What is the Faster Payments Service (FPS)?

The Faster Payments Service (FPS) is a banking initiative in the United Kingdom designed to significantly reduce payment processing times, from several days to just a few seconds. FPS focuses on facilitating quick and efficient payments, particularly for small transactions.

How does the Faster Payments Service work?

FPS enables individuals and businesses to make payments rapidly within the UK. To initiate a Faster Payment, you'll need the recipient's account name, account number, and the sort code for their bank branch. While the goal is to complete transfers within seconds, the actual transfer time may vary depending on factors such as the recipient's bank. FPS is available 24/7, and certain banks allow for Faster Payments of up to £1,000,000.

Who can use the Faster Payments Service?

Since 2018, non-bank financial institutions have also been allowed to participate in FPS. Today, more than 35 financial institutions offer Faster Payments within the UK. While personal accounts typically incur no cost for using FPS, corporate customers may expect a fee of around £2.50 per transaction.

How does Faster Payments compare to BACS and CHAPS?

Faster Payments stands out for its rapid payment processing, making it ideal for transactions that require immediate settlement. In contrast, BACS transfers may take up to three working days and are suitable for non-time-sensitive payments. While BACS is generally cheaper, FPS provides near-instant transfers. CHAPS, on the other hand, is reserved for higher-value transactions and incurs a fee of £25 per transaction. FPS offers near-immediate transfers for smaller payments with individual transaction value limits set by each bank.

What are the different types of Faster Payments?

There are four types of Faster Payments:

• Immediate and Single: One-off transfers where funds are available immediately, typically guaranteed within 2 hours. These transfers can be initiated through mobile banking, telephone, online banking, or in-person.
• In Advance: Individuals can schedule payments in advance, allowing them to pay bills or settle invoices ahead of time.
• Standing Orders: Account holders can set up regular, fixed payments on specific dates, differing from direct debits where the recipient initiates the payment.
• Corporate Access: Designed for business customers, this feature allows for bulk payments to be made simultaneously. However, not all members of the Faster Payments Service offer this capability.
• FPS has revolutionized payment processing in the UK, offering speed and efficiency for both personal and business transactions.