 

Payment Systems Task Force announces faster payments service

[indebtstudent]

Cool