High street banks will begin implementing systems within
the next six months to cut the time that electronic payments take
to clear.
It currently takes three days to process payments made
electronically. Banks agreed to find a new method of processing
payments after pressure from the government's Office of Fair
Trading to improve processing times.
A 10-strong group of banks is examining three methods of
processing electronic payments that can all clear the money within
24 hours. The banks, which meet as the implementation group of
payment clearing association Apacs, aim to agree before the end of
the year to use the same method for processing electronic
payments.
The three systems being assessed at the Apacs meetings are:
- Near-real-time processing, which enables payments made using
online or telephone banking to be processed with almost no
delay
- Early-late, late-early (Elle) processing, which processes
payments that have been made in the morning on the same day and
which processes payments made later in the day early the next
morning
- Multiple-batch processing, which groups payments into different
batches that are processed at set times each day.
Although both Elle and multiple-batch processing methods could
be implemented without the banks changing their business processes,
the adoption of near-real-time processing would force them to
change their systems controlling standing orders.
Banks currently make money on every standing order by holding on
to the payment and earning interest. An Apacs spokesman said,
"There is a float. It is less than a penny a week per account, or
£30m overall, which, when you consider the operating costs of the
systems, is a drop in the ocean."
The banks will take up to two years to implement the new
systems. These could replace measures introduced by Barclays, HBOS
and Natwest to reduce fraud by lengthening the time it takes for
electronic payments to be processed. All three now take 24 hours to
process intra-bank payments.
The banks and building societies that will agree a common
processing method are Abbey, Alliance & Leicester, Barclays,
Co-operative Bank, Egg, HBOS, HSBC, Lloyds TSB, Nationwide and
Royal Bank of Scotland.