Credit Transfers and Standing Orders

Prior to 1936, the Bank had a very limited facility to enable customers to authorise payments to be automatically debited to their accounts and the funds to be then transferred in accordance with the depositor's instructions. The facility was known as 'Standing Orders' or 'Periodical Payments'.


The Bank's early system only allowed depositors to authorise transfers (for repayments to their BMB Mortgage or to pay their annual Safe Deposit rental) or to pay their subscriptions to the Birmingham Hospitals Contributory Scheme (BHCS). No charge was made for these transactions, the mortgage repayments and Safe Deposit rentals being just internal transfers, and the hospital arrangement being considered as a service to a worthwhile charity.


The hospital scheme was administered by the Bank's Head Office remitting the sums collected from depositors' accounts at various branches. A single cheque was drawn to cover all the subscriptions on a quarterly basis.


Except for the arrangement with BHCS, the only method available to depositors to authorise the Bank to make remittances to third parties was under Regulation 34:

.... on the written request of the depositor made on the prescribed form, accompanied by his pass book, payments will be made by cheque, money order or postal order through the post to the address mentioned in such request at the risk and expense of the depositor.

But this system required the depositor to complete an authorisation form for each individual payment, so was not very convenient for regular payments. However, few depositors would need to make such remittances - they could pay their utility bills across the Bank's counters, and items such as insurance premiums and loan repayments would probably be paid in cash to a collector making house calls.


The increased availability of items such as radios and other electrical apparatus in the 1930s led to a growth in hire purchase agreements. A company that was providing hire purchase loans was the Allied Electrical Industries Finance Corporation Limited.  As detailed in a report by the Finance & General Purposes Sub-Committee on June 15th 1936, this company enquired whether the Bank would institute a system of remitting regular, automatic hire purchase instalments to them on behalf of the depositors:


Periodical payments through the Bank.


Arising out of an enquiry received from the Allied Electrical Industries Finance Corporation Limited, as to whether arrangements could be made for depositors to make periodical payments through the medium of the Bank for the hire purchase of certain articles, such as radio or electrical apparatus your Sub-Committee have given this matter consideration. In this connection the General Manager has ascertained that the Post Office Savings Bank has now introduced a system whereby a depositor may give a standing instruction for regular payments for rent, house purchase, insurance, etc, to be made by the Bank on behalf of the depositor. The necessary entries are made in the depositor's pass book when next presented and the service is rendered without charge subject to:


(1) the payments being made not more frequently than once a month


(2) that a minimum balance of £3 is maintained in the account


Your Sub-Committee consider that there are desirable features in allowing depositors to authorise the Bank to make periodic payments from their accounts for specific objects, and to some extent the principle has been adopted in connection with house purchase payments, and the Hospitals Contributory Scheme. They feel that the system could be appropriately extended to other matters, such as insurance, rent, municipal accounts, subscriptions, etc, and that it might be possible to deal with such cases as the one to which the Allied Electrical Industries Finance Corporation Limited have drawn attention.


Subject, therefore, to any observation which the Town Clerk may make upon the matter at the meeting on Monday next, your Sub-Committee recommend that the principle of periodical payments being made from depositors' accounts on the necessary authority being given be approved; and that the General Manager be instructed to prepare, in consultation with the Town Clerk, any necessary form setting forth the terms and conditions to be observed in connection with such a scheme.


With regard to the particular enquiry from the Allied Electrical Industries Finance Corporation Limited, it is recommended that the same be acceded to on the lines above indicated, and on the understanding that the Company will pay the Bank at the rate of 8d. per transaction to cover any expense involved in rendering this service, and that the scheme be determinable by one month's notice on either side. Your Sub-Committee also consider that other similar applications which may be approved by them, should be dealt with in the same manner.


When the Bank Committee considered the Sub-Committee's report, Councillor Martineau raised the point as to whether it would be desirable to make a distinction by charging the firm or company in certain cases where payments on behalf of a depositor under Hire Purchase Agreements, etc were concerned, and not imposing a charge for services in respect of other payments made on behalf of the depositor. It was agreed that the General Manager should be directed to take this question into consideration when preparing a scheme, and it was resolved that:


 - the principle of periodical payments from depositor's accounts (on the necessary authority being given) for appropriate objects, on the lines indicated in the report, be approved; and that the General Manager be instructed to prepare a suitable scheme accordingly, reporting thereon to the Committee in due course, and in consultation with the Town Clerk to settle any necessary forms setting forth the terms and conditions to be observed in connection with such a scheme


 - subject to the scheme and forms being settled, the General Manager be instructed to inform the Allied Electrical Industries Finance Corporation Limited that the Bank are prepared to arrange, on the authority of the depositors concerned, for periodical payments to be made to the Company under Hire Purchase Agreements, on the understanding (unless otherwise decided under the Scheme) that the Company contribute to the Bank at the rate of 8d. per transaction to cover any expenses involved in rendering the service; the arrangement to be determinable by one month's notice on either side and to be in accordance with the terms and conditions to be settled by the General Manager in consultation with the Town Clerk; also, that the Finance & General Purposes Sub-Committee be authorised to deal with any other suitable applications received on similar lines.


The General Manager's subsequent report began by comparing the proposed facility with existing arrangements for depositors to make payments to third parties under Regulation 49 (payments to a third party attending at a branch) and Regulation 34 (depositor requesting that a payment be made to a third party via the post):


Periodical Payments.


At the meeting of the Bank Committee held on the 15th June 1936, I was directed to prepare a suitable scheme for enabling a depositor to authorise periodical payments to be made by the Bank from his account, and in this connection to have regard to the application made by the Allied Electrical Industries Finance Corporation Ltd for payments under hire purchase agreements to be made periodically to the Company on signed authority from the depositor. It was also understood that the Town Clerk and I should confer on these two matters. I have, therefore, the following observations to make:


1. The two proposals differ in their object and application, and are therefore dealt with separately.


2. Under Regulation No 49 a depositor is entitled to authorise a third party to receive an amount from his account. The third party may be an individual or a company. Appropriate forms for use in this connection are already available. To obtain the money the authorised party must attend at the Bank, present the form and pass book, and give an appropriate discharge when the money is paid over in cash. If a depositor wishes money to be sent by post, in accordance with Regulation No 34, to himself or some other party duly authorised, the form of authority and pass book must be forwarded to the Bank; the money is then transmitted, according to the instructions, at the risk and expense of the depositor, to whom the pass book is returned. The expense includes postage and stamp duty on cheque, or the cost of a money or postal order, as the case may be, and is either prepaid by the depositor or deducted from the amount to be remitted.


3. With a view to assisting depositors who are also mortgagors, the Bank has for some years allowed depositors to issue an authority to the Bank to make periodical transfers from the Savings Bank account of the mortgagor, which arrangement works quite satisfactorily. The entries are made in the respective pass books when next presented at the Bank. No additional work is involved in this arrangement, and therefor no charge is made.


4. In order to help the Hospitals Contributory Association and the depositor-contributors, the Bank has, also, for some years allowed depositors to authorise quarterly payments of specific sums to be made direct to the Association. A detailed list of the payments and a single cheque to cover is sent quarterly to the Association, and the entries are made in the respective pass books when next presented. Additional work is involved in this arrangement, although the cost of postage and stamp duty is trivial, but a charge by the Bank for this service has never been contemplated because  of the nature of the work undertaken by the Association.


5. The proposal now brought forward emanates from the policy recently adopted by the Post Office Savings Bank, who are prepared to arrange for periodical payments for rent, insurance, etc to be made from depositors' accounts, without charge, provided a minimum of £3 is retained in the account. If the Bank is to give similar facilities to those given by the Post Office, it follows that the arrangement now in force for dealing with Hospital contributions must be extended and made applicable to other payments. There is a difference, however, in the character of the payments which may be thus made. In the case of Hospital contributions the work is in the nature of a charity, whereas payments for rent, insurance etc are business transactions. Because of this difference it is suggested that out-of-pocket expenses, ie postage and stamp duty, should be paid by the depositor, that a minimum balance of £3 should be retained in the account, and that such payments should not be made more frequently than once a month. No more work is involved in this method than would be the case if a depositor made the withdrawal in person, and, therefore, no charge is suggested beyond covering postage and stamp duty. It would, however, be wise to restrict the arrangement to certain definite objects, otherwise we might be called upon to deal with normal household accounts. It is therefore now suggested that the purposes to which such an arrangement may apply shall be rent, municipal accounts, insurance premiums, contributions or subscriptions to societies and organisations, and any other purpose or object which may be approved by the Committee of Management.


6. The application made by the Allied Electrical Industries Finance Corporation Ltd in respect of hire purchase payments is in a different category. To make payments to such Company at the request of the depositor involves machinery for handling (1) authorities from depositors, (2) particulars of the hire purchase agreements governing the payment, (3) preparation of lists every fortnight giving details of payments and the issue of a cheque therefor, and (4) inter-working arrangements between Head Office and Branches. While the service may be of advantage to the depositors concerned, it is also a benefit to the Company, and therefore it is proper that the Company should pay for the labour and out-of-pocket expenses. How much labour would be involved in this work cannot be estimated as we have no experience to go upon and no knowledge as to how many depositors might avail themselves of the privilege. The Company in question have intimated their willingness to pay 8d. per transaction for this service, and it has been recommended that the Bank should agree to such sum, and that the arrangement should be determinable by one month's notice on either side. Such an arrangement and terms might also be made applicable to any other Company which may request similar arrangements being made.


7. The view expressed at the last meeting of the Bank Committee that difficulties may be experienced with depositors in working a scheme on the lines referred to for the Allied Electrical Industries Finance Corporation Ltd because a charge is made for Bank services, and no charge made in other cases where a depositor authorises payment from his account for a specific object, is not likely to arise. In the one case the hire purchase payment is the result of an agreement between the Company and the customer in the first instance whereby the latter agrees to make specific payments of a  certain sum. The customer can make those payments direct and pay the remittance himself, or he can (if the scheme proposed is adopted) authorise the Bank to do it for him and notify the Company, in which case he has nothing to pay but the Company will pay for the privilege. In the other case the arrangement for periodical payments being made is between the Bank depositor, in the nature of a Bankers' Order, the depositor paying the cost of postage and stamp duty only, and would be in lieu of the depositor making the withdrawal himself and remitting the amount direct.


I see no reason why the scheme as outlined in the report of the Finance & General Purposes Sub-Committee submitted at the last meeting of the Bank Committee, should not be adopted, with the restriction suggested in paragraph No 5 of this report.


At the Bank Committee's meeting on July 20th 1936 it was noted that the Town Clerk had stated that he had now had an opportunity of examining the proposals and the General Manager's Report, and was of opinion that the scheme proposed to be adopted would not be contrary to the powers of the Bank. It was consequently resolved that the Town Clerk and General Manager be instructed to proceed to prepare and carry out schemes for periodical payments from depositors' accounts.


Subsequently, the Allied Electrical Industries Finance Corporation agreed to the terms and conditions of the scheme, but requested that the agreement should be determinable by two months' notice instead of one month - this variation was agreed by the Bank. The Bank Committee also decided that:


with regard to the general scheme whereby individual depositors may authorise the Bank to make payments on their behalf, it has been considered desirable to delete Corporation Accounts from the scheme because of the continual difference in the quarterly accounts for Gas and Electric Supply and possible variation in water accounts and rates, which would prevent a depositor authorising the payment of a definite sum from his account periodically.


However, the scheme was suspended in December 1936 when the attention of the Bank was called to the fact that steps were being taken by certain Insurance Companies and Building  Societies to utilise the scheme for the purpose of receiving premiums and mortgage payments with the object of effecting savings in their costs of collection, etc. It was also understood that the Post Office have considered it necessary to revise their scheme. It was decided that the Chairman, with Alderman Barrow, Councillor Martineau and the General Manager, in consultation with the Town Clerk, should consider what appropriate action should be taken.


By January 1937 the scheme had been reviewed and it was decided that, as there was a likelihood of undue advantage being taken of the scheme by Insurance Companies and Building Societies, that the position would be met by amending the scheme as follows:


(1) The scheme to apply to approved applications' where the depositor maintains a balance in his account sufficient to meet the payment and the facilities to operate (except as mentioned in sub-paragraph 4) without charge to the depositor beyond stamp duty and postage.


(2) To apply to yearly payments in respect of subscriptions to non-charitable institutions and professional organisations.


(3) To apply to monthly, quarterly or annual payments to any charitable institution or body.


(4) Any applications for payments outside the descriptions given above to be determined by your Sub-Committee.


It was decided that there was no necessity to vary the scheme applying to Companies who made arrangements for direct payments to them and pay for the service, as in the case of the arrangements with the Electrical Industries Finance Corporation Ltd.


In April 1937 the Bank received an application from Messrs Scotchers Ltd for periodical payments to be made through the Bank, in respect of hire purchase agreements. The firm were prepared to pay 8d. per transaction and their application was approved.


On February 9th 1938, a joint conference took place in London between representatives of the Post Office, the Trustee Savings Banks and the BMB to discuss the disadvantages under which TSBs and the Municipal Bank were operating periodic payment schemes and to consider future policy.


Consideration was given to the scheme in operation and various suggestions were put forward, it being ultimately decided that the following procedure should be adopted by all concerned, viz:


(1) The minimum periodical payment to be fixed at 7/6.


(2) Such payments to be made not more frequently than monthly.


(3) A minimum charge of 4d per transaction to be made.


(4) A common form of authority to be used.


(5) The revised scheme to be brought into operation on the 1st January 1939.


The alterations to the existing scheme adopted by the Bank was the fixation of a minimum periodic payment and a minimum charge of 4d per transaction to be made. Although the fixed charge of 8d previously applied complied with the requirements of the new scheme, the Bank decided that the charge should be reduced to 4d.


The new scheme (then known as Periodic Payments, but later known as Standing Orders) was accordingly introduced from January 1st 1939. The possible expansion of the scheme was probably inhibited by the commencement of the Second World War, but a scheme was introduced in 1942 to provide a standing order system for gas, electricity, water, and rates accounts (see below). However, it was not until 1961 that a more extensive system was announced in the Bank's Annual Report for that year, which stated:



This service has been extended and the Bank can now be instructed to make regular payments, either monthly, quarterly, half-yearly or annually.


The Bank Committee's Report to the City Council, dated June 5th 1962, provided the first reported statistics:


The extension of the Standing Order facilities and the provision of the Credit Transfer service for depositors has been fully justified. During the past 11 months the number of Standing Orders has increased by 2,732 representing 22,420 transactions per annum, and since the Credit Transfer service was introduced three months ago, 5,278 have been dealt with by the Bank.


The 1960s Standing Order service was based on a system using Addressograph plates, which was eventually replaced with the computerisation of the Bank’s accounting methods in the 1970s.


The Bank's 1962 Annual Report contained the following statement:



This new and simple service for the settlement of bills, accounts, etc., is available at all Offices of the Bank


The Credit Transfer system was a method of transferring funds from one party to another party, utilising the ability of banks to settle multiple transactions in bulk centrally. Basically, the customer presented a Credit Transfer form at a bank's counter with the appropriate amount of cash. The form (which consisted of two parts - one part to be retained by the bank; the other part to be retained by the customer after being receipted by the bank) contained details of the beneficiary and the beneficiary's bank. The system was used to enable various forms of bills to be paid, either single bills or for a series of payments, for example: monthly payments for a loan. Credit Transfers have largely been replaced since by the Direct Debit system where the beneficiary collects the amount owed, directly from the debtor's bank.


Payments generated by a customer presenting a Credit Transfer at the Bank's counters were combined each day with payments generated by a Standing Order authority.


A Report to the City Council dated June 11th 1963 stated:


The use by depositors of the Standing Order facilities and the Credit Transfer service continues to increase. The Standing Orders now number 7,771 and the transactions for the year were 39,268. The number of credit transfers dealt with during the year was 66,488.


The 1964 Annual Report began the public reporting of statistics to show the amount and number of payments made by these two methods, by including them in the 'Volume of Business' figures. The rapid growth in these figures over the succeeding years illustrates the increasing volume of borrowing being undertaken by the Bank's customers by way of hire-purchase finance, and the increasing demand for money transmission services to make the monthly repayments.





Number of















































1976 *










* Period April 1st to November 20th 1976


The special Standing Order arrangement for the payment of Gas, Electricity, Water, and Rates bills (referred to above) was directly linked to the agreement the Bank had with certain authorities for the payment of  Utility Accounts.

Where a customer gave the Bank authority to pay any (or all four) of these bills, the appropriate Utility or Council Department would remit the bills directly to the Bank for payment, quoting a reference number that enabled the depositor's branch to ascertain the depositor's account number. The branch would then debit the depositor's account, and include payment with any cash payments taken over the counter on the same day.


This arrangement actually commenced following the suggestion of a depositor, as the following report (dated July 20th 1942) of the Bank's Finance & General Purposes Sub-Committee shows:


Your Sub-Committee have considered a proposal made by a depositor for Corporation accounts (rates, water, gas and electric supply) to be sent direct to the Bank and paid through accounts of depositors, in the same way as contributions to the Hospitals Contributory Association and Safe Deposit Rentals are dealt with. The advantage claimed for the scheme is that these accounts could be dealt with during slack periods and avoid delays in dealing with normal bank transactions. The General Manager has reported favourably on the proposal and the Departments concerned raise no objection.


Depositors would have to give a standing instruction in the matter and would have to maintain sufficient funds in their accounts to meet the demands, failing which, payment would have to be made by the depositor in the usual manner.


Your Sub-Committee recommend that the proposal be agreed to and that the General Manager be directed to carry the same into effect, consulting the Town Clerk as to the form of authority to be given and arranging with the Departments concerned.


This Standing Order system was provided at no charge to the depositor - the utility provider paid the Bank the normal transaction charge that applied to 'over-the-counter' payments.



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