BACS systems failure shows urgent need to modernise UK’s creaking payments infrastructure, says ACI Worldwide
- 31.08.2015 01:00 am
Barry Kislingbury, Lead Solutions Consultant Consumer Banking Europe, ACI Worldwide comments on today’s news of a BACS payments system failure affecting thousands of HSBC customers:
“Today’s payment systems failure which has left thousands of customers across the UK without salaries ahead of a bank holiday weekend underlines yet again the urgent need to modernise the UK’s creaking banking and payments infrastructure.
“The news comes on the same day as Payments UK, the trade association for the payments industry, has released a report outlining a 10 year vision on how to modernise the UK’s payments systems. However, 10 years is a long time and consumers can’t be expected to wait that long to have a degree of certainty over whether their salaries will arrive on time.
“The BACS payments system, which is currently used to process salary payments, takes three days to move funds from sender to the recipient and only operates Monday to Friday. It has worked well for many years, but it is based on concepts and technologies that date back to the 1960s. As it uses a three day cycle, it is difficult for the payer (e.g. an employer) to know for sure that the payment has been made successfully until several days later.
“There is another option and it is available today. The UK has had a very successful Faster Payments scheme since 2008, which facilitates immediate payments, with the beneficiary (e.g. the employee) receiving their funds within seconds, and the payer/employer knowing at the same time that the payment has been made successfully. Moreover, Faster Payments is available 24 hours a day, 7 days a week, 365 days of the year.
“Perhaps it is time for banks and employers to review the payment processes they currently have in place for salaries. Whilst BACS has been a safe and fit for purpose system for many years, attitudes have changed. A recent survey by ACI and YouGov revealed that a large number of consumers now expect electronic payments to be processed within seconds or minutes.
“The idea that the most important payment most people receive, namely their salary, should take so long to reach them seems out of touch with how technology has evolved and improved customer experience elsewhere. Given that the UK already has the necessary payment systems to support real time payments, it should not be a big ask of the banking sector in the UK to have a firm plan to look to retire BACS in favour of Faster Payments, and moving salaries across would seem to be a good first step towards achieving that.”