Internet bank transfers now in minutes not days

Tuesday saw a new banking transfer system introduced that will allow bank customers to transfer funds in minutes not days, 24 hours a day 365 days a year.

After months of tests payments association Apacs launched its Faster Payment system, which will potentially allow people's cash to be transferred in minutes – not the current three days.

Sandra Quinn, Apacs director of communications, described the new system as being "best in class" with the potential to send money "in real time".

"On Tuesday payments will arrive on Tuesday. For the vast majority of payments, it will happen instantaneously."

For customers, very little will change in how they transfer money, it will just get a lot faster – meaning banks will no longer be holding onto our cash for days as it passes through accounts.

Pula Houghton, campaigns policy manager at Which?, said: “One of the mysteries of the banking world, the payment transfer black hole, is at last disappearing.

"Same day transfers should have been standard practice years ago, yet the banks have been earning £30 million a year from the status quo. We just hope they will be quicker to make this a reality for everyone now.”

In 2007 there were 27.5 million internet and telephone banking users making 125 million payments and 347 million standing orders.

By 2017, some 40.9 million people are expected to be banking online or by phone making 300 million payments and 422 million standing orders.

Initially 13 banks have signed up to Faster Payments, representing around 95 per cent of customers.

The system will be phased in from May 27th with seven banks – Barclays, Citi, Clydesdale and Yorkshire Banks, HSBC, Lloyds TSB, Northern Bank and Royal Bank of Scotland, which includes NatWest – sending and receiving payments almost instantaneously, with transfers expected within at least three hours and usually faster.

Initial tests of the system using penny payments saw cash transferred between different banks in three minutes.

Alliance & Leicester, HBOS, Northern Rock and Nationwide will only be receiving the faster payments at first – not sending them out, while Abbey and the Co-operative banks will be starting in the summer.

By September, 50 per cent of such payments should be covered by the system.

Initially banks are placing a limit on the amount that can be sent through the faster system – but over the coming weeks customers will see payments arrive at the destination straight away.

Faster Payment covers standing orders – which are expected to grow in popularity with the quicker services – and internet and telephone transfers most commonly used for sending cash to friends and family, moving cash between savings accounts, paying bills and paying for services such as cleaners or plumbers.

The standing orders system – so monies leaving accounts will arrive the same day where directed – will go live from June 6th.

In setting up the new system – which was built from scratch and not as a bolt on to original systems – connections between each of the 13 member banks had to be established.

While most customers will be able to use the system, smaller banks and building societies may not be on board.

Consumers are therefore asked to push their banks – and they can check whether they are included by using the Apacs tool at www.canipayfaster.co.uk - to give them faster payments.

"Customer demand could drive change," said Ms Quinn. "Faster payments could help people manage their money."

However, people are being urged to remember the new system will not be a 'big bang' and it could be several months before all transactions happen within the three-hour deadline.

Also cheques will not be sped up nor will direct debit payments, which already arrive on the same day they are sent.

Limits on the size of Faster Payments will also be set – once the system is up and running fully – to hold back fraud risk.

Standing order limits will be £100,000 and the maximum transferred in one-off payments will be £10,000.

Paul Smee, APACS chief executive, said: "Although the initial rollout will be gradual, and some customers may not be using the new service immediately, we expect that in the coming months this will ramp up to enable large numbers of customers to benefit from it.

"After such substantial investment by the industry we’d like, in time, to see the new Faster Payments Service being used for all of the UK’s internet, phone and standing order payments."


Daniel Barnes