Faster internet and phone banking payments are set to become standard from 1 January, enabling many consumers to pay their tax and credit card bills on the same day for the first time.
That means money will leave your account more quickly; at the same time, you will benefit from faster incoming payments. Find out how it will work.
The new maximum timescale for electronic payments, known as D+1, requires payments across the EU to reach the recipient's account by the next working day. However, all standing orders and one-off internet and phone banking payments in the UK will go even further. They will be processed end-to-end within just a couple of hours through the Faster Payments service.
The D+1 change is expected to lift the number of Faster Payments by 25% next year, creating an additional 15 million internet, phone and standing order payments per month. So far in 2011, over £200 billion has been processed in more than 500 million Faster Payments transactions.
To help consumers make sense of the change, the Payments Council's consumer education campaign PayYourWay.org.uk, has produced a factsheet, available here.
To be covered by the new faster timescale requirement, accounts have to be classified as 'payment accounts'. All credit card accounts meet this definition and so will benefit from the quicker payments; some easy access savings accounts also meet the definition and so will benefit from Faster Payments for the first time.
There are, however, other types of accounts with restrictive features such as notice periods for withdrawals or limits on placing/ withdrawing funds (e.g. ISA accounts), that remain classed as non-payment accounts. Timescales for making payments from these non-payment accounts are unaffected by the D+1 change.
Direct debits and Bacs direct credits already meet the new legal requirements by ensuring that money is paid and received on a defined date and so will continue to be processed in the same way. As the legislation only covers electronic payments, cheques are also unaffected and will continue to be processed under the 2-4-6 cheque clearing timescale.