All internet and phone payments to be faster from 2012
Quicker internet and phone banking payments are set to become standard from 1 January 2012, enabling many consumers to pay their tax and credit card bills on a same-day basis for the first time.
The new maximum timescale for electronic payments, technically 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 exceed this requirement, being processed end-to-end within two hours through the Faster Payments service.
The D+1 change, which forms part of the Payment Service Regulations, is expected to bolster 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.
Commenting for PayYourWay.org.uk, Chief Executive of the Payments Council, Adrian Kamellard said: "This is great news for consumers and businesses. More bills are going to be paid more quickly through Faster Payments and the change will mean more certainty if you have been sent money too.
"Not all payments we make will fall under this regulation and it is important to understand which will and which won't. If you want to know more about how the changes will affect you, or just need advice on how to get started with internet banking, payyourway.org.uk has advice and guides on every aspect of payments."
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 and remain dependent on the account's existing terms and conditions.
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.