Faster Payments Service

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Faster Payments Service (FPS) is a banking initiative in the United Kingdom to improve the speed of low value person to person or business to business payments to near real time, essentially as if the two accounts were in the same bank. Before the Faster Payments Service, it would require approximately three working days from the initiation of payment to the beneficiary's receiving the funds. The CHAPS service currently exists to provide real time payments for high value transactions, but Faster Payments will focus on low value transactions for consumers and small businesses.

[edit] Background

In December 2005 the Office of Fair Trading and the banking industry represented by APACS, with the authority of HM Treasury, agreed to create this new payments capability for the United Kingdom by the end of 2007. The end settlement will be handled by the Bank of England, and the only allowed currency will be the pound sterling. The service will exists in parallel with the current CHAPS (mentioned above) and BACS (batch payment processing) systems.

[edit] Technology

Faster Payments will support one-time payments, standing orders, corporate bulk payments, and return payments. The service is expected to handle a peak volume in excess of ten million transactions per day. The system is comprised of networks of member institutions (banks) surrounding the core central system. The central system will handle the actual message switching in near real time, as well as manage the settlement of accounts at the Bank of England, and generate reports. The physical network will be handled by Voca Limited and Link and the system will be managed by the CHAPS Clearing Company.