The scheme, which includes standing orders, launches on May 27 and is the banking industry's response to Government concern that the UK does not have a low-cost, quick and efficient electronic payment mechanism.

"On the plus side, Faster Payments provides innovative retail banks with a real opportunity to think about customer-friendly new services for the consumer," said Stephen Williams, northern head of financial services at business advisory firm Deloitte, based in Leeds.

"For example, offering emergency payments triggered by mobile phone alerts if a customer is in danger of missing the 'pay by' date on a bill could allow one bank to differentiate itself from its competitors."

However, he warns there is likely to be a considerable cost to banks in terms of cannibalisation of existing revenues from the current UK real-time gross settlement system known as CHAPS (Clearing House Automated Payment System).

Mr Williams believes there will also be risk issues as banks will have to approve payments within a matter of seconds of receiving requests for funds.

"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.

"The existing process relies, in part, on banks having sufficient time to detect suspicious transactions," he said.

Mr Williams continued: "Faster Payments can bring significant benefit to customers, businesses and banks, as long as the risks are managed.

"The banks which successfully manage these risks will gain significant operational and strategic benefits.

"A number of banks have opted to issue card readers which work with their customers' debit card to create a more secure authentication and authorisation process. With over 20 million customers regularly using internet banking, increasing online safety is clearly a priority."

Deloitte says businesses will welcome the introduction of FP as it will enable them to reduce the charges they incur on payments below £10,000 by moving from CHAPS to FP.

Currently the only way to make a same-day payment is via CHAPS, which is significantly more expensive than the three-day Bacs payments system.

Mr Williams says introduction of new services based on FP may, in time, also be used by merchants and others in preference to credit card and debit card transactions.

He said the scheme's implementation had not been without its challenges and the "live date" had already been deferred by six months to allow banks to ensure their systems were ready on day one.

For some banks having a real-time customer balance across many channels, including ATM, phone, branch and internet, had required significant work. But, for all the banks, addressing the new security threats of an almost immediate and non-cancellable payment system was a challenge, he admitted.

When Faster Payments goes "live", transactions will be limited to £10,000 for immediate payments and £100,000 for standing orders, although some banks may choose lower limits.

In time it is expected that these limits will be increased.