Banks must speed up electronic money transfers made by telephone and over the internet, the Office of Fair Trading (OFT) has said.
Payments made over the internet will be speeded up
At present, it can take four days for transfers to reach their destination. Banks make an estimated £25m a year in interest during the transfer time.
The OFT has given the banks six months to come up with a way to transfer the money within one day.
The speed of direct debits and credits will be unaffected by the OFT move.
For the past year, the OFT has been negotiating with the banking industry on reducing the time it takes to move money electronically following a telephone or internet instruction by the customer.
The banking industry has now agreed to speed up money transfers, and has six months in which to work out a way to bring the change about.
Once this six month period has elapsed the OFT expects the banks to implement quicker money transfers within two years.
Consumer groups have welcomed the prospect of quicker money transfers.
"This agreement is a long delayed step forward. Finally the industry has promised to bring the UK's electronic payments systems into the twenty-first century," Laurence Baxter, senior policy advisor at Which? told BBC News.
But transfers made by direct debit or direct credit - which account for some nine out of 10 electronic money transfers - will be unaffected by the agreement between the banking industry and the OFT.
"There is no demand to speed direct debits and credits up because it already happens in effect instantaneously," Sandra Quinn, spokeswoman for banking industry body the Association of Payment Clearing Services, told BBC News.
"Banks don't make any money in interest from direct debits or credits."
Later this year the OFT will investigate the amount of time it takes banks to clear cheques.
Consumer groups are hoping that the OFT will decide that the three to five days it takes to clear a cheque is too long.
"Cheques must not become the Cinderella of the bank payments system," Ed Mayo, National Consumer Council chief executive said.
"A donkey could deliver cheques faster than banks can put money into customers' accounts."