Shoppers beware the quick Switch

Money taken from the account may not be passed straight on to the retai ler

CHRISTMAS shoppers using debit cards rather than cheque books should be aware that in many cases the money will come out of their accounts on the following day.

Marks and Spencer, as the only large retailer not to accept payment by debit card, is inadvertently helping its customers this Christmas.

M&S has announced that it will begin to take Switch and Visa Delta cards next summer. At the moment anyone without an M&S credit card must pay by old technology - cash or cheque.

When debit cards were introduced, banks described them as electronic cheque books and said transactions would be held back in order to clear at roughly the same time as cheques.

Since then, however, many card issuers have quietly changed the rules. In most cases, Switch debit card purchases are now taken from customers' accounts the next day. Some Visa Delta transactions are debited equally quickly.

The logic would seem to be, therefore, that customers who want to hang on to their money for as long as possible - or who are waiting for deposits to clear safely - should play safe by continuing to write cheques.

This is not the attitude that the banks are trying to encourage.

Switch cardholders are particularly affected. The banks and building societies that participate in the scheme (there are 28) can decide for themselves when they want to charge their customers, but day-two debiting is now the norm.

The NatWest was the last big Switch issuer to change from a day-three approach, in April last year.

Tim Green, general manager of Switch Card Services, makes the argument that this could even be to customers' advantage: "If you're using a Switch card or cheque book, you are mentally registering that you are reducing your account balance. All the marketresearch we've done has indicated that people like their accounts to be debited as soon as possible, at least when the amounts involved are small. People don't like to have cheques hanging around for a long time,'' he said.

Switch customers may like to bear in mind, however, that the money taken from their accounts will not necessarily be passed straight to the retailer where they spent it.

While large retailers, according to Mr Green, have been pushing for reimbursement on day two, companies with less clout have to wait longer for their money. In the meantime, banks can benefit from the funds they are holding.

Visa brands its debit card with the Delta sign, but processes Delta purchases alongside credit-card transactions. "The earliest practical date for debiting an account is the day after the transaction, but the average is around three days,'' said John Hutchinson, managing director of Visa UK.

According to Barclays, day-two debiting is standard where the Visa retailer has been signed up by the company that has issued the customer's card. Transactions where different Visa member companies are involved are almost certain to take an extra day, although other than by asking the retailer, it is hard to see how the customer will know when this is the case.

Since Barclays claims about 40 per cent of the market, its own Connect debit cardholders are more likely than others to find that their purchases are debited on the next day.