I went to pay my credit card bill today by CHAPS for reasons I don't deem it necessary to go into. I was very surprised when I got a phone call from my bank saying that the sort code of the credit card company would not accept CHAPS payments.
Has anyone come across this and can someone tell me why some sort codes are barred to CHAPS payments? Does it cost them money to accept payment by CHAPS?
In message , Alasdair Baxter writes
CHAPS has some degree of manual processing at each end, hence the fee that is usually charged. If the recipient sorting code is an actual 'branchj' with people thats fine. But with a Credit Card company the sorting code is just a convenience and there isnt anybody to manually apply the dosh to the credit card account.
Answered in uk.legal.moderated where the question was originally posted.
Have a look at:-
Yes, it costs firms £100,000 to be members of the CHAPS system.
Similarly, the firms have to deposit funds with the BoE to facilitate payment/receipt and further deposit security with BoE to underwrite the potential short term liabilities that may, and do, arise.
CC cos, being recipient only, have nothing to gain by being member firms and hence choose not to pay the fees and security costs involved.
For an in-depth understanding of CHAPS refer to most modern UK financial system text books!
MC
And I would also hazard that it is probably in their interest (pardon the pun) to not accept CHAPS payments, after all what sort of people pay their credit card bills by CHAPS; those that have forgotten and do so to avoid being clobbered for late payment charges and those that have big interest bearing balances that are racking up interest in the extra clearing/processing days of cheque or BACS payments at a rate higher than the CHAPS fee cost them.
I bet that they do have the facility to accept CHAPS payments when it suits them though, for example if they are concerned about the chance of losing the debt, just something they don't tend to be too keen encourage.
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