May 27, 2008 | posted by Pam Atherton in Banking |

Today sees the roll-out of the long awaited Faster Payments Service that will enable millions of customers using internet or phone banking to make payments which will reach another account within two hours, rather than the two to three days it takes currently.

APACs, the UK payments association, has produced a new, downloadable advice guide called “How to use the Faster Payments Service”, along with an online easy-to-use sort code checker www.canipayfaster.co.uk, to help customers wishing to benefit from the service as it starts today.

Customers can input any UK sort code to check whether it is able to use the Faster Payments Service. More sort codes will be added over the next few months as the service is rolled out. All these materials are available from www.apacs.org.uk.

Over the last week participating members of the new Faster Payments Service have been making live transactions through the new infrastructure to test the sytem.

It is expected that only 5 per cent of payments will be covered by the system today, but that the proportion will rise to around half of all internet, phone and standing order transactions by August.

The system will not cover paper payments such as cheques or direct debits as the latter are already almost instantaneous.

Customers of seven UK financial institutions will be able to use the service from today, including Royal Bank of Scotland, Barclays, HSBC and Lloyds TSB. The latter says all personal bank customers will be able to send money using the new system by 6 June.

Barclays is limiting the amount customers can send using the system to £5 this week and to £100 by early June. By July 16, the cap will be raised to £10,000.

People banking with Nationwide, HBOS, Northern Rock and Alliance & Leicester will be able to receive payments, but will not switch over fully to the new system until the summer.

Abbey, which is owned by Spanish bank, Santander, will use the system by late summer. Co-operative Bank customers will have access to faster payments in July.

By the end of 2008, almost all internet and phone payments will be being made through the new system. Customers will be informed by their banks when they are able to use the service.

Almost 27.5m people using personal telephone and internet banking in the UK are expected to benefit.   Business customers will not be able to use the system until later in the year.