Faster Payments Service starts today

| May 27, 2008 | 0 Comments
”Faster

The £300 million Faster Payments Service, developed by 13 banks, gets underway today.

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, HSBC, Lloyds TSB, Nationwide Building Society, Northern Bank (Danske Bank), Northern Rock, and Royal Bank of Scotland Group (including NatWest and Ulster Bank).

The service has been designed to reduce the clearing period for a one-off transaction made over the internet or by phone from 3 days to just a few hours. One-off payments up to a maximum value of £10,000 over the telephone or via the internet will leave a customer’s account and arrive at the destination account on the same day.

However, only a small amount of payments will be faster from day one. The service will cover 5% of payments which will rise to around 50% of internet, phone and standing-order payments by August.

By the end of the year, nearly all internet and phone payments will be made through the system.

Philip Cullum of the National Consumer Council said we have been waiting for years, if not decades, for the industry to invest in decent systems, if the price of embedding it properly is a delay of a few months, then that is sensible.

The banks have been preparing for the scheme by testing the service with hundreds of penny payments.

Paul Smee, chief executive of UK payments association Apacs, said the final phase of this enormously complex project has been to test the new system in a live environment.

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

However, experts have warned that the new system could put customers at greater risk of fraud. Experts say that the number of fraudulent payments could increase because banks will have less time to spot unusual or suspicious transactions.

Apacs said that although no system could promise 100% security, the issue had been at the heart of developing the system.

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