Operating in the slow lane for money transfers

MONEY TRANSFERS should be efficient, speedy and low cost. Unfortunately, many banks and building societies prefer a different path where the hallmarks are limited sums, built-in delays with higher charges and hence more profits.

A dystopian approach is taken using the Clearing House Automated Payment System, known as Chaps. This is a transfer system to forward money from one account to another and has no upper limit.

The cost varies but is usually around £25 for each such transfer although £30 with Lloyds.

It has a built-in time exclusion, requiring instructions to be made by 15.30 hours for money to be transferred on the same day.

However, rather than keep taking a circadian approach for all customers, bankers could adopt a quicker, cheaper and less time-restricted way.

This route is simply known as ‘faster payments’ and is free. The money can be sent at any time and is received within two hours.

The banks are operating like a cartel by imposing a low limit – even down to £10,000 with Nationwide – for using the speedier alternative. They need to be reminded that the current limit is £250,000 per transaction with faster payments.

Yet the Bank of England reveals that Chaps is used for transferring as little as under £10 and even 13 per cent of £300£1,000 by the same method.

Banks and building societies use the lame subterfuge that their continuing insistence on using Chaps is to safeguard against fraud.

Business life has moved a long way since Thomas Smith, a cloth merchant, opened Britain’s first bank in 1650 but outdated monetary practices are still being played out.

For sizeable transfers, a 24hour delay to allow both sides to check the intended payment is legitimate would create the necessary anti-fraud measure. It is a helpful suggestion from Resolver, an internet consumer adviser.