UK’s Faster Payments Service speeds-up online payment services

By Ed | November 13th, 2009 | Category: Banking & Finance | No Comments »

Cash or credit? Online payments news Over on PaymentsViews.com, Glenbrook‘s Carol Coye Benson took a look at the UK’s Faster Payments Service.

Carol spoke with David McFarlane, Company Manager of CHAPS Clearing Company about FP – and said she was surprised by much of what he said – FP is not what you thought!

Her article comes at a good time to ask BuildaSkill readers if they’ve noticed a huge improvement in PayPal UK’s time for withdrawing to bank? I certainly have, and they seem to be living up to that new “3-5 working days” statement on the withdraw funds screen.

Two of Carol’s paragraphs (it’s a lengthy article) struck a cord with me, emphasis is mine -

Getting here required massive development efforts on the part of banks and the switch (which is run by VocaLink, the same entity that processes for Bacs and Link, the UK ATM network), and corresponding efforts in rules-setting, branding (more on that later) and risk management. Frankly, I was expecting to hear that the demand came from billers or merchants. But it sounds like the real driver was a regulatory push, responding to consumer advocacy organizations. The impetus was a Treasury-sponsored report in 2000, followed by a report in 2003 by the Office of Fair Trading (the competition authority) saying, essentially, that interbank clearing of electronic items, then averaging around 3 days, was not fast enough – and pointing fingers at banks as dragging their feet in making improvements.

The decision to make FP a separate payment service – with optional participation by banks (rather than enhancing the core BACs service) was a way of dealing with long-standing criticisms of U.K. payments systems as “moving at the pace of the slowest bank”. (Sound familiar?) Currently, 13 banks are participating in FP, including most of the big ones and a scattering of smaller ones. Some both send and receive; others receive only at this time. Over 90% of transaction accounts are now covered on a receive basis. (There are around 80 financial institutions operating at various levels on an indirect agency basis through the settlement banks).

The emboldened bit of that first paragraph absolutely underlines the falsehoods that PayPal have traditionally spouted about why it used to take 10 days to withdraw to a UK bank – here the government watchdogs are stating the interbank period was too slow at only 3-days, never mind PayPal’s 10-days. Now that PayPal is registered as a bank in Luxembourg, they no longer have that excuse and must adhere to new EC regulations, which are overlaid with new UK regulations drawn from the EC dictates (see quote from MoneyBookers below).

A recent email from online payments service MoneyBookers, informed me they have updated their terms of use and user agreement (note this is for the global-use UK-headquartered MoneyBookers’ accounts, not the US-based “help eBay avoid Sherman Act lawsuit” accounts, available only to eBay.com users.

Changes to our Terms of Use have become necessary because of the UK Payment Services Regulations 2009, which came into force on 1st November 2009, giving effect to the EU Payment Services Directive (Directive 2007/64/EC).

The aim of this new legislation is to strengthen consumer rights and to provide a harmonised framework for payment services. The changes will help to improve the quality and reliability of payment services and to ensure that consumers are better informed about payment products. Moneybookers welcomes these developments and is committed to making its payment services even more efficient, transparent and consumer friendly.

MoneyBookers, like all non-PayPal services have always historically sent money to bank faster than PayPal, and although the new terms don’t state an improved withdrawal time (beyond the allusion to more efficiency), I’m anticipating they’ll try to remain faster than eBay’s payment service when doing so.

Gaz

Original story (top 2 paras) : News Agencies
More Information : BuildaSkill’s Banking & Payments discussion forums

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