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Last Updated: Saturday, 9 April 2005, 13:46 GMT 14:46 UK
Banks may cut clearing time to an hour
By Paul Lewis
BBC Radio 4's Money Box

Wallet and computer
Clearing times in the UK are some of the slowest in the world

Faster payments between different bank accounts could at last be on the way in Britain.

By the end of 2006 we could pay our bills electronically or over the phone, transfer money to relatives or friends, or move money from one bank to another - and know that it would arrive - within an hour or two, instead of the minimum three working days it takes now.

BBC Radio 4's Money Box programme has been told that the technology is now being put in place, and the Office of Fair Trading is discussing a timetable for implementation of faster clearing times.

The money is moved through a system called Voca. Its marketing manager, David Sear, confirmed what they were working on.

"We are very much advocating a system that enables payments to be settled every hour or two hours," he said. "We are also advocating an early introduction so that you can do it on an overnight basis or during the course of a day."

That means that if a bill was paid or money transferred at 1000, it would be in the destination bank account by 1200 to be credited or spent.

Timescale

Mr Sear also said that Voca was developing the security to make sure that payments were safe.

"We have processed 50 billion transactions over 36 years and never lost one. That's really important for the security of those payments.

"We want to make sure that we take some time at the front of the transaction to ensure it is the right person and the right destination bank account so you aren't introducing the possibility of money laundering or other kinds of payment fraud."

The banks still have to make their final choice as to the system they want. But once they decide, we could be sitting at our computers making almost instant payments within a couple of years.

Money Box understands that the Office of Fair Trading report on clearing times will be published soon after the general election and will give the banks six months to respond.

By that time Voca will have the new infrastructure in place. David Sear hopes that within another 12 months the banks could be offering us the new service.

"We should hope by the end of 2006, but it is very much up to the banks themselves," he said. "There are a lot of banks connected to the network and they all have to make the changes to make it happen.

"We also have to get the right system that will mean we are very competitive in Europe, which is moving towards a common European payment system."

BBC Radio 4's Money Box was broadcast on Saturday, 9 April, 2005 at 1202 BST.

The programme was repeated on Sunday, 10 April, at 2102 BST.

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