Chase UK Chat (Part 1)

Financial Chat Fintech Chat
2663

I didnt think that was how it worked, it was far more that the number monzo had didnt exist in the list of all the sort codes out there unlike the JP one (JP Morgan Chase is Chase) which does, it was why I suspect they may have used the existing one in the first place to avoid potentially a year (or even longer for crazy mechants) of issues. I actually thought they were smart to use one already allocated to their company to avoid it.

If you are correct then there will be issues for a long time… we will see I guess. I hope you are wrong to be honest as it will be damaging when trying to get non enthusiast customers. Hell some merchants didnt get it sorted until their customers complained about it and I remember some saying Monzo wasnt a real bank (even though it was) because of this. If you are right it will be damaging for the brand given they are going for the less young fintech people who want the idea of a big bank and I certainly wouldnt move my DD over if that turns out to be true because of the potential pain. Younger folk would tend to move companies, older just wont stick with the bank.

I guess we will know when it starts to roll out.

2664

Yes, how it works is that there is a “master database”, which lists every valid sort code and which payment schemes are available or not for that sort code. It also lists the bank which the sort code is associated with, the address of the bank and the phone number that can be used to contact that bank. This database is called the Extended Industry Sort Code Directory (EISCD).

All merchants that want to collect Direct Debits or otherwise need to validate sort codes can buy access to this database from Vocalink (they maintain it) so you have to wait for merchants to update their copies of the database and their processes (web forms programmed to reject “invalid” sort codes and so on).

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2665

The sort code was created for Chase in the same way the BIN on their cards was created for them.

Thankfully merchants and acquirers are now pretty used to new sort codes and BINs and it’s not as problematic as it used to be.

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2666

Far more comprehensive than my reply :joy::grimacing::stuck_out_tongue:

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2667

Haha, although I was only able to give that detailed reply thanks to the knowledge I’ve picked up over the years from this community!
:+1:

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2668

Eeeep fingers crossed it goes better and merchants are faster, that monzo list still seems to get the odd edit years later.

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2669

On this point specifically, you weren’t completely wrong. What you were probably thinking of was the historic sort code “ranges” allocated to clearing banks.

So, for example, the 20s range is Barclays, 30s Lloyds and TSB, 40s HSBC and NatWest have the 50s and 60s. A very crude sort code checking implementation may try to process any sort code that starts with a common bank number like that, although I doubt it as most businesses would buy the database and do it properly.

When Monzo first started, the 04 starting number was completely new for a sort code, which may have thrown some very archaic systems but it isn’t the huge deal you were maybe thinking it was?

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2670

It was a while ago so I have probably conflated the 2 issues as it was all new then. I remember people had issues getting paid as well because of it being a new sort which leans into what your saying above.
Having seen some merchant and pay roll systems I am not surprised their were issues.

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2671

Getting paid would generally be through BACS Direct Credit (or maybe Faster Payment) and, again, possibly large companies with custom payroll systems may have needed to wait for a system update which incorporated a newer version of the database to “recognise” Monzo.

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2672

image

That was the response some got :smiley:

2673

Indeed, with what was actually happening (and why the system would cause an error) being that looking up the sort code for Monzo would have returned a “does not exist” if your database was out of date.

There is a summary of the main sort code ranges on Wikipedia and a checker which reveals which payment schemes are enabled for a sort code on the Faster Payments website. Starling’s website also lets you check sort code addresses (which is useful when filling in paper Direct Debit mandates) and whether or not a bank supports the switching service.

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2674

Hah… it what my City Council says when I amended DD details for Council Tax. Lady told me twice that her computer not accepting Monzo details. But looks she was smart and amended details manually

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2675

I’m actually curious about how sort code allocations work - because NatWest have the 60- range, but Starling’s is 60-83-71 and now Chase is also in the same range. Does NatWest have any involvement with those banks?

The Wikipedia article says that new banks are given an 04 one.

2676

It is not quite as simple as NatWest “owning” the whole 60 range.

Historically, they did have the whole range and other banks within that range would have some payments cleared through NatWest on their behalf (usually international payments, via SWIFT, and often cheques as only cheque-clearing banks could clear cheques).

Nowadays, quite often banks will have nothing to do with the bigger bank that they appear to “share” a sort code range with, and will clear all their own payments, with the possible exception of SWIFT payments only.

The 04 range is a new range where codes are allocated 1 by 1, instead of in ranges, to new banks. This range is restricted as it can’t be used to clear cheques - so that’s why it’s referred to as the “utility bank” range.

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2677

We still rely on NatWest for a few things - cheque clearing for one!

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2678

I think it used to be. As you point out, “correspondent” banks used to be responsible for a whole bunch of things. Look at building societies: most of them (Nationwide being the honorable exception) will have sort codes in clearing banks’ ranges.

Starling also has an 04 range (04-00-40 ‐ what could possibly go wrong with that?) but I imagine it was easier to take a sort code from Natwest at the beginning, given they also relied on them for cash deposits.

This is new information. I promise I’m not picking on you but can you provide a reference or source for this? The way that contemporary banking works, I’d be incredibly surprised if an accident of sort code meant that Monzo could never join the cheque imaging scheme…

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2679

I think they also likely used them to plug into certain payment schemes initially. Probably CHAPS and international payments.

The sortcode they use did come from the NatWest agency banking range, rather than a totally unused range, so they must have been processing at least some payments (probably beyond just cash deposits) on their behalf).

Indeed, you are right about that. However, I think it’s not always the case now? The 08 range, for example, is nominally all the Co-op Bank, yet Virgin Money now seem to clear their 08-60-64 sort code themselves as it is listed separately and comes up in the Faster Payments Checker as owned by Clydesdale Bank PLC.

Yes, and this sort code comes up as enabled for Cheque & Credit Clearing - Starling, of course, don’t issue chequebooks but do clear cheques now they’ve joined the Image Clearing System and enabled cheque imaging in their app.

The Wikipedia page mentions it is reversed for “utility banks” that don’t use cheques and links to this document from Pay UK - unfortunately, although the phrasing “Utility Bank” does appear, there is no mention of cheques in the document so I’m not sure where the idea originated. However, I don’t think any bank with a sort code allocated in the 04 range actually issues cheques - Starling participated in the scheme, but still doesn’t issue cheques, so perhaps the limitation just applies to not issuing them?

However, I agree with you that it doesn’t seem like there would ever be a technical reason to prevent certain codes from using certain payment schemes - so presumably cheque clearing could always be switched on for an 04 sort code even if the range was originally intended for use with banks that don’t issue cheques.

My guess is they just needed to use a spare code for fintechs (given that there are and were going to be a lot of them) so they could hand out new sort codes not connected to traditional clearing banks. Given that 04 was unused, this was an ideal number to bring into use. Since no fintechs ever joined the paper cheque clearing process, and initially none of them cleared cheques themselves, it was also easily inferred that any 04 sort code didn’t support cheques. The code may then have been blocked in the clearing system to avoid fraudulent cheques being claimed against non-cheque clearing banks, but I doubt it?

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2681

So could Starling’s 04 sort code also be used to set up DDs?

I wonder why Chase doesn’t have an 04 sort code too, given they’re a fintec too. :thinking:

2682

Maybe it’s specifically to prevent issues such as new sort codes, the previous sort code would’ve probably been recognised as a NatWest one, now changed to Chase so there’s no issues with acceptance?

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2683

Chase uses JP Morgan sort code. As JP Morgan had sort codes for their investment banking business for a long time.

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