Instant Bank Transfer and Direct Debit payments

tikitak
Member
Member

Hi,

 

I sent money/ completed a transaction using instant bank transfer.

 

I did so without funds in my linked bank account, the primary source. 

 

How is the direct debit initiated? Is it procedure of how direct debits work in general and in this specific case with PayPal to check for the amount is available straight away on the day of the instant bank transfer in my bank account?

 

Furthermore to this will the lack of funds on the day of the instant transfer cause the direct debit to bounce and for me to be charged unpaid item fees?

 

Or is the case that it takes a minimum of 2 days for direct debits for the amount of the instant bank transfer to be taken - (where there must be the correct amount funds in the bank account for the direct debit to be properly taken)

 

Basically, I am checking to see how direct debits work with paypal and perhaps in general  - do they pre check the amount is available in the bank account then take this amount later in say 2 days?

 

Or does the whole process all take place 2 days later, the checking of the amoun and then clearing debiting from the account?

 

I am basically asking what causes the direct debit to bounce;  is it the pre-checking of available funds (if that takes place on the same day of the instant bank transfer) or the lack of funds available two days later when the paypal direct debit is usually taken.

 

Thanks in advance - if this is too long winded and not really that well explained, I will take another shot at this.

 

Cheers.

 

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3 REPLIES 3

tikitak2
New Community Member

On more research this website explains direct debits timeframes - cut off points for direct debit cycle.

 

https://gocardless.com/direct-debit/timings/

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Gemmalu
New Community Member
I think I get the idea of your message,I have the same thing I can pay via bank transfer when I have no money in the bank and it usually takes 2-3 days to come out of your bank,.
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Stuart_D_UK
New Community Member

Very simply, instant bank transfers are Direct Debits. Unlike making a card payment where the linked bank account is checked to see whether you have sufficient funds in your account and if so is authorised Instant Bank Transfers do not. If Paypal approve them, your AVAILABLE BALANCE in your bank account will not be reduced. Therefore, you need to be aware that until the transaction(s) actually appear on your bank statement, this money needs to be reserved by you. EG. If you have £1,000 in available funds, but your Paypal purchase via Instant Bank Transfer (which is a Direct Debit which isn't instant) cost £300, you only have £700 to play with. However, until the Direct Debit reaches your bank your available balance will still be shown as £1,000. Therefore, if you forget you have made the payment and there was a delay in the Direct Debit being processed, say on the Thursday before Good Friday and spend the £1,000 your bank will either pay the direct debit causing you to overdraw or bounce the DD. Whichever you are going to pay some very steep bank charges.

 

This is very bad, for people who have a limited budget or are bad at managing money or genuinely rely on their available balance taking into account Paypal instand bank transfers.

 

Word of warning if your Instant Payment is not paid, Paypal will recover the money via the old method and process the transaction as a normal card payment and try everyday until you have money in your account.

 

This is riddled with problems in my opinion. There will be some very unhappy PayPal customers and I suspect some people will simply receive the goods and either cancel their debit cards or change banks to prevent PayPal recovering their money. 

 

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