A faster system of making bank payments could put customers at greater risk of fraud, experts warn.
The service, introduced tomorrow, will reduce the clearing period for a one-off transaction made over the internet or by phone from three days to a few hours.
For the first time, customers can also make these payments by phone all day every day.
But security analysts warn that the number of fraudulent payments could rise because banks will have less time to spot unusual or suspicious transactions.
A criminal with illegally obtained details could complete a number of transactions before the banks realise what is happening.
“The Faster Payment system will be a challenge for banks which could lead to increased risk of fraud, as it will be harder for banks to detect and block fraud in the time window available,” says Stephen Ley, a risk expert at Deloitte & Touche. “The existing process relies, in part, on banks having sufficient time to detect suspicious transactions.”
“With more than 20 million customers regularly using internet banking, increasing online safety is clearly a priority,” he says.
The service will cover 5% of payments when it gets under way tomorrow.
This will rise to around 50% of internet, phone and standing-order payments by August.
By the end of the year almost all internet and phone payments will be made through the system.
Seven institutions will be implementing the system straight away, including Royal Bank of Scotland/NatWest, Barclays, HSBC and Lloyds TSB.
Lloyds TSB will initially allow only some telephone banking customers to send payments using the system. By 6 June all personal customers will be able to use it.
Barclays is capping the amount customers can send using the system, initially at 5. This will rise to 100 by early June and to 10,000 by mid-July.
The service will also allow same-day clearing for regular standing order payments made on bank working days, reducing the current clearing period of three days.
Standing orders are scheduled to start being processed through the Faster Payment service from 6 June.
Paul Smee, chief executive of the payments association Apacs, said the service will be “great for any customer wanting to move money quickly – perhaps to pay a bill or move money between accounts”.
For example, in future a customer could be warned by mobile phone text alert if he or she is in danger of missing the “pay by” date on a bill.
The customer could then make an immediate emergency payment.
But Apacs has previously warned: “As with any payment system there is no room for error as it will be an integral part of the UK’s economic infrastructure.”