The UK's Faster Payments Service was introduced in 2008 with a focus on personal payments and standing orders. The ACH based system, which clears and settles within a couple of hours (and normally much less), processed its two billionth payment this month. There were 731 million Faster Payments is September 2012 made up of standing orders (39%), single immediate payments (46%), and forward dated payments (15%) with an average value of £715/payment (just below the ACH average of £746). By the end of 2011, over 85% of phone and Internet payments in the UK were processed through Faster Payments.

The transaction value limits still vary between the banks, see table, but they are now much higher and so Faster Payments is used for many more types of payment.

Faster Payments transaction limits

 

Corporates are definitely using Faster Payments more frequently, now the transaction limits impose far less restrictions. David Adams, Head of Treasury at BaxterStorey, commented, they use Faster Payments 'Usually for urgent items such as payroll or "missed" purchase ledger amounts where we would previously have used CHAPS or BACS but want a quicker resolution than the 3 day cycle which still accounts for 98% plus of payments.'

Bank services
All the large banks in the UK now provide corporate banking products which offer Faster Payments. Barclays through their new Barclays.Net electronic banking platform currently supports input of individual Faster Payment instructions and from December 2012, customers will also be able to import a file of Faster Payments. This compliments their host to host service - DirectFile which enables customers to submit a file containing a mixture of BACS (UK ACH), CHAPS (RTGS system), SEPA, cross border and Faster Payments payment instructions.

Barclays is the only bank currently able to sponsor their corporate customers to submit files of Faster Payments into the central scheme infrastructure, using the Direct Corporate Access (Secure-IP) service. This is a replication of the BACS Direct (Bacstel-IP) which corporate customers have used for many years for submitting files directly to BACS. The files are submitted using scheme approved software from companies like Bottomline, Experian and Fundtech. So users can submit large volumes of payments.

Companies are using Faster Payments increasingly for weekly payroll, for returning overpayments and many other situations where immediate payment is essential. Indeed, Marcus Bateman, Senior Product Manager at Barclays recommends that "All companies should pre-register for Faster Payments so that they can use it when they need to." The introduction of Faster Payments means that in many situations the UK's consumers and businesses now expect same day payment, although for companies Faster Payments are 5-10 times more expensive than a BACS payment.

The Faster Payments service is used in some situations by companies for liquidity management purposes, as funds only have to be made available on the day of payment, rather than two days before with the BACS system.

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Same day ACH payment systems are increasingly popular throughout Europe. The lesson from the UK's experience is that companies should ensure that they can use the low-cost Faster Payments option, wherever possible, rather than the much more expensive CHAPS option. However, at the moment only a small proportion of BACS corporate users are also Faster Payments users.