Making and receiving payments

Find out about your rights when payments are made to and from your bank account, and how long it should take to make or receive a payment.

One of the main features of a bank account is being able to make and receive payments. But how this is done can vary depending on the way the payment is made.

Transaction details

To help you monitor your account, a bank or building society must make the following details available to you for every payment made into and out of it:

  • the date of the transaction
  • the amount of the transaction
  • who it was to or from (where appropriate)
  • a reference, so you can identify the payment

In most cases this will be done through a passbook (a book issued by a bank or building society to an account holder, recording sums deposited and withdrawn), paper statement, online banking or mobile banking.

Making a payment

The time it takes for a payment from your account to arrive in the receiving account will depend on how you make that payment.

When you make a payment to another bank, your bank must get the money to the receiving bank by the end of the business day after you told it to make the payment.

However, your bank must tell you the maximum time it will take to make a payment.

If a payment does not arrive in the receiving account by the expected time, ask your bank to explain what has gone wrong

Payment to the wrong account

Payments are made in the UK using a sort code and account number. If you provide the wrong sort code or account number when making a payment, your bank must make a reasonable effort to recover the money, but will not be liable for any of your losses.

Contact your bank immediately if you have made a payment in error. Approaches to recovering money may vary between banks and you may be charged.

If your bank can’t recover the money, you can ask it to provide you with details of the person that received the money, so that you can take court action to recover it. This request must be in writing.

If your bank made the mistake and sent money to the wrong account, it must refund the amount of the payment to your account, plus any charges or interest you pay as a result.

Wrong amount paid

If a payment is made from your account for more or less than you asked the bank to send, it must correct the error and refund you for any charges or interest you have paid as a result of its mistake.

In some situations, such as when booking a hotel room or hiring a car, you may be asked to provide your card details without agreeing the amount to be debited.

If the amount eventually charged is more than you could reasonably have expected to pay, and you contact your bank about it within 8 weeks of the amount being taken from your account, the bank must refund the entire amount or tell you its reasons for not doing so.

If the bank does refund you, it will reclaim the money from the company that charged you. You should be aware that the company is then likely to ask you for payment in some other way.

Blocking of funds

Sometimes a merchant (a hotel or a car rental company, for example) may want to block funds on your card for a service that is being offered, or to take a deposit.  

This may not be done unless you are told the specific amount that is being blocked.  

The blocked funds must be released as soon as possible after the final charge is known or, at the latest, immediately after you request the final payment.

Payment refused

Your bank can only refuse to make a payment if:

  • you do not have enough funds available in the account
  • you have broken the agreed terms and conditions, such as needing to provide two signatures for a joint account payment
  • making the payment would be unlawful

If your bank refuses to make a payment (such as by ‘bouncing’ a direct debit), it must generally tell you at the earliest opportunity that it is doing so and, if possible, explain why.

The bank can charge for not making a payment if the refusal is reasonably justified.

Receiving a payment

If money is paid into your account it must be available to you and start earning interest as soon as the bank receives it if it was:

  • made electronically, such as by CHAPS, Bacs or Faster Payments systems
  • cash deposited at the counter of the bank
  • transferred between accounts with the same bank

If money is paid into a cash ISA or a savings account with a notice period, it does not have to be made available immediately, but the bank must start paying interest on the same business day as it receives the funds.

The full amount of the payment must be credited to your account, unless you have agreed with your bank that charges can be deducted first.

Depositing a cheque

When you deposit a cheque into a current account, you should be able to withdraw the money by the end of the next working day.

Online payments

New types of online services that you allow to access your account data or make payments on your behalf are now regulated by the Financial Conduct Authority.  These are collectively known as open banking services. 

Read about account information services and payment initiation services.