News
Banks slow to implement faster payments system
David Black, banking specialist
It's a year since UK banks were supposed to introduce same day money transmission, but a year on, nearly half of eligible payments still take three or more days.
Around £45bn is estimated to have failed to go through the 'faster payments system' as it should have done since May 2008, when the system was first introduced. Twelve banks and one building society signed up as founder members of the new system, but today seven of the founder members, including Nationwide, Abbey and Lloyds, are only offering a partial or minimal service.
Lloyds was offering a same day transfer service online, but has since withdrawn it, while Abbey says it has been preoccupied by its integration with parent bank, Santander, but says it aims to be operating at 35% capacity by June 2009.
One of the main reasons for money transfers not being processed on the same day is that many banks impose an upper limit on the amount that can be transferred by the system. Nationwide only offers faster payments on amounts of £10 or less, which explains why it is only processing 1% of transfers through the system.
The Alliance & Leicester, Lloyds and Halifax also have thresholds considerably lower than the industry limit of £10,000. Lloys, for instance, limits faster transfers to £5,000. It is not just straightforward money transfers which are not being processed quickly.
The majority of the 13 founder members of the faster payments system, including Lloyds and HBOS, do not allow customers to settle credit card bills through the system, while nearly half of the founder banks do not process standing orders through the system either. APACS, the payment clearing services organisation insists the system is 'robust' even though few customers are benefiting from it.
A spokeswoman for APACS said: "If customers value a fast payment service and their bank is failing to provide it, we would recommend that they switch to a bank that does."
UK Banks providing the faster payment service include RBS Group (which includes Natwest) and Barclays. The banks in a number of the Scandinavian countries have provided same day money transmission for years which begs the question as to why UK banks cannot do likewise. Faster payments will be great for customers, but it sounds as though some of the banks have a long way to go before it's fully implemented.
