Bank transfer payment times speeded up

A new system intended to speed up the time it takes to make cash transfers between bank accounts online or by phone has come on stream.

The Faster Payments Service started on 27 May. The system should see transfers made online and by phone completed on the same day and usually within two hours. Under the old system such transfers could take as long as three days.

The Faster Payments Service is the first new payments system to be introduced in over 20 years.

After complaints from customers, the Office of Fair Trading ordered the banks to come up with a method of transfer that did not leave people waiting for days before the money was switched from account to account.

Last year some 124 million payments were made via internet and phone banking, a figure forecast to climb to 300 million annually in the coming decade.

Despite the fact that 13 banks have adopted the system, the system is not expected to be fully operational until later in the year as the process is to be implemented on a phased basis.

On the first day, just 5 per cent of payments will benefit from the accelerated process.

Some of the banks have also imposed, in the short term, a limit on the amount that can be transferred.

In time, however, when the rollout has been completed, the limit will be £10,000 for single transactions.

Standing orders begin processing under the Faster Payments Service as from 6 June.

Businesses may have to wait longer still to take advantage of the speedier system. It is thought that the banks will want to make sure the process is both secure and reliable before offering it to business customers.

Sandra Quinn of the payments organisation APACS said: “Some banks will tell customers when it goes live. Others won’t and it will be a few months before the system is as complete as we want.”

Ms Quinn added: “It is better to be safe and introduce Faster Payments incrementally than make a dash and get it wrong. In any case, no one will be worse off than they are now - increasingly you’ll benefit.”

Cheques are not included under the new system.

The banks operating the Faster Payments Service are: Abbey, Alliance and Leicester, Barclays, Citi, Clydesdale and Yorkshire Banks, Co-operative Bank, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Northern Bank, Northern Rock, and Royal Bank of Scotland Group including NatWest and Ulster Bank.