Banks Move To Single Day Transactions
Banks have been criticised on several fronts recently, but they are putting system in place to allow single-day cash transfers between different banks. The Faster Payments Service begins on 27 May.
Banks have taken a battering so far this year. They have been criticised for their part in the credit crunch; for not lowering mortgage rates in line with the base rate; for pushing savings rates up faster than they reduce mortgage rates; for the charges they make; and for the threats to limit free banking.
However, one piece of good news from the banks is that single-day cash transfers for telephone or online banking has finally arrived. The scheme should help banks avoid criticism for holding onto transferred money for up to four days as was previously the case. Interest from this money has been estimated to earn the banks £30m a year.
The Faster Payments Service has been developed by 13 banks and starts on 27 May. It is not all-embracing at the start, but single payments of up to £10,000 over the phone or online should leave one account and arrive at the other account on the same day. This will overcome customer frustration at money leaving one account on one day and disappearing for several days before arriving in the target account. Standing order transactions will be included in the scheme from 6 June.
As the banks do not want the system inundated on day one, banks will phase in the system at different times. Customers will no doubt be prepared to wait a week or two for something that has been bugging them for many years. Testing of this complex, £300m project has included many hundreds of small payments between banks. There is, of course, no test like the live environment, but the phased implementation will hopefully see a smooth transition.
The 13 banks included in the scheme are: Abbey, Alliance and Leicester, Barclays, Citi, Clydesdale and Yorkshire Banks (National Australia Group), Co-operative Bank, HBOS (Halifax and Bank of Scotland), HSBC, Lloyds TSB, Nationwide Building Society, Northern Bank (Danske Bank), Northern Rock, and Royal Bank of Scotland Group (including NatWest and Ulster Bank).
