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New bank payment system promises end to 'three working days' rule

Bank customers will be able to transfer cash between accounts in a matter of hours if new technology proves successful

 

Bank customers will soon be able to transfer cash between accounts in a matter of hours if new technology launched this week proves successful.

However, some banks have been accused by a leading consumer group of deliberately ‘dragging their feet’ in failing to more quickly adopt the new service for all customers.

Banks and consumer groups hope the 'Faster Payments' system will eventually mean an end to the cumbersome BACS method of transferring money, an archaic paper-based process that invokes the dreaded ‘three working days’ delay for customers. The BACS settlement scheme has remained essentially the same for more than 20 years.

The first ‘faster payments’ were made on Tuesday morning, though on day one only a fraction of all bank transfers were made using the new technology. The banking industry says it is taking a ‘phased approach’, though by the end of the year it expects that ‘the majority of the UK’s internet, phone and standing order payments are expected to be made using the new system.’

Among the banks trialling the new system on day one were Barclays, HBOS, Lloyds TSB, and Nationwide. At this stage, however, most customers will be unable to access the new service, and will be unable to do until informed by their bank later in the year.

There also a maximum limit placed on the value of payment sent via the Faster Payments service, set at £10,000 for internet and phone payments and £100,000 for standing orders.  Some banks are adopting even lower limits in the early stages.

Philip Cullum, acting chief executive at the National Consumer Council, called it ‘great news for consumers’, especially given banks ‘shameful record of under-investment in payments systems’. But he went on to warn that ‘some banks seem to be dragging their heels – they need to get their act together and extend these improvements to all customers soon.’

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