Faster Bank Transfers A Reality
It's long been a bugbear of online banking users that money transfers from accounts between different banks took up to 4 days to complete, despite the funds apparently leaving the source account instantly. The money would then wend its way through the payment system, existing in limbo between accounts until the transaction was complete.
Interest Savings
Although the banks insist that the complexity of co-ordinating transfers between the numerous UK banks was the reason for the lengthy transfer time, the Office of Fair Trading (OFT) pointed out that the 'limbo money' was worth around £30m a year to the banks in interest payments saved.
Although the banking industry was naturally unwilling to agree with the OFT's view on interest, it did accept that the transfer process was too slow and so set about setting up a new scheme.
New System
The result is the new Faster Payments Service, whereby one off payments of up to £10,000 will be cleared on the same day. The system will operate 24 hours a day, seven days a week, unlike the current system which sticks rigidly to banking hours. It's estimated that most transfers will be completed within 2 hours of being started, with some taking as little as half an hour.
The system was initially planned to start in November 2007, in line with OFT demands, but was delayed to avoid possible teething problems, Even now, with the service officially in operation since 27th May 2008, not everyone can use it as it's being rolled out slowly rather than using a 'big bang' approach, which the banks say would be fraught with danger with a system of this size and complexity.
Nonetheless, it's anticipated that within three months the 'vast majority' of telephone and internet transfers will be made through the new faster system, although standing orders are likely to take rather longer to come into play, with the first half of 2009 being predicted in some cases.
Who Can Make And Receive Faster Payments?
The website www.canipayfaster.co.uk has an online checker to see if bank accounts with a particular sort code are likely to be able to use the new system, while a list of the 13 founder members of the new system is given below.
Founder Members of the Faster Payments Service
- Abbey
- Alliance & Leicester
- Barclays
- Citi
- Co-operative Bank
- Clydesdale and Yorkshire Banks
- HBOS
- HSBC
- Lloyds TSB
- Nationwide Building Society
- Northern Bank
- Northern Rock
- Royal Bank of Scotland Group (including NatWest and Ulster Bank)
