HSBC and First Direct to improve electronic clearing

06 May 2005
HSBC and First Direct are hoping to install an electronic clearing system that would see their customers' payments pushed through on the same day.

The new plans, which the banks hope to implement by the end of the year, would see customers receive interest on money undergoing transfer until it arrives in the recipient's account.

Under the current system, money leaving an account takes at least two days to reach its destination - and banks scoop the interest earned in that period.

According to the Office of Fair Trading (OFT), banks earn something like £30 million a year through the interest gained in that delay, and HSBC admits that it will lose between £5 million and £6 million in the first year of the new system, should it go ahead.

"We will be ready to pass on any interest we earn by the end of the year and we hope it proves a positive catalyst for change across the industry," HSBC chief operating officer Dyfrig John told the Daily Mail.

Mr John added that the UK lags behind some developing countries in the time taken to clear transactions.

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