Banks to cut transaction times

UK banks will change their IT infrastructures to accommodate an industry-wide decision to speed up transactions in 2007.

The Payment Systems Task Force, which is chaired by the Office of Fair Trading, has agreed that online, telephone and standing order transaction times will be reduced to a maximum of 24 hours.

The Association of Payments and Clearing Services (Apacs) has set a deadline of October this year to design a system to cope with demands for faster transactions.

Paul Smee, CEO of Apacs, said: "The driver behind changes in payments should be customer-led. The advent of the internet has brought a growing expectation that online payments should move speedily, at the touch of a button. In a few years' time as online banking continues to grow, customers will want to make more of these payments. The timing for this massive change and investment is just right."

Apacs, which is working with HM Treasury and the Bank of England, added it was important that all banks have access to the technology used.

But at the same time, some banks are looking to delay transaction times to improve security. As a result of internet fraud, Barclays, HBOS and Natwest have extended internal transaction times in order to perform better clearance checks. Barclays said it would delay its transactions by up to one day.

A spokesman from Barclays said: "It's a very small number of people who'll be affected. It's only between Barclays' bank accounts and for the first time that a transaction takes place. All other payments between Barclays and other banks, HSBC say, are not affected."

Earlier this year, Apacs reported online scams caused banks to lose £12m in 2004.