A new service that will speed up the processing of banking payments went live on Tuesday.

The new "faster payments service" will benefit customers by speeding up one-off payments made over the Internet or by phone, reducing the current three-day clearing timescale to a matter of hours.

For the very first time it will also be possible to make such payments all day every day, and the service will enable same day clearing for regular standing order payments made on bank working days, again reducing the current three-day clearing period.

Over the past week, high street banks have been testing the system by sending and receiving payments in pennies, APACS, the UK payments association, said.

Paul Smee, chief executive of APACS, said: "The final part of this enormously complex project has been to test the new system in a live environment.

"Hundreds of penny payments have successfully been made between the participating banks."

The new service will rolled out gradually, with banks informing customers when it is available to them.

Consumer group Which? said the end of the "payment transfer black hole" was long overdue.

Campaigns policy manager Pula Houghton said: "One of the mysteries of the banking world - the payment transfer black hole - is at last disappearing.

"Same day transfers should have been standard practice years ago, yet the banks have been earning 30 million pounds a year from the status quo.

"We just hope they will be quicker to make this a reality for everyone now."

Limits on the value of payments sent through the faster payments service will be 10,000 pounds for internet and phone payments and 100,000 pounds for standing orders. Some banks will initially adopt lower limits.

A guide on how it works and tool allowing people to check whether or not they are able to receive faster payments is available at www.apacs.org.uk and www.canipayfaster.co.uk.