back to article Online sellers warned on UK cheque clearance changes

Online retailers and eBay sellers are advised to keep abreast of new cheque clearance rules that come into force in the UK on 1 December, or risk a heightened threat of becoming victims of fraud. The new 2-4-6 cheque clearance rules mean that payment by cheque is not guaranteed until the seventh working day after a cheque has …

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Pirate

Wow - they've finally changed the cheque clearance time

After years an years of banging on at the powers that be about how ridiculous it is that a cheque should take so long to process in the current climate of communications technology, they've finally listened and changed the process to make it take.... LONGER?!

ARE YOU FRIGGING KIDDING ME?

Not only have they made it take even longer than the unnecessary amount of time it used to take, they've added a layer of uncertainty as to when the funds are actually transferred.

Are the Axis of Evil Comedy tour right? Have terrorists spiked the water supply with heroin?

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Fraud

It should be added that if the cheque proves to be fraudulent, then the money can be recovered up to 6 months later IIRC.

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Pirate

Its an improvement

I think that the spin on this article is slightly misleading. The point about this initiative is that cheques will be guaranteed to be cleared by day 7. Under the old system there was no guarantee at all; it could (in unusual circumstances) take months for a cheque to fully clear despite it appearing as a credit in the payee's bank account, and the payee was at risk the whole time. This uncertainty about cheque clearance, especially for overseas cheques, was the basis for the overpayment fraud, where a fraudulent buyer would present a cheque larger than the amount of the transaction, with some suitable justification, and request repayment of the balance. Of course, the payment would appear in the payees bank account after 2-3 days under the normal routine, but when the cheque bounced several days (or even weeks) later, the payee would be out of pocket. Now all a payee has to do is wait till day 7, and he or she can be assured that the payment is good.

I guess the IT angle is that this kind of fraud is a variant of phishing!

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Unhappy

yeah yeah yeah

In the name of anti-fraud, anti-terrorism, <insert quest here>. The cynic in me would suggest that the bank(s) just like having the dosh in transit for that bit longer. Especially given that cheques are arguably in declining use nowadays.

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Joke

Hahahaha Cheques...

Who still uses these old fashioned things?

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cleared

I've always thought banks have done this incorrectly. in a sense, I don't mind too much how long it takes to clear, as long as it is made abundantly clear to me that it has cleared, and once cleared, that's the end of it.

if a cheque takes 7 working days to clear then I think that either:

a) it should nto appear on my statement until it is cleared or

b) it should appear labelled as not cleared, and ocne it has cleared, the statement should say so clearly.

is there any major problem with either of the two ideas? it makes no sense to me that your bank account should be updated to reflect a payment that has not yet been approved. if the money is not mine to spend, why is it in my account? I don't want to see it there, and then have to count the days trying to work out if it's safe to post an item or not yet, I want it to be clearly marked as safe so that I can be sure that everything is okay.

dave

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Declining use - not our choice

Only because the big stores are wriggling out of accepting them. Cheques have come to my rescue on occasions when I was waiting for an incoming chq to clear so couldn't use a card at the supermarket.

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Anonymous Coward

Print Customer Phone Numbers on Cheques!

is Andy goodwill a muppet? credit card transactions are already better protected by the consumer credit act which does not include cheques as they are debit not credit. this system is only a clarification of what most banks already use, hence no changes, for the majority, all it does is set a deadline for processing which at present is not universal or clear. However fraud is still easily possible and viable, and at cost to the vendor, the sooner banks print customer phone numbers on cheques the better, this way transactions can be verified directly, the only way to really check is directly with the customer. These changes only really affect bounced cheques & fakes.

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W
Go

Decades late and missing a much bigger scam

Decades late and missing a much bigger scam.

That of online money transfers.

How on earth the banks can justify 2-3 days wait (and lost interest to the customer) for an electronic transfer of money is beyond me. I suspect it might have something to do with that interest being a nice little earner for the banks, cumulatively speaking.

I want that money showing up at the recipient's end within 2-3 hours. I know it's not the same thing, but PayPal can manage instant transfers, so I expect the same thing from the banks.

Step to it guys...

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Coat

7 days ?!?

One of my big beefs with the UK banks - in India, all local cheques are cleared within *one* working day (outstation cheques take a while longer owing to the fact that not all banks are connected up at a central clearinghouse).

Fine - let cheques take 7 working days. But why does an "on-line transfer" take 3 working days?

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Anonymous Coward

Declining use - the irony

So the cheques came to your rescue when funds were not available because it takes ages for cheques to clear ?

You mean to tell me that you actually send around pieces of paper to initiate a transfer of funds ? How 19th century.

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Anonymous Coward

@David Haworth

It does clearly show on the banks system as uncleared and is shown on your account along with two balances your cleared and uncleared balance, however banks dont like to confuse customers so will only put one balance on paper, or on the ATM. to find your cleared and uncleared balances you will have to queue for 4.8 hours and speak to a human, if they have any in stock.

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Happy

Swingers

Reminds me of the film "Swingers":

Mike: So how long do I wait to call?

Trent: A day.

Mike: Tomorrow.

Sue: Tomorrow, then a day.

Trent: Yeah.

Mike: So two days?

Trent: Yeah, I guess you could call it that, two days.

Sue: Definitely, two days is like industry standard.

Trent: You know I used to wait two days to call anybody, but now it's like everyone in town waits two days. So I think three days is kind of money. What do you think?

Sue: Yeah, but two's enough not to look anxious.

Trent: But I think three days is kind of money. You know because you...

Mike: Yeah, but you know what, maybe I'll wait 3 weeks. How's that? And tell her I was cleaning out my wallet and I just happened to run into her number.

Charles: Then ask her where you met her.

Mike: Yeah, I'll ask her where I met her. I don't remember. What does she look like? And then I'll asked if we fucked. Is that... would that be... T, would that be the money?

Trent: You know what. Ha ha ha Mike, laugh all you want but if you call too soon you might scare off a nice baby who's ready to party.

Mike: Well how long are you guys gonna wait to call your babies?

Trent, Sue: Six days.

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Pffft

Yet another excuse by the banks to force people to use plastic for transactions!

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Happy

@ Mike Peachy

QUOTE - After years an years of banging on at the powers that be about how ridiculous it is that a cheque should take so long to process in the current climate of communications technology, they've finally listened and changed the process to make it take.... LONGER?! /Quote

There are many dozens of different banks and building societies, but there are only 4 (I believe) clearing banks. ALL cheques are sent through a clearing bank and this is why it was always been at least 7 days to clear a cheque (less if you actually bank with a clearing bank). Typically they tell you it's 5 days, but they mean 5 working days from midnight the day you deposit the cheque. So deposit a cheque on Monday, and it won't clear properly until the following Monday anyway.

So there is no real change in the time taken to clear a cheque, the real change is in the guarantee that the money is cleared fully.

So it is progress, albeit a little on the late side, the use of cheques is in severe decline... I've been using the same cheque book for 3yrs and still have some left. Most of the cheques have been used to pay for pizza when I've been short of cash and too drunk to get to a cash point. :)

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Too slow

I can buy a computer on line in seconds, which century are the banks living in tat a cheque takes so long to clear?

I can take cash out in France, from a German account without charge and see that it's gone from my account immediately.

I can book a train ticket in a few seconds. I'm not told well you've got a sort of ticket, errrr, ummmm, we'll only know if it's valid in seven days time.

Someone needs to give the banks a kick up the bakside!

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Coat

Payment in 7 days to your account

and its really strange that the money goes from the other account on day 1 isnt it... ah well 'the golden days of free banking' </sarcasm>

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Another way to delay cheques...

I was told that the odd-looking numbers at the bottom of a cheque were printed with a 'magnetic ink' containing iron fragments. This was to make them machine-readable for faster processing.

So you demagnetise the cheques and they would have to be processed manually and double the clearing time...

I guess this is redundant information nowadays but can anyone confirm it?

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Silver badge

@Who still uses these old fashioned things?

I do. When a bank wants to charge me 3% of a sum being transferred with no upper limit then a cheque which doesn't cost me anything makes sense.

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Pirate

@ Gavn Taylr

Mis-spellings aside - there's still absolutely no reason why the process cannot be shortened. Submit / Scan / Transmit / Auth / Confirm. There's about as much reason for delaying the process 4 days as there would be having to request ATM cash 4 days in advance just because you're in a different country.

Excuse the rather random comparison, but I can't come up with anything better in 30 seconds.

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Boffin

Re: 7 days

"One of my big beefs with the UK banks - in India, all local cheques are cleared within *one* working day"

I live in Mexico. Any cheque, from any bank, to *any* other bank in the entire country is credited within one working day too. Actually, new regulations made it that other-bank cheques will be credited after 12pm, so now the process is relatively slower than before. It used to be 9am or later. ;)

Electronic transfers come in two variants: TEF (spanish for Electronic Transfer Fund EFT) which is next-day, much like cheques; and SPEI which is 1-2 *hours* same-day. Of course, SPEI has a cost, TEF is (usually) free of charge.

As for cheque clearance, its easy: cheques not yet cleared appear as "SBC" (salvo buen cobro / on good payment), cleared ones add up to your actual balance. I was amazed when my dad said that in the US checks usually take 4+ days to clear. Eek!!

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7 days is better but still too slow

Before this I believe the 'safe time' was around 14 days in case of a counterfeit cheque from a UK bank, however as I understand it there was no guarantee and you could still loose all the cash if something came up in the future.

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Its a scam

Check clearing in the US used to take a week or more but a couple of years ago that all changed. The new inter-bank system means the things clear in seconds, they're more like a direct debit. This has two consequences -- the first is that you can't guarantee that a check you write will have any delay whatsoever that you can use to transfer funds to cover it. Checks are cleared immediately, and if you've got insufficient funds then you'll get hit with the fee. The second is that most large retailers will process your check as a direct debit, so if you write a check they'll read it and debit your account on the spot.

British banking used to be way more sophisticated than US banking. If they insist on holding the check for a week (is it a 'week' or 'seven working days'?) (as if a computer gets time off) then they're scamming you for the float. This is serious money for the banks and you should call them on it.

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The truth....

....is, that cheques COULD be cleared in 24 hours or even less, but then the banks would not get to use that money during the 7 day period that "clearing" time gives them. So, with this income source cut off, banks would have to charge more for their services....

Choose: free, slower cheque processing or fast, paid for processing.

And yes, you can choose... you can usually pay for express clearance on a cheque if you really want/need it.

The REAL scandal is that CASH also has a "clearing" period. Deposit 100 quid over the counter at your own branch then marvel at the 3 days or more that it takes to actually hit your account.

Here in NZ:

1. Most stores (afaict) don't accept cheques

2. A cheque from a recognised institution deposited over the counter can optionally be express cleared for no charge (e.g. if you get a refund cheque from your power company)

3. Cash deposited over the counter appears INSTANTLY in your a/c - you can deposit cash over the counter then immediately withdraw it via the cashpoint. If you wanted to.

4. EFT-POS transactions (Electronic Fund Transfer at Point Of Sale - is a card+PIN based payment, but is NOT a credit/debit card) appear INSTANTLY on your account. You can go out shopping, then come home and check to see how much money you actually have left in your A/C via online banking.

Guess what.... "free banking" is yet to become the norm, let alone even widespread, here in NZ, and I'm not sure that all banks even offer it - most accounts have a tarif scheme, either monthly flat rate or per transaction charges.

UK has free, low quality banking.

NZ has paid for, much better quality banking.

Which just goes to show, "Free" always costs _something_.

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Tim

BACS

Forget cheques, the real ripoff is BACS clearance.

Apart from the 3 to 5 days clearance process, what really gets me is for an automated computerised electronic system, in this modern age of digital communications... why do the computers only work 9-5 Monday to Friday? !!

(having been hit with fees thanks to a credit card payment that didn't get through in time thanks to a weekend and bank holiday).

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Mars

All things are possible

Lloyds will clear most checks in one working day, but the accounts have monthly fees, probably in line with NZ.

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