A new faster banking system is being launched to enable payments to arrive on the day they are made.

Industry body APACS is rolling out its Faster Payments Service, which will allow same-day payments by telephone, online and through standing orders, cutting the processing time from three days to a few hours.

It will also be possible for people to make payments over the phone and internet at any time of the day and on any day of the week.

But the launch comes amid reports that experts are concerned the new system could put consumers at greater risk of fraudulent payments as banks may have less time to detect suspicious transactions.

Security analysts are understood to be concerned that fraudsters could complete transactions before banks are able to spot them.

Stephen Ley, a risk expert at Deloitte & Touche, told the Daily Mail yesterday that the new system will be a "challenge" for banks.

"It will be harder for banks to detect and block fraud in the time window available," he reportedly said.

The system will be phased in gradually, with only around 5% of internet and telephone payments being processed by the system from today.

The system will be used to process standing orders from June 6 and it is hoped that at least half of all payments will be processed using it during the summer.

The 13 founding banks, which include the five main current account providers Barclays, Halifax Bank of Scotland, HSBC, Lloyds TSB and Royal Bank of Scotland Group, will gradually implement the service for their customers during the coming months.

Two of the banks - Abbey and The Co-operative Bank - will not join the launch, but will follow suit within three months.

Seven of the banks will allow money to be sent and received from Tuesday, but four will only allow money to be sent, while some are also capping the amount.

HSBC, for example, is limiting the amount of money that can be transferred in the first week to £20.

APACS said the phased in launch will allow it to monitor the system and help police any potential increase in fraud.

Copyright © PA Business 2008