Banking system goes cashless for Easter

If you are expecting your pay cheque to appear in your bank account today, be warned - you may suffer a cashless Easter weekend. The automated payments system which connects companies to banks broke down on Tuesday, leaving an "unknown" number of payments that did not get through. Banks were told of the breakdown around midnight on Tuesday and spent yesterday alerting branches to the problem.

The computer staff who run the payments system were scratching their heads yesterday, with no clear idea of what caused the network to seize up or how many customers will be barred from their cash.

The fear engulfing high- street banks is that solvent customers will use their cash cards today to prepare for the Bank Holiday weekend, only to be given the electronic equivalent of the bum's rush: "Refer to card issuer."

Even worse, branch managers may mistakenly bounce cheques on accounts which have gone into the red simply because of the computer glitch. Rightly fearful of customer fury, the banks have instructed branch managers that some cheques which should be bounced today should remain firmly desk-bound until next Tuesday. Customers with wages due should be able to draw money provided they take along their pay slip and identification to their local branch.

The problem occurred in the Bacs payments system, an electronic clearing house for all UK banks run by the Association for Payment Clearing Services. A spokesman said: "As soon as we saw that there would be a problem with people's wages and salaries we decided to come clean and warn people. We'll bear any charges if people go overdrawn because of it. It's our problem."

The problem affected an unknown number of companies connected to Bacs. "The system began to run at a slow speed, and (payment) messages weren't getting through. So we shut it off, and then ran it an extra seven hours last night."