Same-day bank payments agreed
Banks have agreed to move money between accounts on the same day
Tuesday, 24, May 2005 02:11
Standing orders, telephone, and internet bank payments will soon move between accounts in a single day, the Payment Systems Task Force has said today.
In effect, this means money transferred in one of these ways will become available to its intended recipient on the day it is sent.
Currently it takes three to five days for electronic transfers to reach their intended recipient - over this time the money leaves the sender's account and earns interest for the paying bank and not the recipient.
Office of Fair Trading figures show that this is costing the consumer around £30 million a year in interest, Which? said today.
Under the new system, payments made before noon will reach their destination on the same day - largely eliminating this problem.
"This is good news for bank customers, both personal and business. Telephone and internet payments and standing orders should all be speeded up and the money could be available to the recipient on the same day," said Jonathan May, chairman of the task force.
However, these changes will not come quickly, with security concerns and other questions meaning that Britons will not be able to benefit from faster payments for around two-and-a-half years.
And while consumer groups have been praising the agreement of the task force, some are questioning the delay.
National Consumer Council chief executive Ed Mayo commented: "Consumers' patience is fast running out and could be totally exhausted by the time these plans come to fruition.
"These changes must be introduced as quickly - and cheaply - as possible. The two-year deadline for the banks to introduce next-day payments, once the implementation group has agreed the way forward, looks over-generous.
"And cheques must not become the Cinderella of the bank payments system. A donkey could deliver cheques faster than banks can put money into customers' accounts."
The task force said today that it expects to set up a working group to examine issues relating to cheques, starting in October 2005.
It will also consider LINK (the UK's ATM network), MasterCard and Visa, Maestro/Switch (the UK's payment cards networks), and the CHAPS clearing scheme, for payments.
Which? welcomed the report, but said that the task force - of which it is a member - could only be said to be a success if its conclusions are taken on board by the industry.
Laurence Baxter, senior policy adviser at Which?, said: "This task force process only works if it demonstrates action, not promises. If the banks cannot honour this promise then Which? will campaign for tight Government regulation to force banks to give customers a fairer and more efficient service and scrap this £30 million racket.
"We also caution the industry to think long and hard if it's considering passing the cost of this faster clearing on to consumers. To charge us for a better service would be wholly inappropriate."
The banking industry was also involved in the task force and in coming to what it described as a "positive" decision.
APACS, the trade association for the UK payments industry, welcomed the agreement. Its chief executive Paul Smee commented: "This is a positive move. The driver behind changes in payments should be customer-led."
He added: "The task force has worked extremely effectively bringing together diverse interests for the benefit of consumers - we look forward to the continuing challenge of delivering real change to customers."