Banking system

Question 1

Cheques

Answer 1

recipient pays into bank
cheque is logged
cheque sent to paying bank
paying bank checks if sufficient cleared funds, amount in word same as amount in figures, it hasnt expired (valid for 6 months)
Clearance takes 3 working days (differs from bank)
Clearance - bank allows us to withdraw money or write a cheque using funds received
Still may be returned unpaid = bounced

Question 2

Bankers draft

Answer 2

bank writes their own cheque
drawn on the bank itself not the clients account
do not bouce

Question 3

BACS

Answer 3

Bank Automated Clearing Services
owned by 16 banks/b.soc in UK and Europe
Direct Credit and Direct Debit
Takes 3 days for money to be credited to the account once instruction for BACS payment has been submitted into BACS system

Question 4

CHAPS

Answer 4

Clearing House Automated Payments System
guaranteed same day payment within the UK (providing it has been submitted into CHAPS system before daily deadline)
Once recd, it is treated as cleared funds by receiving bank
Not instantaneous, can take several hours to arrive once sumbitted
More expensive than BACS

Question 5

Faster Payment Service

Answer 5

Launched in May 2008
Near instantaneous transmission of money in UK
Payments can be made 24 hours, 7 days a week
Max amount is £100k for corporate customers (some banks less) and less for retail customers