Tuesday, 27 May 2008

Faster Electronic Payments in the UK ... Possibly

An article on the BBC website Faster Bank Transfers Underway lets us know of the start-up today of a worthwhile service that allows people to make same-day transfers from their own bank account to someone else's bank account. The existing electronic payment service (called BACS) saw the money disappear from the sending account and then show up three days later at the recipient's account.

The drawback is that not all the banks are starting up at the same time (see this previous BBC article How Fast is Faster Payment Plan?) and some are phasing in the amount that can be transferred, starting with small amounts now and upping it later to the eventual maximum of £10,000. This is apparently to avoid the "Terminal 5 Effect" (thank you British Airways for enriching our language with a delightful new phrase that denotes big bang cutover disasters). Instead of Terminal 5, we have the equivalent of a gradual shift from driving on the left to driving on the right - motorcycles the first week, trucks and buses the following week, cars the third week and so on. It will likely be mid-2009 before we can count on the new service.

The launch is so low-key that Lloyds TSB, one of the first banks supposedly offering the service today, makes no mention of it on its website, or even in the payments function inside an account.

Nice try APACS (the UK payments association), which has a checker to verify if your sort code is able to receive one-day payments. We' ll rate this 5 out of 10 for now. Why could the existing same-day transfer service called CHAPS not have been made free and expanded to everyone? Does it have to do with another hoary but true axiom of the IT world that describes the difficulty of modifying an operating application, "God could not have created the world in seven days if He had had an installed base"?

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