The days of having to wait overnight for funds to transfer from one bank to another are coming to end.

New Zealand banks have completed a massive information technology project costing tens of millions of dollars that should mean all transfers made during the day can be completed within two hours.

The new settlement system built at the behest of the Reserve Bank to reduce the knock-on effects of any bank getting into financial difficulties but should have a big spin off for e-commerce.

Massey University banking lecturer David Tripe said last year that Trade Me would be the biggest obvious beneficiary, as sellers would receive payments and be able to send goods to buyers without having to wait overnight for payments to show up in their bank account. Trade Me spokesman Paul Ford said faster payments should mean quicker trades.

But Tripe warned that a downside was that it could become harder to prevent internet banking fraud, such as phishing scams, as fraudsters might find it easier to fleece victims and transfer money out of the country before banks detected anything was wrong.

Banks originally intended to turn on the new settlement system last year, but there was about a six month delay completing the project.

ASB Bank said it had been processing all payments made between 8.15am and 11.15pm within two hours since Monday and was a "keen participant in this new industry arrangement".