The UK Payments Council has announced that in cooperation with many of the leading financial institutions a new “retry” system, allowing consumers a second chance to avoid bounced payments and the high fees that are generally applied when they bounce.
From Sept. 1, when a customer’s standing order, direct debit or future-dated payment bounces because of insufficient funds in the account, the payment will be processed again later in the day (at 2 p.m.), giving the consumer an opportunity to move funds to cover the insufficiency. The system itself is not new with seven financial institutions employing the functionally since last summer but the most recent deal has seen a total of 29 financial institutions capable of offering customers this service.
Today, financial institutions in the UK generally process incoming and outgoing payments in the morning before allowing the customer to readily check their account. By utilizing this second chance service, customers will be notified if a payment fails and then be able to quickly move money around to ensure that by the afternoon, the same payment would not bounce back.
“The introduction of the retry process helps to give customers more control when it comes to meeting their financial commitments,” said Jemma Smith, director, communications and education, Payments Council in an article on Finextra. “This new process acts like a safety net for those situations when you might not have enough money in your account, giving you a chance to put things right by paying in cleared funds.”
With the UK retail banking segment being actively encouraged to innovate and become more customer friendly, services like this second chance opportunity are a great way to increase customer satisfaction and subsequently customer loyalty and profitability.
Overview by Tristan Hugo-Webb, Associate Director, International Advisory Services
To read the full story, go to Finextra.