Faster Payments is a banking service that allows for near real-time electronic transfer of funds between UK bank accounts.
Do you want to wait days for your payment to reach a family member’s or supplier’s account? We didn’t think so, and neither did the creators of the Faster Payments Service. The Faster Payments system was developed so that your transactions are processed almost instantly, allowing you to make swift personal or business payments with ease.
In this guide, we cover what Faster Payments are, how they work, and their transaction limits. We also explain whether you can use Faster Payments to send money internationally.
What are Faster Payments?
Faster Payments is a UK system that allows for the quick transfer of money between bank accounts. These instant bank transfers process payments within seconds or minutes.
The Faster Payments Service (FPS) was established in 2008 and is run by PayUK. The goal was to create a system that operates in real-time, allowing near-instant payment processing 24/7. This system connects banks and financial institutions across the UK, enabling them to send and receive funds swiftly.
You would use Faster Payments when you need to transfer money quickly, such as settling an invoice urgently to avoid late fees or transferring emergency funds to a family member. Its rapid processing times make it the favoured choice for fast and convenient payments.
This system is designed to be faster than traditional methods like CHAPS and Bacs payments. CHAPS is used for high-value transactions and only guarantees same-day transfers if the bank receives instructions by the cut-off time. Bacs payments typically take three working days to clear, making them better suited to routine payments like payroll.
How do Faster Payments work?
Faster Payments are a rapid way to send and receive money in the UK. The FPS is a sophisticated electronic payment system that ensures money moves quickly and securely between banks.
Here’s how Faster Payments work:
Initiate the payment
Let’s say you want to pay your supplier for your next delivery of office supplies. You log onto your banking platform or mobile banking app to start the payment process. You enter your supplier’s bank details, including their account number and sort code, and the amount you want transferred.
Bank confirms the transfer
Once you submit the payment details, your bank performs security checks to verify the transaction. This includes authenticating your identity and ensuring that the payment details are correct.
Faster Payments System processes the transfer
Your bank then sends the transaction details to the FPS. This central system processes the transaction, checking that the recipient’s bank is ready to receive the funds.
Funds are transferred
The recipient’s bank receives the transaction details from the FPS and credits your supplier’s account almost immediately. You and your supplier should receive a confirmation that the transaction has been processed.
Are Faster Payments secure?
Knowing how long do Faster Payments take, you may worry that they aren’t secure. Banks and the FPS have various security measures in place to ensure your transactions are safe. These include advanced encryption, authentication processes, and real-time fraud detection. They also comply with financial regulations, such as the Financial Conduct Authority (FCA).
Although Faster Payments are near-instant transactions, sometimes they can take up to two hours. In certain cases, security checks and fraud prevention measures can delay the processing.
What are the transaction limits of Faster Payments?
Faster Payments limits can be up to £1,000,000 per transaction. This limit can vary between personal and business accounts and may also differ from one bank to another. It is essential to check with your bank to understand their specific limits.
Can you send money internationally with Faster Payments?
Faster Payments are for sending money between banks in the UK. This means that they don’t allow for international transfers.
If you need to send money abroad, you will need to use international payment services. This is where Western Union steps in, allowing you to send money to over 200 countries and territories around the world. You can check bank transfer details for international transfers to see how long your international transfers will take.
FAQ on Faster Payments
What is the difference between Bacs and Faster Payments?
Bacs payments typically take three working days to clear. This makes them suited to scheduled transactions like payroll or direct debits. Faster Payments are processed almost instantly, making them the best choice for time-sensitive transfers.
What are the disadvantages of Faster Payments?
One of the main disadvantages of Faster Payments is that once a payment is made, it cannot be cancelled. This means you must double-check the recipient’s details before confirming the transaction to avoid sending money to the wrong account.
Who can send Faster Payments?
Any individual or business bank account in the UK that supports the Faster Payments Service can send these types of payments. This includes most major financial institutions, from Barclays to Lloyds Bank to Starling Bank.
