UK Banks Launch ‘Retry System’ to Avoid Bounced Payments

Twenty nine banks in the UK are set to introduce a ‘retry system’ giving customers a second chance to avoid bounced payment charges.

Starting September 1, when customers’ direct debits, standing orders, or future-dated payments bounce due to inadequate funds in their accounts, participating banks or building societies will reprocess the payments later the same day.

Customers will have until at least 2PM the same day to pay cleared funds into their accounts, allowing the ‘retried’ payment to be processed successfully, thus avoiding any charges.

Seven of the largest banks in the UK have already introduced a retry system since last summer following an agreement with the Financial Conduct Authority. The system is now being extended to 29 banks under the Payments Council, which is responsible for ensuring that payment services work in the country.

Penalty charges under the old system have cost customers approximately £200 million per year.

“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 of Payments Council. “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.”