A new system to speed up payments and bank account transfers is to be rolled out this week - spelling the beginning of the end for the three-day clearing system.
From Tuesday 27 May, electronic payments made via the interest or telephone - such as moving money between two accounts or one-off payments to a company or individual - will be processed within hours rather than days. And from June, the system will be extended to speed up standing order payments on working days.
The current three-day clearing system means banking customers who do not set up payments in advance are not protected from any loss of interest. Around 60% of daily phone and internet payments are classified as “spontaneous”, while the remaining 40% have been set up by a customer in advance.
The new system comes three years after the Office of Fair Trading first reached an agreement with banks to reduce clearing times.
However, just 13 banks and building societies have signed up to the new system, meaning not all customers will benefit from faster processing times from day one.
Around 50% of the 27.5 million people who use telephone or internet banking are set to benefit from Tuesday’s launch. These include customers wishing to move money between Barclays, HSBC, Lloyds TSB, Royal Bank of Scotland and NatWest.
Alliance & Leicester, Halifax and Nationwide will also be able to receive faster payments from next week.
APACS, the UK’s payment association, has set up a website that allows customers to input any UK sort code and check whether they are able to receive faster payments.
Paul Smee, chief executive of APACS, says: “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.”