February 28, 2008

BACS: The "C" is for "Crap"...

Here are two scenarios:

  1. I use my computer to access my bank's computer-based Online Banking system. I log into their computer and the computer presents the interface. I have already passed the authentication process, so the computer should be happy that I am who I say I am. I tell the bank's computer to send some money to another computer to settle a bill. It does so, but it takes three fucking days.
  2. I physically go to my bank (or the nearest cash point) and physically remove some physical money. I then get in the car and physically drive (let's approximate to a maximum of 8 hours, which it about how long it would take to travel the roughly 600 miles from the top of Scotland to the bottom of England at 70 mph in a straight line) to the physical headquarters of the company that issued the bill. I physically hand them the physical money to settle the bill.

How the hell can I get physical money across the country faster than the banks can send virtual money in the form of electricity!?

If we assume the electrical signal travels at the speed of light, then if it takes 3 days for the money to arrive, that means the signal has had to travel about 2 million times around the equator (I love Google) before it eventually reaches its destination...

I've already established my identity with my bank's computer by passing the log in screen, I have the money available in my account, I'm assuming it's just computers that are handling the transaction, so what takes them so long?!

It's ridiculous.

UPDATE: Just found this on Wikipedia:

The BACS system, and in particular the time taken for money to move between accounts, has been widely criticised by consumer groups as inefficient and archaic, especially as it is the system used for money transfers made by telephone or internet banking. This compares unfavourably with other developed countries, particularly in Scandinavia, where the "Elle" system ("Early Late / Late Early") allows money transferred before lunchtime to reach a payee's account on the same working day, or money transferred after lunchtime to reach the payee's account the following morning.


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  1. Possibly the computer has to check everything several million times?
    Either that or a human operator checks it.
    Ha… yeah…

    28 Feb 2008, 15:16

  2. I’ve just added a relevant quotation from Wikipedia.

    28 Feb 2008, 15:22

  3. Mathew Mannion

    I must admit I do like when it’s the same bank (e.g. HSBC) when I can seamlessly transfer £5000 between accounts (which I did yesterday, followed by a phonecall saying it’s “suspicious”, pfft) and get money from my housemates for rent… It’d be great if everyone did that, sigh :) If I remember my History of Computing correctly, in the old days they used to use a system where they don’t actually trade the money between banks straight away at all, they just trade the balance at the end of a period of time (which, at least in those days, used to be the end of the day). I guess it’s a lot easier to transfer the difference in one lump sum at the end of the day than it is to do it for every transaction.

    Still, the Scandinavians do seem to do a lot of things better. It’s a similar situation to the industrial revolution, really – when Germany’s industrial revolution happened 50 years later than the British ones (off the top of my head; I’m shit at history) they didn’t have to go through the learning curve that the UK did – so the Germans had a lot of factories built with the latest working processes (and French money from the Franco-Prussian war) whilst Britain was stuck with old, archaic machinery. It does seem that similar things are happening today where we are paying some prices for being at the cutting edge of computing decades ago.

    28 Feb 2008, 16:10

  4. If you took the money to the headquarters they probably wouldn’t accept it because they won’t have the facilities to deal with cash.

    28 Feb 2008, 18:19

  5. If you took the money to the headquarters they probably wouldn’t accept it because they won’t have the facilities to deal with cash.

    That is the fatal flaw, but it doesn’t change the fact that the money would have arrived faster…

    28 Feb 2008, 20:34

  6. Well you could pay for a CHAPS transfer (£20) and have the money sent the same day but of course thats not ideal unless you are dealing with large amounts really.

    But according to this page orders will at some point this year get processed the same day.

    09 Mar 2008, 13:21

  7. Yes, according to the Wikipedia article where I got the above quotation:

    In March 2005, the Office of Fair Trading proposed that such a system [Elle] be introduced in the UK. In December of that year, plans were announced for its introduction in the period from the end of 2006 to 2008, with estimates of the time taken for such payments being between 15 minutes and 3 hours depending on the banks/building societies at each end of the transaction.

    09 Mar 2008, 14:07

  8. Robert O'Toole

    This was recently explained to me by the manager of Abbey bank in Coventry. BACS and CHAPS use the old clearning system designed for cheques. Hence despite paying £20 to transfer money between Abbey and Coventry Building Society by CHAPS, it still took two days to go through.

    I think that she was at least a little embarassed by the fact that it takes so long for a customer to transfer money, in comparison to the ease with which criminals in Sri Lanka were able to withdraw £8000 from our account.

    I’ve learned a lot about our banking system in the last few weeks. We should all be very concerned, it is struggling to cope. I’ll write an article on this soon, although the economy may well have crashed by the time I do so.

    For now, simple advice: be very wary of using a bank that has it’s base in Madrid, it’s call centre in India, and it’s criminals in Sri Lanka.

    19 Mar 2008, 08:44

  9. Robert O'Toole

    I think that she was at least a little embarassed

    I’m referring to the Manager of Abby in Coventry.

    19 Mar 2008, 09:04

  10. I’m sure I read somewhere that it’s partially profit driven. The banks will debit the money almost immediately but only credit the new account 3 days later. This allows them to keep the interest you could have earned on the money over 3 days and summed across all accounts that probably adds up to a fair amount of profit.

    I guess the banks have no particular interest in either losing a potential source of income or spending money on a faster transfer system since it only benefits customers and not them :-)

    26 Mar 2008, 15:40


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