Faster payments service in phased rollout

With one month to go, APACS, the UK payments association, has confirmed plans for the launch of the new Faster Payments Service (FPS). The new service will benefit customers by speeding up one-off payments made over the internet or by phone, reducing the current three-day clearing timescale to enable these payments to clear within hours, not days.

For the very first time it will also be possible to make these payments all day every day. The service will also enable same day clearing for regular standing order payments made on bank working days, reducing the current clearing timescale of three days.

The new payments infrastructure for this service remains on track to be launched on May 27th and, from this date, founding banks - Abbey, Alliance & Leicester, Barclays, Citi, Clydesdale and Yorkshire Banks (National Australia Group), Co-operative Bank, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Northern Bank (Danske Bank), Northern Rock and Royal Bank of Scotland Group (including NatWest and Ulster Bank) - will be gradually implementing their own plans to deliver the new service to their customers.

At present there is no need for customers to do anything or to make any changes to existing payments. Any payment that is not processed through the new service will continue to be made using the existing Bacs three-day service.

To ensure a smooth rollout of this new service, volumes on launch day are being carefully managed. This means on day one it is expected that only 5% of members' internet and phone payments will be processed as faster payments. As an additional introductory measure some financial institutions will place lower initial limits on the value of phone and internet payments that can be sent or alternatively they may choose to phase rollout across their customer accounts.

Standing orders are scheduled to start being processed through the FPS from June 6th. Over the summer the overall volumes are expected to increase to over 50% of anticipated peak-day processing volumes.

There will be a maximum limit placed on the value of each payment sent through the FPS, with the maximum value for internet and phone payments set at £10,000 and standing orders to £100,000. At launch some banks will adopt lower limits than those figures.

Currently internet and phone payments account for just 2% of interbank automated payment volumes, but they are growing rapidly as customers increasingly turn to them instead of more traditional payment methods such as cheques.

Standing orders account for 6% of interbank automated payments. The new system is being built to cater for the large volume increases projected for the future.

The remaining 92% of interbank automated payments are 'bulk' transactions generated by organisations and businesses both large and small and are: Direct Debits, used to pay utility bills, life and general insurance premiums and various subscriptions; Bacs Direct Credits, used for salary payments, pensions, and state benefits; and CHAPS payments.

29 April 2008 © Moneyextra.com

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