Payment Systems Flashcards
Outline BACS
Bankers automated clearing system
- clearing & settlement of automated payments in UK
- non- profit membership based industry body owned by 16 leading banks in UK, Europe & US
Outline Faster Payment Service
Introduced to UK in 2008/ UK payments admin started initiative to improve speed of lower value transactions
Used to make of one payments
Banks set transaction limit (£100,000)
Funds transferred in minutes/ received in 2 hours
Payments cannot be recalled / operates in near real time
Outline CHAPS
Clearing House Automated Payment System
British company established 1984
Offers same day transfers / sterling
Customer initiates transfer to payee account at another bank
Real time gross settlement / cleared same day
Usually high value transactions
Irrevocable - prevents potential payments being stopped by sender or returned due to insufficient funds
Outline SWIFT
Society of Worldwide interbank financial telecommunications
- members owned cooperative society/ Belgium law
- swift payment message is an instruction to transfer funds between financial institutions /settlement takes place via payment systems
Users able to develop internal applications that link to SWIFT network via terminals / used to process transactions without re inputting info manually
Messaged formatted by SWIFT are read/ processed by payment systems
Cooperates with ISO to define standards for messages format & content
Outline SEPA
Single European Payments Area programme
Initiative of European payments council brings together European payments industry
Area within Europe where participants make / receive payments in € under same basic conditions
Aims to achieve faster settlement & simplified processing / improve cash flow while reducing costs
Rules establish to existing national Euro credit transfers & direct debit schemes are being replaced by SEPA credit transfers & direct debits
EURO countries = Feb 2014
Non euro countries = oct 2016
SEPA direct debits
- replaced euro dominated schemes in euro countries
- doesn’t effect U.K schemes
- some UK banks offer SEPA direct debit collections from accounts
Outline Paym
Secure payment method of small sums using mobile telephone number
Launched April 2014
Account holders receive funds through this system must register both mobile numbers & current accounts with bank participating in scheme
Outline how cheques are cleared
Payee;
- sends cheque to bank
- banks sends cheque to central clearing / forward to main clearing department of bank
- sent to branch which account is held
- if funds available cheque cleared for payment in by drawers branch
If insufficient funds = cheque returned unpaid
Cheques sent for direct clearance involve payees bank send cheque by post to paying bank, collecting bank telephones paying bank to receive confirmation of payment / fee charged
Outline the cheque clearing system
Nov 2007 introduced timescale changes to give customers increased clarity & certainty with regards to cheques clearing
Current account = 2-4-6
- cheque received by payee bank
- interest received no later than 2 days after
- ability to withdraw money no later than 4 days
- Certainty cheque won’t bounce & money not reclaimed without consent at end of 6 days
Savings Account =2-6-6
System doesn’t operate on weekends or bank hols
