By Jane Croft,Retail Banking Correspondent
Published: December 15
Banks will today select a multi-million pound technology system aimed at cutting the time it takes to transfer money between accounts from three days to one.
It is understood that a joint bid submitted by Voca, the transactions processing company, and Link, the cash machine operator, is the favourite to win the contract.
The Office of Fair Trading payment systems taskforce will meet this morning to formally decide whether it will select the Voca/Link bid or a rival bid by Visa, the credit card operator.
Banks agreed with the OFT this year to speed up electronic payments following decades of complaints from customers and small businesses.
The technological platform, which will cost about £65m to build, will allow money paid in the morning to arrive the same day, rather than three days as at present.
The move is aimed at helping consumers pay bills and transfer money to other accounts more quickly.
The Voca/Link bid is thought to have won the backing of many banks because of Link's record in providing real-time transactions.
It is understood that the system is nearly "real time", enabling money to be transferred almost straight away.
However, even when the IT system has been approved, banks will take up to two years to install the infrastructure because of the complexity of integrating it with their own ITsystems.
The new system will only speed up payments of standing orders and payments made via the internet or telephone.
However, it will not cover cheque clearing, which the OFT-led payments group is looking at separately. Cheques are still popular in the business sector and one in seven regular bills is still paid by cheque.
The clearing system in
Mervyn King, governor of the Bank of England, recently expressed concern that slow electronic processing put
The length of time it takes to transmit money was first raised by Don Cruickshank, the former telecommunications regulator.
His government-sponsored report, published five years ago, criticised British banks for their lack of competitive practices. The taskforce will now start looking at use of cheques in the