On-Us Transactions, Intrabank Groups, Push vs Pull Revisited

An on-us transaction is a payment where the payer and the payee hold accounts at the same bank, so the money never leaves the bank and no clearing or settlement between banks is needed. If the small business in Leeds and the supplier in Bristol both banked with Meridian Bank London, the GBP 4,750 cheque would be presented at Meridian Bank, checked by Meridian Bank and paid by Meridian Bank, with a simple debit to the drawer account and a credit to the supplier account in the same ledger. On-us payments are faster and cheaper, because there is no clearing file, no scheme fee and no interbank settlement, and the payee can often be credited the same day. A business analyst should always ask whether a payment is on-us, because the flow, the timing and the cost all change with the answer. An intrabank group payment is a payment between two banks that belong to the same banking group, for example between a parent bank and its subsidiary in another country, or between two brands owned by one group. The payment crosses a legal boundary, because the two banks are separate legal entities, but it stays inside the group, so the group can use internal accounts and internal rules rather than the public clearing system. The payment may still be cleared through the group internal system, and the settlement may be a single internal transfer at the end of the day. A product owner should consider whether group payments can be offered at a lower price than cross bank payments, because the cost is lower, and a business analyst must know which entity holds each account, because the legal and regulatory reporting still applies. Push and pull payments describe who starts the movement of money, and the cheque is the classic pull example. In a push payment, such as a credit transfer, the payer instructs the bank to send money to the payee, so the payer controls the timing and the amount. In a pull payment, such as a cheque or a direct debit, the payee starts the collection, so the payee controls the timing and the payer must make sure the funds are there when the collection arrives. The GBP 4,750 cheque is a pull, because the supplier presents the cheque and pulls the money from the drawer account, while a credit transfer for the same amount would be a push. The pull model creates timing risk for both sides, because the payer cannot predict presentment and the payee cannot confirm funds until clearing. The worked example settles, and the lessons are clear. The small business in Leeds writes a crossed account payee cheque for GBP 4,750 to the supplier on Monday, and the supplier deposits it at the collecting bank the same day. The collecting bank captures the image, sends it through image-based clearing on Monday evening, and the paying bank checks the signature, the funds and the mandate on Tuesday morning. The paying bank debits the drawer GBP 4,750, settles the net amount to the collecting bank, and the supplier account is credited GBP 4,750 on Tuesday. A business analyst should take away that the cheque flow is a pull with a delay, that the image is the clearing instrument, and that the bounce path must be designed as carefully as the success path, because a supplier who is paid late by a bounced cheque will not accept a cheque again.