UK payment retry scheme saves £200m+ in first year

Financial professionals can cut costs by centralising payments

A ‘retry process’ that helps UK bank and building society customers avoid unpaid payment charges saved them at least £200m over the 12 months since its use was extended across the banking industry in September 2014, reports Payments UK.

The organisation, successor to the Payments Council, says that the process automatically operates if a customer’s standing order, direct debit or future-dated payment stays unpaid due to insufficient funds in their account. In this situation the customer’s bank or building society will process the payment again later the same day.

Customers have the opportunity to pay cleared funds into their account, enabling the ‘retried’ payment to be successfully processed second time around, so he/she avoids incurring an unpaid payment fee. In the year to the end of September 2015 around 25m payments, which initially failed, were successfully paid using the retry service.

Participating banks and building societies give customers until at least 2pm to pay cleared funds into their account, with some offering a later cut-off time.

Jonathan Davidson, director of supervision – retail and authorisations at UK regulator the Financial Conduct Authority (FCA), said: “This simple change has had a positive impact on consumers; saving them money and allowing them to manage their finances better. It is a good example of how banks can work together to make a real difference for customers and demonstrate the benefits of collaboration between all parts of the industry.”

Maurice Cleaves, chief executive (CEO) of Payments UK, added: “Customer savings of more than £200m in unpaid payment fees is testament to the success of the retry process being used across the banking industry.

“This process has given customers more control, acting as a useful safety net for those situations where they do not have enough money in their account. This said, if you find yourself regularly taking advantage of the retry process, I would strongly recommend reviewing the timing of your payments so that they leave your account on a more suitable day.”

121 views

Related reading

us-corporates
A European Union (EU) flag flies outside of the headquarters of the European Central Bank (ECB) in Frankfurt, Germany, on Wednesday, Aug. 1, 2012. As Denmark experiments with official interest rates below zero, European Central Bank President Mario Draghi is getting a glimpse of how extreme monetary policy decisions play out in real life. Photographer: Hannelore Foerster/Bloomberg
mmfs-i
euribor