Bank payments could be delayed by up to three days under new rules that would give banks more time to investigate potential fraud.

The Government said it was proposing laws that will extend the time that payments can be stalled by up to 72 hours.

Currently, a bank has until the end of the next business day to either process of refuse a payment made by a customer.

Extending the window will give banks more of a chance to investigate transactions deemed to be suspicious, and potentially block any high-risk payments from going through.

Tulip Siddiq, the economic secretary to the Treasury, said: “Hundreds of millions of pounds are lost to scammers each year, targeting vulnerable communities and ruining the lives of ordinary people.

“We need to protect these people better, which is why we are giving banks more time to investigate suspicious payments and break the criminal spell that scammers weave.”

Rocio Concha, the director of policy and advocacy at consumer group Which?, said the proposals mark a “positive step in the fight against fraud”.

“While it should not affect the vast majority of everyday payments, it’s important that banks can delay a bank transfer and take action if they think a customer is being targeted by a scam.

“These measures should be used in a careful and targeted way.”

If a bank finds evidence to suggest a payment is fraudulent then it needs to inform customers about a delay, and explain what they need to do in order to unblock it.

Banks will also have to compensate customers for any interest or late payment fees they could incur as a result of delays.

The changes are designed to prevent people falling victim to authorised push payment (APP) fraud, which occurs when they are coerced or tricked into sending money to a fraudster.

Purchase scams, where people pay for a product or service that they never receive or is counterfeit, are on the rise, as well as so-called romance scams.

Romance scams happen when fraudsters target typically vulnerable people and trick them into transferring large amounts of money by pretending to be interested in a romantic relationship.