Faster Payments Service

Faster Payments Service (FPS) is a UK banking initiative to reduce payment times between different banks' customer accounts from three working days using the long-established BACS system, to typically a few hours. CHAPS already provides limited faster-than-BACS service (by close of business that day) for 'high value' transactions, while FPS is focused on the much larger number of smaller payments, subject to limits that depend on the individual banks, with some allowing Faster Payments of up to £250,000. Transfer time, while expected to be short, is not guaranteed; nor is it guaranteed that the receiving institution will immediately credit the payee's account.

Nine banks and one building society, accounting for about 95 percent of payments traffic, initially committed to use the service; as of May 2015^[update] there continued to be ten members. For smaller organisations such as building societies and savings institutions, a deposit-only service is available through agency arrangements with a member. There had been few announcements regarding charges for Faster Payments; it had been expected to be around £1-£5 for immediate payments by business users. No retail bank currently charges personal customers for this service (with non-guaranteed transfer time), nor as of 2010^[update] was there any sign this would change.

FPS was officially launched on 27 May 2008 (though testing the previous week allowed users to process very small value (1p) transactions as 'faster payments') for non-scheduled, 'immediate' payments (about 5 percent of traffic) only, with access for future-dated payments and standing orders from 6 June. In practice the service was severely limited by the approach of individual member banks to its adoption (see Implementation). A general online Sort Code Checker was made available by APACS shortly ahead of launch, which shows whether a specific sort code is able to receive Faster Payments.

In November 1998 the UK Treasury commissioned a review (The Cruickshank Report) of competition within the UK banking sector, which reported in March 2000. Among its recommendations was primary legislation to establish an independent payment systems commission (PayCom) in place of existing, privately controlled, interbank arrangements. The following day, the Chancellor, Gordon Brown, announced that legislation would be introduced, if necessary, to open payment systems to increased competition. Initially the banking industry was consulted by government on further steps and progress in payments services monitored by the Competition Commission and the Office of Fair Trading (OFT).

...
Wikipedia