Page last updated at 10:51 GMT, Tuesday, 29 April 2008 11:51 UK

Slow start for fast cash transfer

Computer user
Banking online is more popular than telephone banking

A banking scheme for one-day cash transfers over the phone or on the internet is set to have a slow start.

The new Faster Payments Service will ultimately see cash transfers arrive within a day instead of three days.

But only 5% of transactions will be processed as faster payments when the scheme is launched on 27 May.

The quicker system was agreed three years ago and should have started last November, but was delayed to ensure that it worked properly.

Safety conscious

Banking industry body Apacs has announced the timetable for the roll-out of the scheme for the first time.

Standing orders will begin to go through the faster payments scheme from 6 June, but Apacs expects only a half of all transfers to be cleared within a day by the end of August.

The 13 banks under the scheme, including the big five High Street operations, will decide when to phase in the scheme and for which customers.

Business customers are likely to benefit later than personal banking customers as the banks want to ensure the system is secure and reliable.

"The challenge of achieving this cannot be underestimated. As with any payment system there is no room for error as it will be an integral part of the UK's economic infrastructure," said Apacs chief executive Paul Smee.

"A phased roll-out will best help us ensure customers get the safety, integrity and efficiency they have come to expect when making payments here in the UK."

Currently, internet and phone payments make up 2% of all payments in the banking system, with standing orders making up another 9%.

The plan came after an agreement between Apacs and the Office of Fair Trading (OFT) in 2005 that the existing procedures should be improved, rather than having the same three-day rules as cheques.

The latest figures have shown that online banking has become more popular than telephone banking.

A YouGov survey of 3,000 people in March suggested that 70% of people in the UK knew nothing about the new faster payments system.

The survey was commissioned by ACI Worldwide,

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