Cheque/payment bouncing "rules"

Nah, the intelligent thing to do is to bounce things in such an order as to make sure there is enough left from which to pay the bounce fee.

Seriously, though, I'd guess they just process them on a FCFS basis, and it's conceivable that all DDs are processed before all cheques. It may well be that on some days they'll do them the other way round, just depends on which tape they play first.

More seriously, if an intelligent scheme were to be used, it ought to minimise the number of bounces. Say you had £202 in the account, and a cheque for £150 plus 10 cheques for £10 were due to be processed. Isn't it better to pay all the £10 cheques and bounce just the £150, than to bounce 5 of the small cheques, incurring a fee for each?

Which seems backwards. The cheque will have been written at least a couple of days before the bank comes to pay on it. Therefore, the cheque (being the earlier transaction) should be processed before the DD.

But the DD will have been authorised by the drawer before the cheque was written and it is likely that the originator 'put' the DD into the BACS system before the cheque was written as well.

As a general principle a Bank can bounce whatever it wants in any order but the drawer can ask them to bounce some and pay others.

Another principle is that it potentially more damaging to the drawer for it to bounce a small cheque than to bounce a big one on the basis that you must be pretty skint if the bank cant trust you for a tenner, but to bounce one for £5k isnt so bad!

In message , meltey chamon! wrote

If you had a decent bank account you would not have the a cheque bounced for a £3 lack of funds and you would have a 'free' overdraft for the first £100.

If you are unlucky, the bank will just pay the two amounts and then charge you for operating an overdraft without their agreement. You may be charged, say £50, for the letter they write and for _all_ the transactions through your account for that month.

So re-run the scenario with the change that instead of the account starting £102 in credit, let it be £102 short of the free overdraft limit.

Indeed. But some account holders may be too high a credit risk to be allowed access to an non-agreed overdraft. Although it may seem churlish to act in a "jobsworth" manner for the sake of only a few quid, there will always be a point at which there do have to be hard limits.

Precisely why I hate DD's, why not just send the RSPCA one cheque a year for £60 or better still £90 because you wont have been stung by the bank's exorbitant fees.

Kevin

Why not just make sure you've always got enough dosh in the account, and never get stung for any fees?

Provided no bouncing takes place, DDs and cheques cost you the same, namely nothing. But it's cheaper for RSPCA to receive their donations by DD than as cheques.

The problems with DD's are that all the benifits are for the receipient and none for the sender. Why bother with ensuring that there is always money in the account to avoid penalty fees, just write cheques. They are more expensive for the receipient but that is their problem. I get paid by cheque for the work that I do. I would love to be paid by DD but I don't think that it is going to happen.

Kevin

The sender benefits too, from a reduced admin load. The sender also benefits indirectly from the recipient's benefit. If you want to support a charity, it's in your interest to help keep its costs down.

Eh? Bounced DDs and bounced cheques both involve penalty fees. The best way to avoid penalty fees is to avoid bouncing altogether.

No, indirectly it's yours as well.

Well, that's fine for you because you presumably don't have hundreds of thousands of cheques coming in each week.

In message , snipped-for-privacy@mwfree.net writes

No its isnt. The cost will be passed on to you.

It would if you could convince your bank that you were a good enough risk and you could supply them the data in the right format for BACS.

Eh? Why send a cheque that you know it is going to bounce.

Personally the extra cost to me of dealing in cheques far outweighs the inconvenience of DD's, DD's are a con.

Kevin

It's reduced admin for the sender because he doesn't need to write a cheque every time. He does, of course, have to be aware of what is going to come out of the account when, but that is also the case with cheques.

Sorry, you've lost me there. Where did I suggest this?

This sentence doesn't make sense. Perhaps you'd care to re-write it.

True

On a practical level though, given that DD Originator status is a limitless liability product, a company would, generally speaking, need to have at least a 5-10 Million pound turnover for a bank to even look at doing this!!

MC

In message , " snipped-for-privacy@talktalk.net" writes

No it isnt. An originator has (if you like) an 'origination' limit, just like an overdraft but assessed slightly differently.

No. An 'origination limit' limit would be based on the banks overall risk assesment of which turnover is only a part.